To Our Valued Customers:

 

Market Conditions – The anticipated return of capacity in July is certainly welcomed by many as service reliability on the Transpacific was severely fractured from blank sailings fueled by volume uncertainty caused by COVID-19. The roller coaster of supply and demand will likely continue for the remainder of the year as importers will closely monitor sales projections versus inventory levels that resemble more of a “just in time” shipping model than traditional buying patterns. We expect market volumes to remain strong with adequate capacity deployment to satisfy demand in the short term.

 

Market Rates – Market rates have fallen back to June 15th levels to the West Coast and the majority of US inland point locations however these rate levels are still well above average. The gap between fixed-rate pricing and market rates is still significant even with the implementation of peak season surcharges and this is anticipated to continue through at least the remainder of July. Market rates will remain fairly flat or see slight downward pressure simply because the majority of the capacity is back in the market.

 

Peak Season Surcharges – Ocean carriers implemented peak surcharges as the gap between fixed rates established back in May were lower than July 1st markets by an astonishing 2-1 ratio to West Coast ports! The peak season surcharges through the market have wide variances depending on starting rate level however most ranged between $600 & $800 per 40’. The rate gap still remains significant between fixed and market pricing with market rates still averaging in the $2850-$2900 per 40’ to West Coast versus fixed rates with peak season surcharges averaging in the low $2000 range. Ocean carriers are strictly holding shippers to the minimum quantum container (MQC) established on the effective date of the agreement and we expect this to continue unless market rates come down significantly which is not anticipated in the short- term.

 

Inventory Replenishment Upgrade Import Forecast – Imports are down significantly year over year through June however May & June volume increased sharply as inventory replenishment is underway on anticipation of stronger demand as the US market opens back up after months of lock-down caused by the pandemic. It’s early if the mini-surge on imports will cool back down due to uncertainties of COVID-19 spikes in several states and an optimistically cautious approach is expected by many importers. Certain products that are seemingly “pandemic proof” are having a strong sales season and are likely to continue through the remainder of the year. Products such as backyard furniture, barbeques, sporting equipment, games & cookware are all hot commodities as the majority of the country continues to spend a lot of time at home.

 

Blank Sailings & Extra Loaders – OCEAN & 2M alliances have few blank sailings for the remainder of July into early August and THE Alliance has reinstated many of its originally announced blanks as stronger than anticipated demand was realized in the market. Many carriers have introduced extra loader vessels into the market with several departing Asia ports during week 30 and 31. The additional vessel capacity is mostly to Pacific Southwest ports and Pacific Northwest ports however alliances are also bringing back online East Coast services that have been on ice since March. Maersk Lines will start back up their TP11 East Coast service during the first week of August and THE Alliance will introduce their EC3 East Coast next week adding capacity into the South Atlantic ports from Ningbo, Shanghai & Busan.

 

BROWSE MORE ARTICLES

E-MAIL TO COLLEAGUE

NOTIFY ME WHEN NEW ARTICLES ARE POSTED

SOUND FAMILIAR? HAVE A SLIGHTLY DIFFERENT ISSUE? CONTACT US