Skip to main content

The Transpacific Eastbound (TPEB) market is slower than it has been in years. The Journal of Commerce reports that US imports from Asia decreased 31% year-over-year in February, and are now at the lowest level since March 2020. The spot rate market reflects this slowdown; rates from Asia are now lower than they have been since the pre-pandemic years, and lower in most cases than ocean carrier breakeven rates.

The months between Lunar New Year and the usual summer surge are typically the slowest, the slack season. This current situation is more extreme, however, given the massive swing we’ve seen since the freight rate and volume heights of 2021 and early 2022. Importers are still working through high inventories and are hesitant to forecast when volumes may increase again. Economic uncertainty continues, and data on consumer spending remains mixed.

Annual ocean freight contracting is under way, but shippers are reluctant to sign for contract rates when the spot market is still declining, and significantly better deals can be found in the spot, at least in the short term. Many shippers are weighing how much volume to contract vs. how much volume to leave to the spot/floating market; some shippers, less optimistic about the economy and consumption this year, will decide to forgo contracts entirely this year in favor of floating rates. We’re likely to see reductions in contract rates in the coming weeks given the weak market.

Ocean carriers are still blanking sailings and canceling services to try to combat the rate decline. It’s easier for carriers to pull capacity than to add it back to the market, so there are concerns that any uptick in volume that materializes this year will send spot rates up quickly. With market rates as low as they are right now, any shift in volume is likely to result in a significant increase in spot rates and difficulty securing space.

On the Transatlantic Westbound trade, rates have been falling for the last few months, and are still adjusting; the weakening has been slower than the decline on the TPEB trade. There are major equipment availability issues across Europe, however, since Asia-Europe volumes are also down.

US Exports remain relatively stable. Equipment availability is better overall than it was at the height of the pandemic, but there are still issues securing containers and chassis at some inland points. Congestion has cleared on the west coast as port labor contract negotiations approach the one-year mark; many shippers have shifted volumes from west coast to east and gulf coast gateways. Recent delays at LAX/LGB terminals have been attributed to labor slowdowns stemming from stalled negotiations. Where possible, we recommend avoiding US west coast gateways.

 

 

Industry News

To keep current on the latest market and industry news, please subscribe to our client alerts, or follow us on LinkedIn.

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.

 

Connect with us

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
Connect with Rachel

 

Need more info? Contact us!

Close Menu

Ready to Get Started?

Sign up for a CVI account or ask to see our services in action.

Get started »