To Our Valued Customers:
Market Conditions: With the industry bracing for a surge of cargo arriving US ports in the short-term companies are also tasked with quickly canceling bookings and postponing purchase orders. India’s announcement on a 21-day lockdown from March 25th has forced some India ports to declare force majeure and sending pending purchase orders into disarray. Ocean carriers are quickly working on contingency plans to adjust supply and avoid pressure on market rates. The efficiency of ocean carrier’s alliances allows for rapid adjustments on capacity and we expect to hear many announcements in the coming days. Stay tuned…
Ocean container volumes on the decline: Most analysts project a global double-digit decrease in container volume versus same period (Mar-May ’19) which seems fair based on market conditions being caused by the global pandemic. China is reporting a 10%-20% drop in new bookings for the first week of April and can expect similar numbers from other manufacturing hubs. India will experience a much larger percentage drop through April due to the lockdown of the entire nation of over 1.2 billion people! This market disruption is unlike any other we experienced and it will be difficult to predict when a feel of “normalcy” returns to the market place.
Ports of New York & New Jersey plan for congestion: The port authority expects a 25% increase in volume during April and May from the surge of volume out of China in March. To avoid terminal congestion contingency plans are being reviewed that include looking outside of the ports for additional capacity if deemed necessary. The Port Authority is actively discussing with warehouse owners and operators on their capacity to help with expectations once the cargo arrives.
Blank Sailings & Service Suspensions: Ocean carriers are quickly announcing blank sailings and temporary suspensions of services such as with THE Alliance’s TP3 East Coast service which was scheduled to launch on April 1st now being potentially suspended for the entire month of April. Ocean carriers servicing India are also considering blank sailings due to the 21-day lock down. A total of 16 blank sailings are scheduled through week 16 with approximately 50% being new announcements. We can only expect additional announcements over the next several days as ocean carriers do their utmost to balance supply and avoid downward pressure on market rates.
Market rates: Ocean carriers implemented a general rate increase on April 1st however the increase offset the downward pressure on market rates over the last several days. We can only expect downward pressure on market rates for the remainder of the month as volumes drop off dramatically. How effectively ocean carriers can balance supply will be the underlying determinant. I would hedge towards April rates dropping off somewhat however nothing too drastic. Stay tuned…
We truly appreciate all your support. Should you need any additional information or guidance, please feel free to contact your Laufer sales or team member.