The number one question we are asked by our customers as we look forward to 2021 is: How can we mitigate the outrageous increases in our ocean freight expenditures that were not forecast in 2020, and what did we get in return for the increases?
Carriers implemented a range of new revenue streams including a “priority loading” charge, experienced a massive meltdown at the Los -Angeles–Long Beach gateway, and basically took the attitude of “the market is what it is.” The lack of planning and meeting the challenges that were created as a result of the surge in volume in the second half of the year has created tremendous frustration and supply chain meltdowns. We tell our customers daily: forecast, forecast, forecast; but even with more detailed forecast models, the carriers have failed the industry miserably.
Looking forward to 2021, the industry is showing signs of continued volatility. The terminals in LA–LB must find solutions to improve service levels. Carriers are blaming shippers for the lack of equipment in key Asia ports, and that’s wrong because the shippers cannot get appointments to return empties, creating additional costs for detention and chassis shortages. These challenges are going to remain in place until the carriers address the terminal failures.
Carriers are going to face tremendous push-back from shippers over the dramatic rate increases that have taken place in 2020. This is going to result in very contentious contract negotiations in 2021 that will result in some new boilerplate terms providing some level of service expectations by the carriers to justify the actions taken during the crisis created by a global pandemic. 2021 will bring continued volatility to the market.