To Our Valued Customers:
Part of why Laufer is “Built Different” is knowing what situations in the logistics and supply chain business will affect your bottom line. Below is a quick review of some recent market updates on the Transpacific Eastbound Market. At Laufer Group International, we’re here to help you navigate any issues you encounter and find solutions that provide the least impact to your business. Contact your Laufer sales representative for any inquiries or assistance.
Market Conditions - Transpacific import volumes remain soft with December looking to be the earliest time frame for a rebound in demand. Chinese New Year falls on January 25th coupled with a looming IMO 2020 mandate on low sulfur fuel should translate into a stronger December in terms of volumes. An abundance of blank sailings over the last few weeks hasn’t translated into capacity shortages that are noteworthy. India market was experiencing capacity shortages throughout the month of September & October however the situation has drastically improved since November 1st.
The increase in sourcing diversification into South Asia, Sub-Con and India will continue and if the market capacity does tighten up before Chinese New Year it’s quite possible origins such as Thailand, Indonesia, Malaysia & Vietnam to an extent that rely on transshipment points can see temporary capacity constraints leading up to the holiday.
Market Rates -Market rates increased on November 1st after a few unsuccessful attempts during this past peak season. We anticipate market rates to slowly deteriorate through the remainder of November with a November 15th market increase being highly unlikely. December 1st is a different ballgame as the ocean carrier’s factor in the operational expenditure of the low sulfur fuel mandate effective on January 1st, 2020. Ocean carriers already have already announced increases to the market which varies by trade, additional information provided below under IMO 2020.
Blank Sailings - The announced blank sailings during the 2nd half of November & early December are primarily into the PNW with any potential scheduling issues concentrated in this sub-trade. The potential for additional blank sailing’s exists as ocean carriers prepare for IMO 2020 by retrofitting vessels with emission scrubbers to become compliant with the global IMO requirement.
IMO 2020 – As briefly discussed above ocean carriers have been steadily announcing low sulfur surcharges or newly configured monthly BAF formulas that incorporate the low sulfur fuel component effective on December 1st for all contracts with a validity of 3 months or shorter. For shippers with long term fixed contracts or rate agreements the increase, the implementation process varies by carrier. Many shippers will not feel the impact on cost until January 1st as the quarterly adjusted BAF becomes applicable.
The December 1st low sulfur fuel surcharges announced in the market vary by ocean carrier with an average-cost approximately $200/40’ for West Coast discharging vessels & $350/40’ to the East Coast & Gulf ports. Market rates that go into effect on December 1st will have the low sulfur fuel component in addition to any general market rate increase to determine the “all-inclusive” rate at such time, stay tuned…
The administration will most likely not set another effective date unless talks stagnate and between both countries.