Short-term ocean freight rates on Transpacific Eastbound lanes have settled somewhat in recent weeks. Import volume remains soft, and the outlook for the coming months is weak overall. US importers are still working through high levels of inventory, so the usual surge ahead of Asian Lunar New Year holidays has not materialized. Carriers have blanked a significant number of sailings and canceled some services entirely to reduce capacity from Asia to US ports. There are signs that this capacity discipline is working toward the goal of rate stabilization; some carriers have been rolling cargo and declining new bookings placed on the lowest market spot rates, especially on services to US West Coast ports.
China has eased COVID restrictions in recent weeks, a positive step toward a new normalcy for the global manufacturing hub. Concerns remain, however, as China works to reopen and potential COVID surges loom. Factory closings for the Lunar New Year holiday are expected to begin early and run later than usual this year due to COVID travel concerns and slower demand. Uncertainty is driving more importers to consider alternative sourcing locations, seeking a greater measure of supply chain stability.
Transatlantic Westbound lanes are still relatively stable, though there are signs of slight weakening. Carriers have repositioned some extra capacity from slower trades to Europe-US lanes, and moderate reductions to spot rates have followed. North Europe ports have experienced a number of labor slowdowns that caused congestion across the region this year; the latest slowdown, this week in Rotterdam, is expected to result in more disruption. Capacity out of Europe is very tight heading into the holidays, with inland and ocean services booked up in advance.
In the US, port congestion has eased considerably; Savannah and Houston ports are the only two major gateways with significant vessel waiting times. On the US West Coast, ports have lost volumes to East Coast gateways as labor contract negotiations remain stalled.
With inventories still high, US warehouse capacity remains very tight. Truck capacity has eased in most markets, though chassis shortages remain a challenge across the country.
Heading into 2023, the outlook for supply chain reliability is more positive than it has been at any other point since the start of the COVID pandemic. With weak demand in the short-term, however, carriers will continue to look for ways to streamline services, especially with new vessel capacity coming online in the new year. Continued blank sailings and service cancellations should be expected as long as volumes remain lower. Advance forecasting and booking is still as critical as ever.
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Rachel Shames
VP, Pricing & Procurement
CV International, Inc.
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Rachel serves as Vice President, Pricing and Procurement for CVI. Her responsibilities include vendor selection, contract management and negotiation, transportation pricing, FMC compliance, and international agent network management.
Rachel began her career in international shipping with CMA-CGM America. She joined CVI in 2011, gaining experience in various departments with a focus on inside sales and marketing for the company. In 2014, Rachel assumed the role of Manager, Transportation, working on service procurement and development of client proposals. She has served in her current position since 2018.
A native of Norfolk, Virginia, Rachel earned her bachelor’s degree from the University of Michigan in 2005. She holds a Master of Business Administration with a concentration in Maritime and Supply Chain Management from Old Dominion University.
– Rachel Shames, Director, Pricing & Procurement, CVI
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