Market Conditions – May is certainly living up to expectations with only limited capacity available on all sub-trades. Space to the East Coast, Gulf and Pacific Northwest is proving the most difficult to secure. Premium costs have been skyrocketing and additional rate hikes are expected on May 15th. Many shippers are being forced to leave freight at their manufacture’s warehouses in Asia due to the lack of capacity.
Most ocean carriers are reporting that capacity through mid-June is already approaching maximum levels due to the latest additional blank sailings announced in the market. The Transpacific import market will continue to face ongoing capacity challenges until terminal berthing delays ease, allowing additional weekly capacity to return on the Transpacific.
Market Rates – After most ocean carriers substantially increased market rates on May 1st, another GRI is expected on the 15th with an average cost hike between $200-$400 per 40’. Ocean carriers are also significantly increasing their rates for premium services, for instance MSC’s Diamond service is expected to spike by approximately $2,500 per 40’ due to the high demand through the remainder of May. We expect premium rates for the 2nd half of May to increase an average of $2k-$2.5k depending on sub-trade and ocean carrier. The market was anticipating May rate levels to hit all-time records and we would not be surprised to see even higher market rates in June as demand remains extremely strong.
Port Congestion – As of Tuesday, May 14th, 20 container vessels await anchor off Southern California and 10 vessels in Oakland, CA. That is the equivalent of 5-6 weekly service strings to the West Coast! Our last market reflected a similar number of vessels at anchor, not an encouraging sign if we are looking for a light at the end of the tunnel for the most utilized sub-trade into North America.
East Coast terminal congestion remains in the South-Atlantic. Savannah is averaging 6 container vessels at anchor however the dwell times are much less than seen in Southern California. The average dwell is only a few days in comparison to West Coast where vessels average a week or more at anchor.
June Blank Sailings – We expect to see the ocean carrier alliances to announce more blank sailings for the month of June as the congestion in California has not improved from its current status quo. THE alliance was the first to announce four blank sailings that were scheduled in June out of Yantian in Southern China. Three of the services are on the PSW sub-trade and one into the PNW. Expectations are for OCEAN and 2M alliances to both announce June cancellations in the short-term. A quick check on vesselfinder.com clearly indicates additional blank sailings are unavoidable.
For over 70 years, Laufer Group International Ltd. has been helping customers improve the way they handle their logistics. To see how we can help, or for any questions, contact Brian Martorano, National Director of Business Development, Ocean Import or contact your local sales representative.