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December 27, 2016             

Transpacific Eastbound Market Update

 

To Our Valued Customers: 

Market Conditions – What’s Happening with Capacity and Demand?   Transpacific eastbound space conditions remain very tight as we quickly approach the Lunar New Year holiday on January 28, 2017.  Space has been most challenged on East Coast all water services since early December as anticipated, and as we enter January, space to the U.S. West Coast is also quite full.  Forecasts for Week 3 and Week 4 are extremely strong on all services.  

General Rate Increases:  A clear side effect of tight space conditions is an increasing spot market.  Carriers have achieved this largely by restricting capacity and by imposing smaller GRIs throughout the fall.  The loss of Hanjin Shipping to bankruptcy has also had an impact. We anticipate another GRI for January 1, 2017 in the range of $600-$1000 per 40’ as carriers try to push the spot market up prior to CNY and the traditional eastbound contract season that gets underway in March.  

Blank Sailings:  Carriers have announced a series of blank sailings starting in Week 5 and extending through Week 8 as demand for space and equipment in China will dramatically drop for the 3-4 weeks following the Lunar New Year holiday as factories slowly come back to life.  It is too early to predict how this will impact space and equipment for the months of February and March.  

Carrier Alliances:  Carrier alliances are largely set for the spring of 2017 as follows:

                      THE Alliance:        Yangming, KLine, NYK, MOL, Hapag Lloyd (UASC)

                      Ocean Alliance:    COSCO Shipping, OOCL, CMA (APL), Evergreen

                      2M:                       Maersk, MSC

                      Non-aligned:         Zim, Hyundai*, Wanhai, PIL, Korea Line

What remains to be determined is the exact transit times, terminal selection, and some rotation specifics, all of which we anticipate will be finalized and shared later in January.  Hyundai remains in a precarious position as a slot charter partner within the 2M Alliance to the US East Coast (and 2M members will take over the charter on those ships), and will be forced to run independent services to the US West Coast starting in March once they leave the G6 Alliance (one service to PSW, another to PNW).  Korea Line anticipates starting a US West Coast service from Asia in March.  The three Japanese carriers (KLine, NYK, MOL), have announced that they will merge container services in 2018 to create a new, single Japanese carrier.

Our #1 priority as always is to help maintain our customers’ competitiveness, to keep your cargo flowing as quickly and as consistently as possible, and to continue to communicate effectively along the way.  Our nimbleness, market awareness, and “Built Different” philosophy enable us to do this - as your partner.  

Thank you very much for all your support. 

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