US governors are making independent decisions to return staff to work and open up their economies, even as the death toll from the Covid-19 pandemic across the country tops 60,000.
It is what consultant Jon Monroe calls the divided states of America, and he says it will certainly lead to more infections and more deaths. According to Monroe, “We are experiencing quarantine fatigue. The pressure is everywhere to re-open the economy.”
It is with this backdrop that the BCO’s are completing their contract negotiations with the shipping lines, with just a few left to settle, and with last week’s questions about maximum quantity commitments still ringing in the shippers’ ears. These questions remain, but it is hindsight that will provide the clearest view.
“It looks like May is the month that retailers will come back to life,” Monroe says. With mall operators having announced the re-opening of malls, Simon Properties, the largest mall owner in the US, will re- open 49 malls in 10 states this weekend.
There are a number of stores reopening in May, including Apple Store, Chico’s, TJX and Haverty’s Furniture.
“A silver lining in this dark cloud heard from multiple sources is that many retailers increased their online business in the past month. A few retailers noted that they turned a number of open stores into fulfilment centres,” said Monroe.
A positive side of the pandemic, “if that can be said”, is that many consumers have migrated online either for shipping or education. Monroe says, “This will most likely fast forward people’s comfort zone to manage more of their life online. One survey noted that a majority of respondents will be seeking cloud-based platforms to better manage their supply chain online.”
As the consumers have shifted more of their consuming online, so the non-vessel operating common carriers (NVOCC)’s are following suit, with contract discussions Zooming ahead, or not.
According to Monroe, the NVOCC’s are sending mixed signals with contract completions. Some wanted contracts completed by the of April to get products moving on new contracts, and others have extended their contracts for a period of time (30 days) in order to buy time.
NVOCC volumes for April were mixed with some moving volumes in line with last year and others cargo volumes had substantially diminished.
Carriers, who introduced a general rate increase today, may be trying to keep freight of all kinds rates artificially high to encourage NVOCC’s to finish the contracts as soon as possible.
Finally, Monroe points out that the expected surge in cargo at US ports never happened. In its recent podcast the Northwest Seaports Alliance noted that space set aside for container storage had never even had enquiries for its use.
Current Contract Status of Key Carriers
- COSCO/ZIM – still under BCO negotiation, finalising NVO’s at second round
- APL – NVO negotiation to complete next week. CMA took over all APL lanes except Asia to N. America
- HPL – NVO negotiations to complete 2nd week of May
- ONE – Almost finished with BCO negotiations still pending NVOCC’s
- OOCL-Finished BCO. NVO now being completed. How many space/MQC budget left for NVO’ s.
