Early Peak Season Brings Rate Increases and Capacity Challenges

In this week’s market update, we analyze the early start to the Asia-to-US peak season, marked by soaring spot rates, capacity constraints, and revised service rotations. Key highlights include a rapid rise in rates reminiscent of pandemic levels, strategic changes to transpacific services by major alliances, and forecasts of strong import demand driven by robust consumer spending. Additionally, ongoing labor negotiations on the US Atlantic Coast and Canadian West Coast raise concerns about potential disruptions during this critical period. To mitigate risks, we urge shippers to act proactively, secure space, and plan ahead.

Rapid Increase in Spot Rates Raises Concerns of Capacity Shortages

• Meteoric rise in spot rates observed, comparable to pandemic levels and Red Sea crisis.
• Shortage of vessel capacity due to round-Africa services and increased port congestion in Asia and Western Mediterranean.
• Demand surge exacerbates port congestion and vessel waiting times, reducing capacity further.
• Trans-Pacific carriers reducing allocations to non-vessel-operating common carriers (NVOs) for fixed-rate bookings.
• Focus on booking cargo at higher spot rates due to significant rate increases since April.
• An average GRI of $1000 is to be implemented across all carriers at the first week of June.
• Shippers may face increased costs and limited booking options.
• Carrier resume providing service to Baltimore, MD;

Ocean Alliance Revises Transpacific Services Port Rotations

• HTW service (Asia to North America West Coast): Tacoma port call dropped, new rotation includes nine port calls starting with Yantian.
• HTW service will be operated by Evergreen (HTW), while CMA CGM (GEX), COSCO (AAS3), OOCL (PCS2) and ONE (CP4) will be slot charterers.
• There will be eight vessels deployed on the service, with an average vessel capacity of 13,000 TEU.
• The revised port rotation of the service will be as follows (9 port calls): Yantian – Los Angeles – Oakland – Kaohsiung – Port Klang – Cai Mep – Taipei – Kaohsiung – Yantian.
• ECX1/AWE4 service (Asia to North America East Coast): Adds Laem Chabang and Cai Mep, drops Cristobal, revised rotation includes nine port calls starting with Charleston.
• ECX1/AWE4 service will be operated by OOCL (ECX1) and COSCO (AWE4), while CMA CGM (SAX) and Evergreen (SAX) will be slot charterers.
• There will be thirteen vessels deployed on the service, with an average vessel capacity of 13,500 TEU.
• The revised port rotation of the service will be as follows (9 port calls): Charleston – Laem Chabang – Cai Mep – Hong Kong – Xiamen – Shanghai – New York – Savannah – Charleston.
• The changes aim to optimize service efficiency and address congestion issues.

Strong Consumer Spending Drives Import Forecast Upgrade

• Retailers forecast monthly import volumes above 2 million TEUs into the 2024 peak shipping season.
• National Retail Federation (NRF) report highlights robust consumer spending despite economic concerns.
• Increased import demand may strain port capacities and logistics infrastructure while entering peak season early this year.

USMX and ILA to Start Contract Negotiations for Atlantic Coast Ports

• Negotiations on new contracts for 45,000 dockworkers along US east and Gulf coast ports expected soon.
• Commitment to avoiding disruptions and achieving timely agreements before the current contract expires on September 30.
• Potential impact on port operations if negotiations stall or fail which may ultimately challenge its capabilities of digesting peak season cargo traffic.

BC Port Foreman Contract Talks Stall Amid Rail Strike Threat

• Negotiations between BC Maritime Employers Association (BCMEA) and foremen’s union stalled.
• Risk of labor disruption for Vancouver and Prince Rupert ports.
• Federal government intervening to prevent rail strike.
• Potential for significant impact on Canadian west coast port operations and logistics in the upcoming weeks.

Industry Trends