Transpacific Eastbound rates have been stable for the last few weeks. This plateau is likely the result of a
combination of factors. The Golden Week holiday underway in China has closed down much of the
economy and the shipping front will be quiet through this week. The Chinese government’s recent
encouragement to carriers to pull back on rate increases and blank sailings no doubt had at least some
impact on all alliances, directly or indirectly. Overall, carriers were already working toward a better
supply and demand balance, and most of the available ocean capacity is now being utilized. Space
remains very tight because demand is still surging, and equipment availability is still problematic, but the
imbalance of the previous few months has been improved.
Equipment remains a challenge, especially in China and India. Inland Container Depots and major ports
in India have huge backlogs of bookings waiting for container availability.
Consumer spending on goods is still strong and carriers expect high demand to continue through year
end, and even through Chinese New Year (beginning February 12, 2021). Recent data confirms huge
shifts in consumer spending since the start of the pandemic – far less on services and far more on goods.
Economic uncertainties and concerns remain that will play major roles in the strength of the shipping
market in the short and long term: a potential second stimulus package, growing numbers of
permanently unemployed, possible wintertime COVID case spikes, and the November election, to name
just a few.
Carriers are still charging premiums for space and rates remain at very high levels.
Air freight space is getting tighter as more tech and holiday cargoes buy up space. Expect rates to
increase in the coming weeks, especially out of China.
CVI continues to closely monitor and manage freight space across our portfolio of contracts. However,
with the spot rates so far outside the long-term rate levels, carriers are significantly restricting contract
space. Most carriers are offering a fraction of the usual allocation for long-term fixed rates – some as
low as 20-30 percent. There is simply no guarantee that fixed-rate contract volumes will be accepted or loaded
while carriers can obtain much higher margins accepting volume at short-term rate levels.
In this market, 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.
We are still seeing some blank sailing announcements on transatlantic trades, keeping space tight and
putting upward pressure on rates. Air freight space remains tight as well due to limited service.
COVID cases are on the rise in some parts of Europe and there are growing concerns about a new
shutdown and restricted access to border crossings. There are no impacts to manufacturing or logistics
services at this time.
The situation on the US domestic side has continued to deteriorate. Huge import volumes are clogging
up nearly every major gateway. There is significant congestion at most major US and Canada ports. The
west coast is particularly congested, from LAX/LGB up to Vancouver. East coast ports including NYC and
ORF are also experiencing significant issues. Vessel berthing delays, terminal operational delays, chassis
shortages, full warehouses, and tight trucking capacity are impacting all shippers. Truckers are waiting at
LAX/LGB terminals for 10-20 hours at a time. Truck power is booked solid for 1-2 weeks in advance. LCL
co-loaders have issued delay notices for cargo moving via NYC and LAX, and some have reduced the
amount of free days at local CFS warehouses.
Trucking rates are surging in most markets and power is difficult to secure on short notice. Please be
sure to plan accordingly and book truck power well in advance. 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
U.S Gulf Coast Faces Another Hurricane Threat
The U.S. Gulf Coast is facing yet another hurricane threat in what has been the busiest Atlantic cyclone
season in more than a decade. Tropical Storm Delta, currently located south of Cuba, is set to move
northward and strengthen to hurricane force before making landfall between Louisiana and the Florida
Panhandle on Friday. You can track the path of Delta here: Tracking_Hurricane_Delta
The supply chain industry is looking ahead to global distribution of a COVID vaccine. When a reliable
vaccine begins to ship, impacts will be far reaching. Distribution of such a highly anticipated product
require a massive amount cargo space across all modes – air, warehouse, road. It’s likely that all global
shippers will feel the impacts of a vaccine distribution rush. Limited capacity will result in higher rates
and significant space challenges for shippers of other products. Some in the industry expect distribution
to certain parts of the world to begin as early as Jan/Feb 2021. The timeline is uncertain, and we are
sounding the alarm now so that you are aware of possible future impacts. Of course, we will update you
as the situation develops.
CLIENT ALERT: Filings Based on the Legal Action Taken Against Section 301 Rounds 3 and 4B Continue
Though the reported deadline to submit a case on Round 3 of the additional tariffs to the Court of
International Trade has passed, interested importers are being encouraged to continue to seek action.
Many attorneys are of the opinion that a party does not acquire standing to sue until they suffer an
actual “injury in fact”; meaning an actual payment of the additional tariffs. Following this reasoning the
two-year statute of limitations is still open for most of the entries in which the Section 301 tariffs were
paid. Read more here: Tariff-updates-you-need-to-know!
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!
Rachel serves as Director, 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, Director, Pricing & Procurement, CVI
Connect with Rachel