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OCEAN freight analyst Sea-Intelligence has reported a sharp increase in service contracts filed with the Federal Maritime Commission in the United States.

According to Sea-Intelligence, the contracts themselves are confidential, but the FMC provides information on the amount of contract filings as well as the number of amendments.

The analyst said it sees a peak in the contract filings in April and May every year because of the contract negotiation cycle in the US.

Image: Sea-Intelligence

It changed from late 2020, with a spike in contract filings and a decrease in the number of amendments.  

Sea-Intelligence CEO Alan Murphy said under normal market conditions, 41% of the original filings are done in the April and May period with a “shoulder season” in March and June.

“Most other months have a filing share of around 5%,” Mr Murphy said. “However, in 2020 we see a large shift in November and December.

“This is reflective of the very large rate increases seen on the Transpacific, prompting a substantial number of shippers to negotiate new service contracts for 2021 at a much earlier time than usual, in order to safeguard against further market disruption.

“Then in 2021 we see an even more extreme shift, as a staggering 38% of all original filings are made in December 2021, clearly in an effort by the shippers to pre-empt more disruptions in 2022.”

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Mr Murphy said while there has been drastic change in behaviour in terms of the relationship between shippers and carriers, analysts are uncertain whether the change is temporary of a harbinger of a more fundamental shift in the US markets going forward.

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