Transpacific Eastbound Market Update
June 27, 2018
To Our Valued Customers:
Market Conditions – Space conditions today are relatively tight, which is surprising as June traditionally is a slow month for Asia exports to the United States; it’s that time between back-to-school/Halloween and Christmas holiday season. Container volumes are forecasted to remain strong going into the third and fourth quarter of 2018, although there is some uncertainty of how current and potential tariffs will impact volumes.
Maersk/MSC Cancel PNW Service: 2M carriers Maersk and MSC have decided to cancel one of their current PNW services, the TP-1/Eagle Service calling Kaohsiung, Yantian, Xiamen, Shanghai, Busan, Vancouver, and Seattle. Siting market conditions as the reason, this reduction in capacity is already having an impact on other PNW services provided by competing carriers as the 2M cargo now has to flow on those services. We would expect space to get even tighter with the removal of this service.
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’.
General Rate Increase – In anticipation of stronger volumes in July, and the removal of 2M’s PNW service,carriers have announced a General Rate Increase (GRI) on both July 1, 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 gradually increase through the summer until after National Day holiday in China October 1, 2018.
Peak Season Surcharge (PSS): Carriers have filed a Peak Season Surcharge effective July 1, 2018 of $540/20’, $600/40’, $675/HQ, and $760/45’.
ONE and Challenges: With the merger of NYK, Mitsui OSK, and Kline into one company called ONE (Ocean Network Express) completed in April, 2018, there are still concerns that ongoing service challenges that the market is experiencing with ONE will continue through the summer and fall. ONE is an important component of Laufer’s portfolio and will continue to be in the future, but we are watching their performance carefully to determine where to best utilize their services and access their capacity.
What you can do: Forecasts! There is still a high degree of uncertainty in the market 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!