Transpacific Eastbound Market Letter - January 2016

January 4, 2016           

Transpacific Eastbound Market Update


To Our Valued Customers: 


Market Conditions – What’s Happening with Capacity and Demand?   What a difference a month can make.  Carriers have become emboldened by the larger than anticipated increase in demand they are experiencing prior to the Chinese New Year holiday.  Bookings from December through mid-February remain extremely strong.  And with the successful capacity cuts we have been seeing the last two months (approximately 1.5 million Teus of idled global capacity as of mid-December), overall market space has become very tight in virtually every lane.  Destination ports that are minimally serviced are the most acutely impacted (Portland, OR; Jacksonville, FL; Miami, FL; Houston, TX AWE; Wilmington, NC; Boston, MA) as well as origin ports that require a trans-shipment (Xingang, Dalian, SE Asia, Qingdao, etc). We expect this tightness of space to continue well into February, as blank sailings through the holiday impact weeks 6-8.


Winter Scheduling and Blank Sailings:  Despite the predicted pre-CNY seasonal increase in demand for space and equipment, carriers continue with their winter scheduling adjustments to rationalize their capacity.  In addition, carriers are announcing significant blank sailings during and immediately following the Chinese New Year holiday.


General Rate Increases:  With space tightening in virtually every lane segment in the TP trade, carriers were largely successful in implementing significant rate increases January 1, 2016 as follows:

US West Coast and WC/IPI:         $960/20’       $1200/40’        $1350/HQ          $1520/45’

US East Coast/Gulf Coast AWE:   $1440/20’    $1600/40’        $1800/HQ           $2025/45’


Peak Season Surcharge:  Yes, a PSS…  Due to the tightening of space conditions in the TP trade, TSA carriers have filed a PSS to be effective January 15, 2016 in the amount of $360/20’, $400/40’, $450/HQ, and $510/45’. 


February 1, 2016 General Rate Increase:  Carriers have announced yet another GRI to go into effect February 1, 2016 as follows:

US WC, EC and all IPI Destinations:  $540/20’    $600/40’     $675/HQ           $$760/45’


Will These Rate Increases Go Through?  There is a high likelihood that spot rate levels will increase sequentially this quarter due to the above factors.  Each of these GRIs and the PSS will most likely be mitigated to some extent, but the overall trend is that market rate levels are increasing through February, 2016.


Lunar New Year 2016 Reminder:    The Lunar New Year will begin February 8, 2016. 


Our #1 priority as always is to help maintain our customers’ competitiveness, to keep your cargo flowing as quickly and as consistently as possible, and to continue to communicate effectively along the way.  Our nimbleness, market awareness, and “Built Different” philosophy enable us to do this - as your partner. 


We thank you for your continued support.