Transpacific Eastbound Market Update
July 17, 2018
To Our Valued Customers:
Capacity Reductions in the Peak Season? Unfortunately, yes. All three major alliances have announced the removal of services in July and August that will significantly reduce available capacity to the US West Coast effective immediately. Even with capacity utilization relatively high and with strong peak forecasts from retailers and importers, all major carrier alliances will adjust their rotations immediately to remove some available capacity. The details are as follows:
2M (Maersk, MSC): July cancelation of TP-1/Eagle Service
Rotation: Kaohsiung, Yantian, Xiamen, Shanghai, Busan, Vancouver, Seattle
THE Alliance (ONE, HPL, YML): July/August cancelation of PS8 Service
Rotation: Xingang, Qingdao, Shanghai, Busan, Prince Rupert, Los Angeles, and Tacoma
OCEAN (COSCO, APL, OOCL, CMA, EMC): August Cancelation of AAC Service
Rotation: Lianyungang, Shanghai, Ningbo, Los Angeles, Seattle
Peak Season Surcharge: Due to the strength in booking forecasts and vessel utilization quite strong in the TPEB trade, we expect a PSS to be applied quickly as the above capacity reductions take effect. Carriers have all filed an applicable Peak Season Surcharge to be applied as quickly as July 15, 2018, by as much as $540/20’, $600/40’, $675/HQ, and $760/45’.
Emergency Bunker Surcharge - Soaring bunker costs with oil approaching $80 a barrel will impact 3rd quarter BAF prices on long term fixed rate contracts and impact market rates in the short term. Bunker fuel costs YTD have increased by approximately 30%. As a result, carriers have announced to the market a global Emergency Bunker Surcharge effective July 1, 2018 to offset these sudden and higher costs. The EBS has been filed at $60/20’, $120/40’, $120/HQ, and $120/45’. Some carriers postponed this EBF for thirty days but we expect all carriers to implement this for August 1, 2018.
General Rate Increases – In anticipation of stronger volumes from July through October, carriers have announced a General Rate Increase (GRI) on both July 15, 2018 and August 1, 2018 of $900/20’, $1000/40’, $1125/HQ, and $1267/45’) respectively. While we expect much of these GRI amounts to be mitigated or even postponed, we do expect that rate levels in the spot market will now significantly increase through the summer until after National Day holiday in China October 1, 2018.
What you can do: Forecasts! There is still a high degree of uncertainty in the market (tariffs, space, capacity, demand) so it is difficult to predict space conditions through the balance of the year. We at Laufer realize how important it is for all of our customers to have a consistent and predictable flow of space and equipment so you can satisfy your customer needs and requirements. That has always been and remains our priority. We do expect a strong peak season in 2018 so are preparing as such. One thing we request from all of our customers is for future forecasts, especially for larger, seasonal flows of product. Early forecasts allow us to better prepare and communicate will all partners in the supply chain, and to support your business needs.
Should you need any additional information or assistance, please feel free to contact your Laufer sales or customer support personnel. Thank you very much for all your support!