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Transpacific

Rates increased again as of today, though slightly less than anticipated. We’re seeing rollovers and
booking delays out of most Asia origins. Vessels are booked up 3-4 weeks in advance; many services are
already completely booked through early August. Some carriers are securing premium surcharges for
priority loading, and some have announced peak season surcharges beginning in July. Extra loaders have
been utilized and some previously blanked sailings have been reinstated.

With surging COVID-19 cases in the US and some key high population states taking extra safety
precautions, we may be headed toward another volume decline. If consumers are less active in the
coming weeks, we’ll see importers cut orders and demand less ocean space. This scenario is far from
guaranteed, but we’ll continue to monitor as usual.

There is no doubt that carriers will take action by canceling more planned sailings if the market shows
signs of softening. Carriers took a more restrained approach with blank sailings for Q3, electing to blank
many early sailings and leave much of the schedule for August/September unchanged for now. Volumes
and forecasting over the next few weeks will determine whether additional Q3 sailings will be canceled.
There is a lot at stake for ocean carriers. Top container shipping analysts recently revised the outlook for
2020 carrier profitability. If they can maintain rates at these higher levels, the industry stands to achieve
an annual profit in the range of $9 billion. That scenario, a significant turn from the previous outlook
dampened by the pandemic, depends heavily on carriers’ discipline with rates. As we’ve learned over
the last few years, carriers will continue to manipulate capacity, so it reflects expected demand and
higher rates are maintained.

It is imperative that all transpacific eastbound shippers place bookings at least one month prior to cargo
ready date. For all business, contract/long term and floating/short term, advance booking is required.
We urge you to proactively communicate any specific space needs to your dedicated CVI customer
service or sales representative.

Air freight space out of Asia is stabilizing as demand for PPE slows and capacity increases. Rates out of
China are closer to normal levels at this time, varying by service/lane.

Transatlantic

The EU is reopening to visitors but not yet permitting travelers from the US. The result will be continued
tight air capacity as services remain severely limited. Ocean capacity remains tight in and out of Europe
as well. Blank sailings are causing significant space issues in both directions, and scarce equipment in
Europe continues to present a challenge. 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

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. We expect to see impacts from the recent global disruption for the
remainder of the year, and possibly into next year.
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!

On behalf of the CVI Team – Have a happy, healthy and safe July 4th Holiday!!

 

Rachel Shames

Director, Pricing & Procurement

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