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APL says customers re-negotiating Asia - Europe contracts after spot rate drop

APL says customers re-negotiating Asia - Europe contracts after spot rate drop
Given the massive drop in Asia – Europe spot container freight rates in recent months APL says contract customers are seeking to re-negotiate previous agreed levels.

Kenneth Glenn, president of APL, said in a earnings call for parent Neptune Orient Lines (NOL) that beneficial cargo owner (BCO) customers had sought renegotiation on Asia – Europe contracts but not on the transpacific trade.

Glenn said at this time there had been no impact on BCO contract rates on the transpacific, a trade which has seen 4 – 5% volume growth this year.

The situation was different though on the Asia – Europe trade, the largest globally, where he said year-to-date market growth had been negative.

Looking to the Asia – Europe trade Glen said they had “seen enormous rate pressure” and that this had had an impact on BCO rate negotiations from earlier in the year.

However, he also stressed BCO customers were a “relatively minor portion of their Asia – Europe book of business”. Glenn said there BCO customers accounted for 20% of their Asia – Europe business versus 65 – 70% of customers on the transpacific.