Transpacific Eastbound Market Update 09/11/20
To Our Valued Customers:
Market Conditions – Peak season volume surge continues with vessels on the majority of Transpacific Eastbound voyages sailing at capacity. Calendar weeks 38-40 are typically the strongest shipping weeks of the year and 2020 will not disappoint. Ocean carriers have added additional capacity via extra loaders to provide capacity relief before China National Holiday on October 1st. The additional capacity however will not help relieve soaring freight costs as ocean carriers push through another GRI (general rate increase) on September 15th.
Market Rates – The historic market rate levels continue with another GRI of $500-$600 per 40’ going into effect next week. The GRI would add an additional 13%-15% over September 1st market rates and will be the 8th consecutive increase pushed through in the market since June 1st. West Coast market rates have increased over 130% in comparison versus September 1st 2019. The streak of rate increases by ocean carriers will be in jeopardy on October 1st as the National Holiday places a temporary reprieve on China imports however will volumes be strong enough that rates can climb higher? I’m hedging were at the high watermark for the year however market rates will remain extremely high with volatility through the remainder of the year is looking likely.
Additional September Capacity – Ocean carriers have announced 12 extra-loaders to help satisfy the continued strong demand. The majority of the vessels will be deployed on the China to LAX/LGB subtrade as speed to market remains the driving force in the short-term. The departure days from China ports coincide with the last big push of cargo to the ports before China National Holiday. The holiday break in China should help clear backlogs and replenish much needed empty equipment.
Equipment Shortage Update – India and South Asia origins are reporting the majority of equipment shortages with short-term relief unlikely as ocean carriers move empty equipment to China as first priority. Taiwan has also started reporting EQ shortages with new bookings only being accepted for early October departures. China ports such as Yantian and Ningbo are short on 40’HC with the situation not expected to improve until the end of September.
Port & Rail Terminal Congestion – As vessels arrive into US ports at capacity over the next several weeks, we can only expect bottlenecks to become increasingly likely. The usual headache causing verbiage will be heard such terminal congestion, chassis shortages, truck power issues, lack of appointments however at this time it’s unsure on the severity. Stay tuned…