The Transpacific Eastbound market has softened over the last couple of weeks due to weak demand and a slowdown in blank sailings. Carriers have not announced many blank sailings for December, though that could change. Looking ahead to January, carriers are hoping for a rush before the Lunar New Year holiday, which begins February 10, and in advance of contract discussions. Capacity will need to be tightened significantly for carriers to achieve healthier long-term contract rates during spring negotiations.
Low-water restrictions continue at the Panama Canal. Daily transits will be reduced further in the coming months, and carriers will continue to limit cargo weight of containers transiting the canal. Currently, most containerships are not experiencing significant delays. Many carriers have announced Panama Canal Surcharges effective January 1, 2024, which will apply to all cargo transiting the canal. Current amounts are in the range of $260-300 per FEU. If the market does not improve, it will be difficult for carriers to implement this surcharge due to spot market pressure.
Ocean carriers are beginning to divert services to avoid the Panama Canal, some shifting to sail via the Suez Canal and some via the Cape of Good Hope. THE Alliance announced that some sailings from Asia to the US on the EC1, EC2, and EC6 services will shift to avoid the Panama Canal, and ZIM announced that the ZXB service will do the same. Other carriers are likely to follow suit. However, there are risks to vessels using the Suez Canal route as well, as attacks by Iran-backed Houthi forces in Yemen continue to target commercial ships in the Red Sea.
Demand and rates remain low on the Transatlantic Westbound trade. New sustainability requirements from the EU, a phased plan known as the Emissions Trading System (ETS), will result in an additional surcharge from carriers on lanes to/from Europe. Current estimates for this new surcharge are around $60 per FEU, effective January 1, 2024.
US exports are relatively stable, though weak import volume is causing equipment availability issues at some inland points.
Longer term, negotiations for the master contract covering US East Coast and Gulf Coast port labor will begin in 2024, ahead of the September expiration date. Though EC/GC labor discussions are typically less contentious than those on the West Coast, there are indications that this year’s may be more challenging.
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!
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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