To Our Valued Customers:

 

Market Conditions Inventory replenishment and continued strong imports of PPE related products continue to drive demand into August. Volume forecasts for the traditional peak season months of August through October seem fairly robust which has triggered the announcement of several extra loader vessels in the month of August, (see below extra loader details) primarily to Pacific Southwest ports. The high vessel utilization on vessels that sailed in June and early July are now being realized with an increase in rail dwell days on West Coast ports as volumes increased significantly versus May & June levels. August will see a drastic reduction of blank sailings in comparison to what the industry has experienced since April which should translate to fewer rolled shipments on the Asia to North America trade lanes.

 

Market Rates – Ocean carriers are implementing another round of rate increases on August 1st that are poised to push rates higher by $400 to $600 per 40depending on sub-trade. Carriers are taking advantage of good utilization levels on vessels due to aggressive capacity management on the Transpacific trade. Does the August GRI stick? It will depend on demand as always however with few blank sailings and a barrage of extra loaders to the West Coast its highly in question. Regardless how long the August rate increase lasts market rates are well above average and are expected to remain such for the foreseeable future.

 

Ocean carriers strictly manage fixed rate allocations Shippers are experiencing a decrease in fixed rate allocations which is expected to continue through peak season. The main driver is the significant gap between market rates and fixed rates which will increase again if the August 1st general rate increase stick in the market. The majority of the market accepted peak season surcharges that helped close the gap to maintain fixed space allocations however the peak season surcharges were not nearly enough to secure increases in allocations from ocean carriers. We dont see anything in the market through at least August to indicate fixed rate capacity will improve. Stay tuned...

 

South Asia Capacity As supply chains continue to diversify sourcing options South Asia have been beneficiaries over the last couple of years. Ocean carriers followed the shift by increasing capacity and direct port calls however cargo rolls increased from South Asia on non-direct port call origins in June and early July when blank sailings drastically reduced capacity. Cargo sailing from Indonesia, Thailand and Malaysia had a greater likelihood of seeing a week delay if containers were transshipped over another port outside of the country and reason direct calling port capacity remains difficult to secure.

 

Extra Loader Vessels in August Carriers have announced several additional sailings through the month of August with approximately 60% of the extra loaders by THE Alliance & Ocean Alliance scheduled to call the Pacific Southwest ports of Long Beach/Los Angeles. The total additional sailings by both alliances stand around 25 which will add a significant amount of capacity to meet market demand. The additional capacity in some cases replaces some blank sailings so the actual increase in capacity is elusive due to vessel capacity size variances and specific origin port calls. Regardless, extra loaders should help limit rollover experienced in June and July which is a welcome market relief.

 

 

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