Market Trends

Transpacific surge of shipping volumes to US has dissipated from China and the greater Far East ports to the US/Canada West Coast ports as the chance to arrive before the expected July 8 US tariff increases are in place. Of course, deadlines can be extended again, or tentative agreements may be made in the next two weeks. Odds seem to be that some exporting countries will be hit with the new US tariffs. China deadline is August 12 when the current temporary agreement is set to expire, if not extended again or fully agreed to.

Global capacity overall looks strong. This was demonstrated by the quick reaction by carriers to the surge from China and the Far East to US markets in May and June. MSC was particularly quick with extra loaders being independent of alliance entanglements. Smaller Intra-Asia carriers also jumped in the Transpac to benefit from the high rates.



 

Big Port Congestion

Major North European ports are still impacted by volumes and congestion on their import caused by high import volume.

Still some impacted ports in Asia: Colombo, Singapore and Vietnam Saigon/HCM terminals.

Expected congestion and delays to worsen for US/Can West Coast ports as China/Asia surge shipments are arriving now and the next few weeks.

 

 

Far East Westbound (FEWB) – Asia to Europe & Mediterranean

Supply & Demand:
Demand remains good and capacity also is steady.

Key Rates:

  • Spot rates have increased since the start of June and continue to climb higher:
    • Far East/ China to No. Europe ports + 10-15% and expect further increasing into July. To the Med, smaller increase since June 1 of about 5%. And steady into July.
    • South India/Sri Lanka to No. Europe ports + 4-5% since June 1 and expected another 5% or so into July. To the Med, same increase since start of June but expectations into July are for larger increases with GRI of +10% higher spots.

Transit & Reliability:

  • Red Sea/Suez continues as a high-risk situation. Carriers are reluctant to move back through the Suez but a very large CMA-CGM vessel did transit the canal recently. This may be the start of a slow change over back to the Suez instead of the “around Africa” route.
  • A return of the Suez route will have a major positive impact on global ocean capacity adding up to 10%.
  • Suez route cuts about 12-18 days off of the transit from Asia for Europe, Med & N.Africa destinations as well as reducing transits back to Asia.
  • Ports in North Europe still have impacts on congestion & delays.

 

Asia to U.S. / North America – Transpacific Eastbound (TPEB)

Supply & Demand: After the big surge in volumes and the lack of available capacity from China and other Far East ports, the situation should soften.

·        " The carriers’ loading factors are good overall at 80-90%. Note that some carriers are pushing clients for more support on their contracts. And we are seeing different carriers offer additional allocations on certain sailings. “ Expert quoted.

·    “Some carriers are pushing clients for more support on their contracts. And we are seeing different carriers offer additional allocations on certain sailings. “ Expert quoted.

·        Restart of the Suez Canal, while not as dramatic an impact as is with Europe, does speed up transit and capacity to the Americas East Coasts.

Key Rates:  

Asia to US-Canada West Coast

·        From the China/ Far East, spot rates have fallen 40-50% just over the last couple of weeks since they peaked. More softening is expected with up to a 15% further reduction in July. GRIs are planned but are at risk of not being supported.

·        From Southeast Asia to US-Canada West Coast this trade usually follows the Far East/China rate  levels within $50-100 or so but more and more are becoming a larger block of volume and a stand-alone sub-market. Since the start of June, rates are down almost 40%. Expectations are that they will decline another 5-10% by early July.

·        From South Asia, India/Sri Lanka areas, rates are lower by 12-15% from June 1st. Expecting slight decline further in July.

Asia to US-Canada East Coast

·        From China/Far East, spot rates have decreased slightly by 5-8% in June. Expect further lowering in July by about 5% more.

·        From Southeast Asia, decrease since June 1 has been about 8% and in July expect further decreasing slightly.

·        From India Subcontinent and Sri Lanka, has increased 6-10% from June 1 and should increase another few percent in July.

 

 

COMMENT:  Rates and Control over supply are more under the control over the major carriers than every before. With the top 4 in commanding control having about two thirds of total container capacity globally and the top 10 at 80% + control, they control capacity better than ever.

 

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