Transpacific Eastbound Market

To Our Valued Customers: 

Market Conditions – The results of the 1/1/19 tariff scare on an additional $200M of import products from China resulted in a cargo since August and has been wreaking havoc on supply chains in the major gateways in North America ever since.  A perfect storm with vessels arriving at capacity compounded by extra loaders during a time period when many are taking time off for the holidays.           

Terminal congestion has created lengthy dwell times with certain markets fairing worse than others.  Currently the West Coast gateways have been bearing the brunt of the delays as long driver wait times are causing missed appointments, demurrage and accessorial surcharges being passed on by the dray carriers to recover costs.  Rail departure dwells also increased and in some cases 10 days from discharge to rail departure is common place.    

East Coast terminal impacts are more isolated with terminals such as Miami becoming a flash point over the last several weeks.  Dray carriers are experiencing long dwells to pick up containers with some reporting up to 5 hours wait times causing shipments to be left at the piers with demurrage accrual.  Many shippers reporting dray carriers rejecting new deliver orders for the short term leaving many scrambling to find capacity. 

Expectations is the for situation to gradually improve over the next few weeks as the backlog is cleared and vessels start arriving at more seasonal levels.  Time is of the essence as expectations are for a short however busy pre-CNY cargo rush with bookings for late January and early February already being reported as very strong.  We encourage all shippers to make your bookings well in advance and keep your gateway options open for any urgent shipments that must load out before the holiday.     

Market rates -    Ocean carriers were somewhat successful on increasing rate on January 1st however we anticipate a much higher spike in ocean freight rates effective January 15th as ocean carriers take advantage of high utilization levels before Chinese New Year.  Many factors will contribute on where post CNY rate levels settle as the long term fixed rate negotiations begin in earnest & ocean carriers focused on revenue recovery in 2019.  A low spot rate market would not help with negotiations and one can only anticipate ocean carriers to align supply with demand to stabilize the rate market through the spring.

Post Chinese New Year Blank Sailings -   A tremendous amount of blank sailings where announced to the market during the China holiday with 40 sailings being scratched removing over 321,000TEU of capacity during week 6, 7 & 8.  Ocean Alliance represents nearly 50% of the blank sailing with approximately 150,000TEU being removed in early February.  THE Alliance removing approximately 91,721TEU of capacity and 2M Alliance with approximately 75,000TEU being withdrawn.  A few independents make up the additional capacity being removed during this time period.    

 

Laufer Group International

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