May 23, 2016
Transpacific Eastbound Market Update
To Our Valued Customers:
Market Conditions – What’s Happening with Capacity and Demand? Despite recent weakening of carrier spot pricing in the Transpacific trade from mid-May, especially to the west and east coast base ports, space conditions are becoming tight in certain areas. Most acute right now are origins Ningbo, Shanghai, Xingang and Qingdao to LA/LGB and to the US East Coast. We have been seeing a consistent increase in booking demand since late April which typically foretells a traditional peak year, with seasonal merchandise demand peaking from July to October. There remains a significant amount of capacity idled throughout the world (approximately 1.4 million Teus) so carriers are trying to reduce the amount of capacity they introduce in the market this peak season in an attempt to get rates back up. And because of this, carriers in the TP trade have announced the following rate increase schedule:
June 1, 2016 General Rate Increase: Carriers have announced yet another GRI to go into effect June 1, 2016 as follows:
US WC, EC and all IPI Destinations: $540/20’ $600/40’ $675/HQ $760/45’
Peak Season Surcharge: Yes, a PSS… Due to tightening of space conditions in the TP trade, TSA carriers have filed a PSS to be effective June 15, 2016 in the amount of $360/20’, $400/40’, $450/HQ, and $510/45’.
Will These Rate Increases Go Through? With space becoming tight in certain areas we believe the spot rate levels will indeed increase June 1, 2016 and possibly again on June 15, 2016 with the Peak Season Surcharge. How much of an increase we simply don’t know as these GRI and PSS amounts are often mitigated.
Panama Canal Expansion June 26, 2016: The long-awaited widening of the Panama Canal is upon us, with the new locks scheduled to open in late June. This will allow far larger vessels to transit the Canal than before, and we are anticipating some carriers substituting larger vessels immediately once the new locks open. This is also creating some interest from carriers in expanding their east coast network to include additional capacity to places like Houston, Mobile, and New Orleans – with some servicing destinations like Memphis from the gulf for the first time.
G20 Summit Reminder: The G20 Summit will be held in Hangzhou, China between September 4-5, 2016. If you are importing from Shanghai, Ningbo, or Nanjing please discuss with your suppliers what plans they have should their factories be forced to close during that time due to heightened pollution controls.
Formation of new Alliances: The current Alliance structure that dominates our market today will be almost entirely different next April, 2017 with two new Alliances being formed with new partners. With regulatory hurdles to overcome, and current Alliance rules in place, we do not expect any major change in the current structure or carrier networks until after Chinese New Year, 2017.
SOLAS and VGM Requirements effective July 1, 2016: We do not expect the new SOLAS VGM requirements to be postponed, so we are urging our import customers to verify that each of their suppliers is aware of the new weight requirements and that they have a plan in place to communicate the VGM to their carrier for each container from July 1.
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.
Have the News Delivered to you
Like what you see here? Why not let us send it directly to you?
Sign up to receive our Weekly Industry Newsletter, a compilation of all news articles that matter to you and your business.