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In light of the disruptions on services typically routed through the Suez and Panama Canals, ocean carriers are announcing rate increases for January 1 on lanes from between Asia and the US. From Asia, the expected rate increase is approximately $1000 per FEU in the spot market. Long-term contract rates will likely be subject to specific surcharges by carrier, such as Panama Canal Surcharge, Red Sea Surcharge, Peak Season Surcharge, Contingency Adjustment Surcharge, etc.

At this time, the major container carriers have announced plans to either pause vessels intended to transit the Suez Canal or re-route around the Cape of Good Hope. From Asia to the US East Coast, the additional transit time for vessels sailing around Africa is around 10-14 days, but may be longer depending on weather and port call changes.

Some services are still transiting the Panama Canal, which remains the fastest route from China to the US East and Gulf Coast ports. Despite reduced daily transits at the Panama Canal, containerships are moving through the Panama Canal with limited delays, although there are weight restrictions and limited service options for this route.

This week, the US announced a multi-national coalition, Operation Prosperity Guardian, with plans to deploy assets to the Red Sea region to help safeguard commercial ocean traffic. The timeline is unclear, but container carrier actions indicate they expect it will take at least a couple of weeks for the coalition to be in place. There is also uncertainty surrounding what specific steps the coalition will take to prevent attacks, and how effective the coalition will be. Container carriers are erring on the side of caution, and mostly avoiding the area.

Shippers across all trade lanes are likely to feel the impacts of the current disruption at the canals. Transit times will be impacted on inbound lanes from Asia, as well as exports from the US to Asia; longer lead times will be required across the board. Longer transits back to Asia from the US mean longer stretches between service rotations. Equipment imbalances may also develop as carriers try to streamline their schedules. Volumes via US and Canada West Coast ports are expected to grow, putting pressure on port and rail infrastructure and increasing the risk of vessel and rail congestion.

With effective capacity reduced due to longer transit times, and the Lunar New Year booking rush around the corner, early booking and advance planning will be critical. Place bookings at least 4 weeks early, and build in an extra 2-3 weeks of transit into lead times for US East and Gulf Coast services.

 

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Your CVI team is here to assist you through these current market challenges. Ocean freight, air freight, domestic road/rail, and Customs Compliance – count on our dedicated professionals to care for you and your supply chain. Call us and let us show you what we can do!

 

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, VP, Pricing & Procurement, CVI
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