Transpacific Eastbound Market Update
September 7, 2018
To Our Valued Customers:
Market Conditions - Market capacity remains very tight, especially for West Coast ports of entry. The reduction in market capacity that started back on August 1st coupled with traditional holiday cargo rush has pushed short-term market rates to the highest levels since 2014. The potential October tariff increase on $200 Billion of additional products, including consumer goods is also contributing to the recent cargo rush as shippers try and clear goods prior to the potential 25% tariff increase.
Timeline on List 3 Tariff ($200 Billion)- After two days of talks on August 22nd and 23rd no meaningful progress was announced other than a statement from the Chinese government that talks were “constructive and frank”. President Trump is expected to meet with President Xi during the November Asia-Pacific Economic Cooperation Forum however it’s unlikely the planned summit will cause a postponement of the list 3 tariff from becoming effective sometime in October. Below is the most updated timeline on the list 3 tariff;
Shanghai Delays – Two typhoons that hit Shanghai in late July and early August have caused substantial vessel delays. Additionally, inland flooding has resulted in high levels of sediment from the Huangpu river within the harbor, resulting in vessel draft restrictions. This forces ocean carriers to load less freight (by weight) to offset the lower water draft conditions. Port congestion also continues and many vessels are experiencing multi day delays. We expect improvement by early October.
West Coast and Canada rail congestion - West Coast dwell times at US & Canadian ports for inland rail departures have steadily been increasing since early August with delays now varying from as little as 2 days to as much as 7 days. Chicago is also experiencing switching delays to Eastern railroads with additional dwell times before departing to the Ohio Valley and other East Coast locations. With vessels arriving at capacity thru the middle of October it’s unlikely the situation will improve in the short term.
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