Duration and Price Adjustment of Sea Freight

Published on 14 January 2014

Transportation of container shipments by sea is becoming increasingly unclear, unpredictable, and more expensive.

The transit and waiting times are also increasing. The Voerman Group recognizes the importance of providing insight into the cause of this situation in order to manage expectations. Everyone who moves with Voerman will receive an extensive explanation of the situation regarding the sea transportation, and will be informed of any changes. Unfortunately, we regularly encounter deviations from the agreed transit times which are caused by actions taken by the shipping companies and their terms and conditions are not within our influence.

Shipping companies do have a difficult time though, also because many of the shipping routes deviate from what was offered. Busy routes frequently state that they are ‘out-balance’, meaning that the maximum capacity is only sufficient in one direction of the route. On the return trip, the ships have a much lower capacity and often take empty containers with them.

The shippers can also be unpredictable. Containers are sometimes unloaded from the ship and stored in a harbor halfway the route in order to make room for a shipment that is more profitable..

To save on costs, the ships have also been sailing slower, causing the transit times to increase. Additionally, we used to be able to reserve the sea transport and if need be, cancel it on time without charge. However, now, there are costs involved in any cancellation. And the fuel and currency surcharges have increased as well.

The large shippers have already imposed substantial price hikes in 2013. Even so, extra charges are added when booking a shipment at short notice. The prices have gone up 20%– 30%. We have listed here below an overview of the extra costs.

For specific routes, the following factors also play a role in the price increase.

Asia: There is less cargo coming from Asia. As a result, smaller ships are being used. A surcharge is applied now because of a shortage of containers. Also, there is an additional charge for sailing through the Suez Canal and for the security required in the Gulf of Aden because of piracy and the ships are sailing slower.

USA: The security costs (customs) have increased. There is a shortage of containers and an increasing shortage of local container drivers. Also here the ships are sailing slower. Smaller ships are being used because many ports are old and too shallow for larger ships.

Caribbean and Africa: There are less ports of call being used causing feeder and transshipment costs. Feeders are small container ships that transport goods between harbors. These feeder ships are often not owned by the shipping companies. The feeder ships sailing schedule is not consistent as they depart only when they have full enough load to make it profitable. Furthermore, on Curacao there is often only one crane available to unload the ship, resulting in delays.

We hope that this information has given you some insight into the current sea shipping situation.

Of course, we understand that delays in transit time can be disturbing. This is why we wanted to explain the situation to you in this memo. And as mentioned, we will continue to be proactive in communicating with you and your expats. Our goal remains to facilitate a smooth removal process and ensure a good start in the new homeland.

We will keep you up to date and if you, or your expats, have any questions, please feel free to contact us.

We wish you a good start of the New Year.