Capacity Issues Continue

Over the last several weeks, conditions on the Transpacific trade lane have greatly deteriorated. Vessel space has continued to tighten for cargo moving from Asian (primarily Chinese) points of origin to West Coast, East Coast and Gulf Coast ports. Below are the highlights. 

Contributing Factors

The market is in a critical capacity crunch due to factors such as:

• The carrier alliances are implementing capacity reductions of more than 22,000 TEU per week amid the standard peak shipping season
• Proposed and implemented tariffs
• Increased volumes year-over-year

Impact on Rates and Space

Spot rates have reached record highs that will likely continue to increase in mid-August and into September. The combination of these factors will likely impact space through Golden Week (Chinese Holiday which occurs in October) and could spill into November.

Peak Season Surcharges are not creating additional space on the vessels. Therefore, space allocation has been significantly restricted or eliminated making it difficult to secure space on vessels. From the largest to the smaller shippers, these turbulent market conditions require shippers to pay elevated pricing.

Tips to Mitigate Space Constraints

1. Shipping as early as possible and providing forecasts are critical to avoiding delays
2. Importers are encouraged to place bookings as early as possible, with at least three weeks of lead time encouraged
3. Consider air freight options for urgent shipments

Additional Information

These service interruptions are impacting the market during the traditional peak season when space is normally tight, but the market typically does not retract space during this period. These capacity withdrawals have triggered a sharp increase in the spot market. 

Due to this, please note the previously announced increases that are scheduled to become effective on August 15, 2018 and September 1, 2018.

• Peak Season Surcharges (PSS): Vessel utilization is very high, especially to the USWC and is not expected to weaken for several weeks. Please note that as provided in previous updates the PSS has been announced at the following levels: $540/20, $600/40’ & HQ and $760/45’ on 8/15/18
• General Rate Increase (GRI): August 15, 2018 announced increase of $900/20’, $1000/40’ & HQ and $1265/45’
• General Rate Increase (GRI): September 1, 2018 announced increase of $900/20’, $1000/40’ & HQ and $1265/45’

Ascent Global Logistics will provide space and pricing updates as available. 

For the most up-to-date information, please contact our International Freight Forwarding team or contact your local Ascent Global Logistics representative directly. Your account manager will be able to assist with planning and prioritization of shipments.

Best Regards,
Bruce Chilton
Vice President of Trade Management
Ascent Global Logistics International Freight Forwarding
2424 W Kingsley St STE C, Springfield MO 65807
PH: 417-823-9800  FX: 417-773-1417
www.ascentgl.com