To Our Valued Customers:
Market Conditions: As retailers push backorder dates or simply cancel orders ocean carriers have quickly responded by removing over 1 Million TEU of capacity through June on the TPE trade. Shipper forecast volumes will dictate future announcements on capacity as too many uncertainties remain on how quickly the economy will bounce back later this year. We can expect market rates to remain fairly stable through the remainder of April as the industry navigates through import contract season.
VLSFO & IFO380 Gap Closes: Oil prices recovered slightly with the news from OPEC on reaching a 23- nation deal to cut 10% of crude oil output starting in May. The gap between VLSFO vs. IFO380 is less than $100 per metric ton. Back on January 1st, the VLSFO was over $700 a metric ton as vessel operators frantically scheduled scrubber installations to lower operational costs. Fast forward three months and VLSFO is averaging $250 a metric ton down a staggering 65%. The reduction in oil production will help settle a very volatile market however until the global market show signs of recovery from the pandemic continued downward pressure remains.
Blank Sailing Update: Approximately 100 blank sailings were announced in the market from April through June with over 60% going into the West Coast. THE Alliance and 2M are leading the way with approximately 20% capacity reduction while OCEAN Alliance is around 10%-12%. The substantial capacity reduction and potential for additional blank sailings during this shipping season can undermine supply chains seeking consistency on products arriving US shores. Blank sailings also impact the services that continue without interruption due to such services picking up ad-hoc port calls and receiving additional transship freight causing potential capacity dilemmas that are nearly impossible to forecast.
MSC Possible Malware Attack: The service disruption started on Thursday, April 9th and continues now on day 4. Self-service tools for arranging and managing bookings on MSC ships are currently not operational and bookings should be arranged through other available platforms such as agents and booking portals such as INNTRA and GT Nexus. MSC corporate HQ expects the network outage to be resolved in the short-term without providing a target date. MSC customers cargo remains to move with due to MSC expansive global agent network that is not being affected by the system shutdown.
India Extends Lockdown: The lockdown has been extended through May 3rd as India aggressively works to stop the virus from spreading amongst the various states. The WTO advised the extension has resulted in a 50% cancellation of export orders reports. The Federation of Indian Export Organizations (FIEO) made a request to the government for a minimum labor force to be allowed to complete orders that were under production prior to the lockdown. States that have high infection rates such as Magdashar will not be included and any decision will be made after careful consideration from the India government.