Spot rates increased yet again last week in response to market demand. We’re seeing surging volumes
across many different verticals – GDSM, apparel, footwear, PPE, and general medical equipment. There are concerns about escalating political tensions between US and China, driving some importers to frontload cargo in hopes of getting ahead of potential future tariffs. Rollovers are common given the
continued imbalance between capacity and demand. Vessel space is still booking up weeks in advance,
and carriers are responding with even higher peak season and premium load surcharges. Shippers of all
sizes are paying premiums over spring contract rate levels in order to get loaded timely, and those
premiums are expected to rise again as of September 1.
Equipment availability in China is a growing concern. 40HC containers are scarce in certain areas,
especially North China. ZIM is experiencing issues already, and other carriers are expecting problems in
the coming weeks. Carriers may begin to reposition large volumes of empty containers from the US
rather than wait for loaded exports. The situation is likely to put even greater upward pressure on ocean
freight rates over the next month.
More carriers are anticipating strong demand through the end of the year based on optimistic importer
forecasts received to date. The outlook runs counter to early assumptions that the pandemic and
resulting recession would quickly dampen global trade. In fact, carriers have reinserted so much space
into the market that capacity currently outpaces 2019 capacity by 14% – and there is plenty of cargo to
fill that space. Carrier financial results from the second quarter of 2020 reveal significant profitability
improvement in the short term. It’s clear that volumes are far greater than the industry predicted just a
few months ago, and carriers are capitalizing on unexpected market strength. Strategic capacity control
has proven so highly effective for carriers that it will no doubt remain for the long term.
Air cargo out of Asia has begun to stabilize once again after a recent surge. However, space and service
are still severely limited. Higher volumes expected to move in September and October are likely to cause
a new space crunch and quickly send rates climbing again. 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.
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.
Reduced sailings are causing major space issues on Transatlantic trades, in both directions. Scarce
equipment across Europe is still an issue, and limited passenger air services are still keeping the air cargo
market very tight.
In the US, truck capacity has tightened as well. There is a still a good deal of PPE moving around the
country, utilizing road capacity and putting additional 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 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.
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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.
Please see the latest Client Alert posted by our Director of Compliance & Customs Services, Sam
McClure: Client Alert – SEC 232 Reimposed-HK & China Designation-MPF Adjustment – EU Section 301 Revised
To keep current on the latest market and industry news, please subscribe to our client alerts page at
https://cvinternational.com/resources/industry-news/ 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!
Director, Pricing & Procurement, CVI