No payment, no container

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As space, container equipment and port congestion continue to make importing from Asia very challenging, ocean freight carriers have been responding to the significant rise in rates in a risk-averse manner by reducing credit terms. The situation has now developed to the point that payments are expected upfront.

As many of you will know, businesses are fighting for space and equipment. Demand is extremely high and outweighs the containers that are available.

At first, carriers were responding by implementing very short freight payment terms before confirming bookings. In most cases, payment was expected within 5 days of the vessel sailing.

Now, carriers can pick and choose when it comes to which client they reward with empty containers and vessel space. Those who pay first are at the top of the list.

The situation is developing to the point that almost every shipping line has revoked credit, and carriers have enforced this across the board.

The fact of the matter is, if you want to secure a container, you have to pay in advance. There is simply no other route to obtain containers other than to adhere to payments upfront to shipping lines.

Shipping and logistics companies are reporting that they do not see this as the ‘new normal’. The hope is that once more containers are filtered into the supply chain, rates should ease and so should the demands of payments upfront.

Other transport modes, such as air freight and road freight are unaffected by the above and, at this stage, usual credit terms apply.

We will of course keep you updated on this situation. If you would like to provide any feedback or discuss how this has affected your business, please get in touch