Small and mid-sized US retailers who were unable to lock in their annual trans-Pacific service contracts until this month are paying a steep price. 

Container lines are finalizing their 2022-23 service contracts with retailers who move less than 150,000 TEU a year at rates at least $2,000 per FEU higher than those signed in late 2021 with the largest US importers. Mid-size importers this month said they are signing deals ranging from $8,000 to $10,000 per FEU from Asia to the West Coast, compared with the $6,000 to $8,000 per FEU shippers were nabbing in the Fall. spoke to sources at four container lines, five non-vessel-operating common carriers (NVOs), and four mid-size shippers for this story. 

Trans-Pacific carriers have been extremely selective in choosing which importers they would negotiate contracts with in initial talks that began last fall, focusing on customers that in past years have accurately forecasted their import volumes and consistently delivered on those volumes. Some importers told they wanted to finalize their 2022-23 contracts last fall, knowing that rates were moving higher each month, but had to stand in line behind customers who carriers consider as “most-favored shippers.”

Unlike past years, when the rate differential between the highest-paying and lowest-paying shippers was about $1,000 per FEU, or less, vessel capacity in the largest US trade lane is so tight that those importers who have yet to finalize their contracts report carriers are quoting rates with a “take it or leave it” attitude. 

Smaller importers will pay as much as $4,000 per FEU more to the West Coast than the largest retailers, according to the sources, most of whom did not want to be identified. The situation could be even worse for forwarders, known NVOs. Carriers usually wait until most of their contracts are signed with direct importers before negotiating contract rates with NVOs, but forwarders say discussions this year have been confined to securing capacity. 

“Rate negotiations? There’s been no negotiations at all. It’s just a discussion of allocations,” David Bennett, COO at the forwarder Farrow, told 

Generally, NVOs have two levels of rates. Their named account rates are for specific importers and are lower than for all other clients, known as “freight all kinds” (FAK) clients. “Discussions are only FAK and the spot market,” Bennett said. 

Importers willing to pay record rates to secure space 

Carriers say space is already tight in the trans-Pacific this spring and is expected to get even tighter during the summer-fall peak-shipping season. Now that carriers have locked in most of the volumes they were looking for from their direct shipper customers, they are leveraging what little capacity is left for those accounts that will pay the highest prices. 

“It’s just a matter of space. No one is forcing anything on anyone,” a carrier executive told 

Becky Wu-Lee, senior manager of logistics and customs compliance at Igloo Products, told the JOC TPM22 conference in Long Beach earlier this month that shippers this year must choose between paying a higher rate or having cargo rolled. 

“If you really have to load, you pay it. If you go for lower rates, or have lower rates, you’re not going to load,” she said. 

In the past, when vessel space was more plentiful, carriers would negotiate rates with customers in several rounds, but no such discussions have taken place since January. “The days of having one, two, three rounds of negotiations are over,” the same carrier executive said. 

That was confirmed by an importer in the automotive sector. “The revised boilerplates we are getting [for negotiations] are so heavy-handed,” the importer told Wednesday. 

But carriers say they are following past procedures in negotiating the lowest rates with their largest and most-favored customers, with smaller customers paying higher rates. “Most of the big BCOs [beneficial cargo owners] aggressively signed their contracts early. As we get to medium and smaller BCOs, it’s natural for the rates to go higher,” a second carrier executive told 

A mid-size retailer told he attempted last fall to finalize contracts with his core carriers. He was able to complete most of the contracts at $6,000 to $8,000 per FEU to the West Coast, and even secured higher space commitments in some lanes. But carriers said they would get back to him on his remaining contracts. Now he is being quoted contract rates at $8,000 to slightly more than $10,000 per FEU on what is remaining, with carriers basically telling him, “take it or leave it,” the retailer said. 

A mid-size retailer in the home furnishings sector likewise confirmed his earliest contracts were signed at $6,000 to $8,000 per FEU, but for those contracts carriers declined to sign last fall, the rates are now between $9,000 and $10,000 per FEU. 

Jack Chang, managing director of the forwarder JUSDA, said that after focusing on their primary accounts, carriers have been taking their time and reviewing what importers they want on which trade lanes, and are filling their remaining space with a focus on revenue. 

“Yield management — they’re getting so good at it,” Chang said of the carriers. 

Some carriers this year are focusing on multi-year and end-to-end contracts with their core customers. All-inclusive contracts with bundled land and ocean services are priced higher than pure ocean freight services. 

“Our long-term, multi-year contracts are 70 percent of our business,” Maersk told in a statement. “The other 30 percent is Maersk Spot and Twill products.” 

High demand for East Coast services 

East Coast rates continue to move higher as demand for all-water services grows in this year of contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association. Importers who have a history of shipping to the East and Gulf coasts have already begun to shift some of their volume away from the West Coast in anticipation of the current contract’s July 1 expiration — and potential disruptions that may result. 

“We’ve made provisions to move things around, but any extra space we get is at the expense of other BCOs,” said the automotive sector shipper. 

Importers with no history of shipping through the East and Gulf coasts are generally out of luck. “If you weren’t on an East Coast service before, you won’t get on now,” Chang said. 

The vice president of transportation at a home furnishings retailer said he gave up on trying to book more space on East Coast services early in his negotiations with carriers. “East Coast capacity isn’t there, or you can only buy it at such a premium,” the source said. ”We’re saying it’s not worth it, so let’s just roll the dice with the West Coast.” 

The director of global logistics at a mid-sized retailer with a presence on the East Coast said signing for East Coast volumes hasn’t been a problem in his 2022-23 contracts, but carriers were not generous in expanding his allocations. “We got space, but not enough space for what we will ship,” he said. 

Carriers and shippers say East Coast rates in the 2022-23 contracts that were signed last September through December were generally in the $8,000 to $10,000 per FEU range, but the rates seemed to climb higher with each passing week. 

The spread between rates on the longer all-water services to the East Coast and the West Coast in past years was normally about $1,000 per FEU. This year, East Coast contracts are priced at least $2,000 per FEU higher than West Coast rates, carriers and shippers said. 

This spread is reflected in the spot rate indexes, such as Drewry’s World Container Index. The spot rate from Shanghai to Los Angeles on March 17 was $10,154 per FEU, while Shanghai to New York was $12,276 per FEU. 

Carriers discouraging IPI contracts 

Through-rates from Asia to the US interior via the West Coast, known as inland point intermodal (IPI) rates, are also rising rapidly as carriers prefer that importers stop the containers on the West Coast and transload the contents to domestic containers or trailers. That way, carriers can quickly return the empty marine container to Asia for another high-paying shipment to the US. 

Carriers, therefore, are disincentivizing IPI bookings by offering much higher through-rates from Asia to inland hubs such as Chicago. “I’ve had to back off from IPI, primarily because carriers don’t want to do IPI,” the automotive shipper said. 

A carrier executive explained that each line has its own business plan for IPI freight. Some carriers don’t want to lose control of their containers when they are shipped to Chicago and other inland destinations, or they consider the “opportunity cost” of a container sitting idle for weeks in the interior US versus sending it back empty to Asia for another $10,000 US-bound import load, the carrier source said. 

The all-inclusive IPI rate from Shanghai to Chicago via the West Coast was about $12,000 per FEU in last year’s service contracts, but has climbed steadily to as high as $15,000 per FEU now, the carrier executive told 

Carriers booking volumes more realistically 

Carriers last year contracted for cargo volume based upon the listed capacity of the vessels in their trans-Pacific fleets. They ended up being unable to handle those cargo volumes because the effective capacity of the vessels was reduced due to congestion at Asian and US ports. While carriers in total increased the capacity deployed to the West Coast by 31 percent in 2021, the effective capacity was reduced by 8 to 25 percent at various times because of delays at Asian and US ports, Thorsten Meincke, board member, air and ocean freight at DB Schenker, told TPM22. 

Carrier executives told they are not booking freight against the listed capacity of their services, but rather are leaving a margin for error as they anticipate that vessel bunching and delays in the inland supply chain will continue to act as a constraint on capacity, particularly with retailers projecting that US imports will increase again this year. 

Christian Sur, executive vice president of ocean freight and contract logistics at forwarder Unique Logistics International, said that while this strategy has resulted in some shippers receiving lower minimum quantity commitments (MQCs) than they asked for, carriers will hopefully deliver on the MQCs their customers have contracted. 

“Last year they didn’t fill their allocations. This year they’re quoting something that should be more manageable,” Sur said. 

Contact Bill Mongelluzzo at and follow him on Twitter: @billmongelluzzo.