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Transpacific

Services from Asia to the US are still extremely overbooked. Carriers have successfully maintained rates
over the last few months by cutting capacity, and the result is a severe imbalance in supply and demand.
We see where rollovers are occurring frequently on services to both the USWC and USEC. Carriers are
reinstating some sailings, but the tight space situation will likely continue through at least July. Spot
rates are holding steady, even ticking up slightly over the last week. Some carriers are asking for
premium surcharges to guarantee space on short notice – essentially early peak season charges in
exchange for priority loading on overbooked vessels.

It’s unclear whether this strong demand will continue into the next quarter; it may be a temporary
increase to replenish inventory, or it may be a sign of gradual improvement as world economies start to
reopen from pandemic shutdowns. The Alliances announced aggressive blank sailings for Q3 – 75+
sailings so far, a sign that they are not overly optimistic about the outlook. Carriers are still seeing
volumes at significantly lower levels than the same time last year. They are, however, planning the first
official first peak season surcharges for July. What is clear is that carriers will keep capacity tight to
maintain higher rates.

Early booking and forecasting are critical – forecasts at 6-8 weeks out and bookings at 3-4 weeks prior
to cargo ready date are highly recommended. We urge you to proactively communicate any specific
space needs to your dedicated CVI customer service or sales representative.

We are seeing new “speed” ocean services being launched, with 12-day transit from Yantian/Da Chan
Bay to LA. With quick rail connections to major IPI points, you may find this service attractive. Just
know that it is priced at a steep premium! Again, please reach out to your dedicated CVI customer
service or sales representative for more information.

Air freight space remains tight. Rates continue to fall, although not at the pace at which they rose.
Passenger freighters added capacity to the trade, but most of it was directed toward personal protective
equipment (PPE). There are uncertainties in the market. The likelihood of freighters needing
maintenance is less of a concern as more (limited) passenger service comes online, but the concerns
about the unknown scale of passenger demand and the impact and size of consumer demand as
economies start to reopen, remains.

Transatlantic

Capacity remains tight in and out of Europe. Blank sailings are causing major space issues in both
directions. Scarce equipment in Europe is also still a challenge. Air freight space remains tight as well,
though the gradual increase of global capacity will improve the situation. Early booking and forecasting
are critical so we can plan appropriately for allocation and scheduling requirements. Again, we urge
you to proactively communicate any specific space needs to your dedicated CVI customer service or
sales representative.

Domestic

We are watching developments in the US closely. Unrest in some major US cities may impact inland
moves to/from these areas. (Minneapolis and Long Beach are two examples).
Tight equipment supply and blank sailings on transpacific and transatlantic trades are causing US export
rates to creep upward. We are seeing overbooked vessels on nearly every lane. Early booking is crucial.
Air freight rates out of the US are fluid and on spot basis only. Schedules and capacity are changing
frequently.

Global

With many countries loosening pandemic-fueled restrictions, ease of shipping is improving slowly. We
are monitoring the situation in regions where the virus is still on the rise (Latin America, for example).
We expect to see impacts from the recent global disruption for the remainder of the year, and possibly
into next year.

 

Rachel Shames

Director, Pricing and Procurement

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