To Our Valued Customers: 

Part of why Laufer is “Built Different” is knowing what situations in the logistics and supply chain business will affect your bottom line. Below is a quick review of some recent market updates on the Transpacific Eastbound Market. At Laufer Group International, we’re here to help you navigate any issues you encounter and find solutions that provide the least impact to your business. Contact your Laufer sales representative for any inquiries or assistance.

Market Update – Uncertainty Continues! As market volumes have increased over the last couple of weeks ocean carriers have announced extra loaders in July and early August.  A total of seven extra vessels will carry the higher demand with four additional services to the East Coast and three into Southern California, most of which are 3000-4000 x Teu vessels.  However, during the same time period, THE Alliance & Ocean Alliance have announced four blank sailings into the Pacific Northwest (8000-12,000 x Teu vessels) as volume forecasts must have reflected a continuation of soft demand into Canada and the Pacific Northwest.  The capacity fluctuations in 2019 and beyond are expected as ocean carriers continue to improve on cargo forecasting and try to maintain a balance between supply and demand.    

Market Rates –   Spot market rate levels increased July 1st by an average of $300/40’ across all sub-trades into the USA with Canadian gateways still the most cost-effective routes for certain IPI destinations.  Differential in pricing is substantial with rates into Chicago running $400 to $500/40’ less than via US gateways.  Expectations are for market rates to remain fairly steady before potentially increasing again later this month or August 1st

Peak Season Surcharges –   Confidence continues to increase on a peak season surcharge being implemented on long term fixed rate agreements on either July 15th or August 1st at the latest.  All ocean carriers have peak season surcharges filed in respective tariffs effective July 15th .  We have several factors that point towards ocean carriers successfully driving peak surcharges through in the market;

1. A temporary cease fire on the implementation of round 4 tariffs.  The $300 Billion worth of products yet to be hit with tariffs are mostly consumer products that ship heavy during the 2nd half of the year.  A window now exists to bring this product in without fear of additional product cost.  How long this window will exist is the multi-Million Dollar question, literally! 

2. Seasonal freight volume increases as wholesalers & retail gear up for the holiday season.

3. IMO 2020 impact on vessel capacity will hit the global market during the 4th quarter and we expect shippers will try and advance orders to minimize the impact of this disruption on their supply chains.

4. Ocean carriers offset rising equipment repositioning costs as the imbalance between import and export increases during the peak season, especially this year as agricultural products were hit hard by Chinese retaliatory tariffs on US exports. 

IMO 2020 Update –   Market analysists predict ocean carrier costs will increase anywhere from $10 to $15 Billion annually due to the low sulfur fuel mandate of .5% effective January 1st.  Carriers are also retrofitting vessels with scrubbers that bring down emission levels to meet the requirements however the costs on doing such are substantial.  A lot of uncertainty exists on the cost of low sulfur fuel as market demand will not be realized until early next year.  As with all markets, supply and demand will determine prices.  Early estimates range from $100 to $300 per TEU, a substantial increase on transportation costs are likely as we move into 2020, stay tuned….

 

BROWSE MORE ARTICLES

E-MAIL TO COLLEAGUE

NOTIFY ME WHEN NEW ARTICLES ARE POSTED

SOUND FAMILIAR? HAVE A SLIGHTLY DIFFERENT ISSUE? CONTACT US