Market Conditions – As Golden Week is upon us shippers in China frantically push freight out of their manufacturing warehouses before October 1st. Severe congestion at terminals at the major hubs such as Shanghai and Yantian are being reported with que lines between 4 and 5 miles long. We would only expect some shippers to miss vessel cut off’s resulting in shipment delays being reported over the next couple days. Market wide booking activity still remains strong before the holiday with expectations for volumes to bounce back fairly quickly after the holiday. As e-commerce sales remain off the charts, a strong outdoor furniture shipping season set to begin, coupled with a new surge in PPE shipments it’s becoming more likely to see Transpacific imports remain strong in the 4th quarter.
Market Rates – The good news is ocean carriers have already announced the extension of current market rates through October 14th which ends the run of 9 consecutive GRI’s on the Transpacific dating back to July 1st. The bad news is rate levels still remain at historical levels with the majority of carriers holding onto current levels. As many shippers and ocean carrier offices in China close for the Golden Week Holiday, we expect little to no rate movement through October 14th. Expectations for imports to bounce back after the holiday should limit any significant erosion on market rates through the remainder of October.
Golden Week Blank Sailings – Since the Ministry of Transportation of China requested ocean carriers calling China ports to reinstate blank sailings to stabilize capacity that has caused the soaring freight rates, many carriers have revised their initial blank sailing plans. Cosco, OOCL & Evergeen reinstated 6 services that originally were going to blank and 2M has limited blanks to only a couple of services in week 41 and 42. A total of 13 blanks representing approximately 120,000TEU are scheduled with THE Alliance having services blanked, OCEAN with 3 services and 2M with 3 services. The reductions in blank sailings should help with stabilizing empty availability after the holiday and also temper the potential for another rate increase as capacity remains in the market in addition to extra loaders late in the month.
US Port Congestion Quickly Escalates – As forecasted the continuous influx of ultra large container vessels arriving at US ports coupled with additional vessels added by ocean carriers due to strong demand is quickly overwhelming US ports. The first choke point as usual is Southern California since the highest percentage of US imports arrive at the port complexes in Los Angeles and Long Beach, CA. Dray carriers are reporting a lack of chassis, terminal appointment and congestion at the ports which are resulting in congestion surcharges, surge charges or simply rejection of delivery orders. Please look for our separate market letter addressing the escalating situation, stay tuned….