Contract Adherence in Shipping is an Increasing Priority

coracle News

Between continued capacity issues, rising shipping costs, and anticipated changes to the way contracts are negotiated, it’s more important than ever to partner with the right logistics company.

The extraordinary shipping season has highlighted existing problems with contract-adherence within the shipping industry. With space at a premium and little guarantee that contracts will be honoured, changes are expected to the ways that capacity is contracted in the future. 

Base rates will be higher in the upcoming year, and some customers are prepared to sign contracts lasting 16 to 18 months, rather than 12, and at higher rates to guarantee slot space. A more structured contractual framework including enforceable contracts may be the answer. Alternately, shipping could become purely a spot market, driven more by dynamic pricing. [1]

In any case, the key to success will be companies that do the work needed to position themselves a shipper of choice. They will need to be driven by clear forecasting, communicate clear expectations, and prioritize efficiency of operations. Canaan Group has built strong relationships and held long-term contracts with shipping lines going back 40 years, and is proactively working to maintain those connections. 

[1] US importers must rethink contracting capacity guarantees, Journal of Commerce