Market Conditions – Continued overcapacity on the Transpacific trade, combined with soft import volumes during the first half of March, is putting downward pressure on freight rates through the end of the month. At the same time, the conflict involving Iran has prompted ocean carriers to quickly file emergency fuel surcharges, general rate increases (GRIs), and peak season surcharges (PSS), each with varying effective dates based on filings with the Federal Maritime Commission. Potential GRIs and peak season surcharges are expected to take effect on April 1st, while emergency fuel surcharges may be implemented between March 25th and the first week of April.
So far, the conflict has not disrupted sailing schedules for imports from China and most South Asian origins. However, the Indian Subcontinent is experiencing significant impacts due to schedule changes and blank sailings. This is already evident in new bookings from India, where shippers are encountering longer wait times for the first available vessel departures, with many sailings now pushed to late March and beyond.
Market Rates – Freight rates declined through the first week of March but have since stabilized at shipper-friendly levels. However, most ocean carriers have only extended short-term rates through March 19th, creating uncertainty around pricing for the remainder of the month. It remains unclear whether carriers will attempt a short-term increase to offset rising fuel costs before April 1st. The more likely scenario is that carriers push through a substantial general rate increase on April 1st while also applying peak season and emergency fuel surcharges on fixed-rate agreements. In the meantime, carriers will be closely monitoring competitors to ensure higher bunker costs are reflected in freight rates, while their commercial teams work to protect market share—never an easy balance in an uncertain shipping market.
The planned general rate increases will also affect the India–U.S. trade. Carriers have announced increases of $2,000–$3,000 per container, depending on the carrier, with effective dates of April 1st. While it remains uncertain where the market will ultimately settle, rates are expected to be at least double the levels seen on March 12th for imports from India.
Ocean Carriers File Emergency Fuel Surcharges – Ocean carriers have filed emergency fuel surcharges ranging from $400 to $600 per container, depending on the carrier. These surcharges are expected to impact all trade lanes, as the conflict is affecting both bunker fuel costs and bunkering locations. Under FMC regulations, carriers must provide 30 days’ notice from the filing date before the surcharge can take effect on U.S. trades, which is why effective dates vary by carrier. However, for trades outside the United States, the emergency fuel surcharges can be implemented immediately.
Federal Maritime Commission Watching – The emergency fuel surcharges are being closely monitored by the Federal Maritime Commission (FMC), making it unlikely that ocean carriers will risk being viewed as bad actors by taking advantage of the situation. Carriers are required to provide supporting data demonstrating that the surcharge reflects actual additional costs they are incurring. Additionally, the Ocean Shipping Reform Act of 2022 provides regulatory oversight intended to prevent opportunistic price gouging in the market.
Fixed Rate Negotiations – Progress has been slow as importers attempt to claw back rate increases absorbed over the past two contract seasons. The roughly 10% increase secured by ocean carriers last year has effectively become the baseline they are now defending in this year’s negotiations. The conflict involving Iran has further complicated discussions, as carriers face sharply higher short-term bunkering costs. As a result, negotiations are expected to include temporary emergency fuel surcharges, likely accompanied by creative contractual language from both sides. Longer-term base freight rates, however, are not expected to be significantly impacted and should ultimately reflect savings compared to last year once the bunker component is excluded.
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