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Spot rates increased as of August 1. West coast rates are the highest they have been in over 10 years; east coast levels are quite high as well. Demand is growing in certain verticals such as GDSM, apparel, footwear, PPE, and general medical equipment. There are concerns about escalating political tensions between US and China, driving some importers to front load cargo in hopes of getting ahead of potential future tariffs. Space is extremely tight and more carriers are insisting on peak season surcharges for loading guarantees. Rollovers are common given the continued imbalance between capacity and demand.

Carriers are still announcing reinstatement of sailings while bookings are strong, but we expect the current situation to last at least through August and possibly into the fall months. If holiday demand is strong, the current conditions will be with us for a while. Carriers have achieved solid results by limiting capacity in the market – they will continue with this approach for the long-term.

On the air cargo front, the market out of Asia has been increasing over the last 2-3 weeks. A recent uptick in COVID-19 cases in Hong Kong caused disruption to typical cargo flow and pushed HKG air rates to higher levels. Steady volumes of PPE and limited air capacity due to low passenger travel are having the same effect on freight moving out of China. Looking ahead to the fall, we expect the usual rush of electronics and other time-sensitive holiday products to push demand beyond the current supply limits. Major tech brands such as Apple and Samsung will be booking available space at a premium. Capacity open to the rest of the market will be sold at much higher levels than in previous years.

CVI is closely managing freight space across a variety of contracts. 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.

Transatlantic, Domestic, and Global Trades

Beirut’s port was destroyed this week by a massive explosion. Everything in the vicinity of the port, including terminal facilities, offices, containers, and vessels, was impacted – likely destroyed. There will be major disruption to ocean trade in and out of Beirut for some time.

At Nhava Sheva, 3 cranes collapsed at the JNPCT container terminal this week. Operational delays are expected.

The EU has reopened for business and visitors, and space is a challenge across the board. Blank sailings are causing major space issues in both directions; THE Alliance announced a new round of blank sailings today. Scarce equipment across Europe is an issue, and limited passenger air services are still keeping the air cargo market very tight. Potential new US tariffs on some goods from Europe have importers rushing to get cargo out before the August increase, putting further pressure on space and rates across all modes.

In the US, truck capacity has tightened over the last several weeks, corresponding with the late spring volume increase. There is a still a good deal of PPE moving around the country as well, utilizing road capacity and putting upward pressure on rates.

Blank sailings on transpacific and transatlantic ocean trades are keeping export space very tight. We’re seeing overbooked vessels on nearly every lane. Similarly, reduced services in the global air freight market are helping maintain higher air rates. Early booking is crucial on exports as well as import lanes.

Many countries across the globe have loosened pandemic-fueled restrictions, while others are implementing a second round of countermeasures. We expect to be dealing with disruptions linked to the pandemic for some time. Broader economic impacts have not been fully realized in most of the US and our major trading partners. Carriers are watching bookings and load factors closely, and they will align their capacity with the market on short notice. We will continue to monitor the situation across all fronts. Please keep CVI advised of your shipping needs as early as possible.


Rachel Shames,
Director, Pricing & Procurement

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