Ocean, trucking, and air freight rates and trends for the week of September 12, 2018.
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Hurricane Florence is expected to make landfall on Thursday, September 13th, as a category 4 hurricane. Due to mandatory port closures and evacuation orders, you may see delays for your shipment(s). As always, our team will notify you as soon as we’re aware of any changes that might impact you.
Shippers moving freight from China to the U.S. are seeing some of the highest ocean freight spot rates in over two years, reports Supply Chain Dive. The increased rates are largely attributed to three factors: higher crude oil costs, an earlier peak season, and carriers cutting capacity.
TPEB space is full/rolling, and we recommend booking services as early as possible - at least 3-4 weeks before ETD. Please also note that carriers are announcing blank sailings for October and November, which will further constrict space.
Monsoon season is in effect from June through October:
U.S. importers are having a more difficult time this year getting their cargo on ships due to the very low capacity. JOC reports, “The eagerness of carriers to capitalize upon an early surge in cargo resulting from importers’ panic over Trump administration tariffs, typhoons in Asia, and a calculated reduction in capacity, is fraying relationships with customers.”
We recommend booking shipments as early as possible to guarantee space.
U.S. importers shipping in trans-Pacific should expect higher rates, as peak season has caused very low capacity on most ships. As JOC reports, “Ocean carriers in certain cases are holding the line on weekly minimum quantity commitments (MQC) as they have done in prior periods of tight capacity, meaning that any given shipper will be allocated only one week’s worth of capacity out of its total annual MQC.”
The International Maritime Organization has mandated under new Emission Control Area regulations that by 2020, all merchant vessels must reduce their sulfur emissions to 0.5% from 3.5%.
Whether they upgrade their vessels or their fuel, carriers will need to undertake significant changes to comply with the new regulations, and those changes will come at a cost to shippers. Rates may climb between now and 2020 as a result.
The transpacific air freight sector sees tight capacity and high rates as peak season soars, reports The Loadstar. Aside from standard peak season causes, the threat of a new round of tariffs has motivated many to move up shipments. Europe’s peak’s season is likely to begin soon, as well.
Air volume growth was “virtually flat” in July, reports The Loadstar. Despite this, volume growth year-over-year is still up with rates 15-20% higher than in 2017.
According to a report from Logindex, global industrial production will reach its lowest monthly increase since July 2015. The report noted that the trade tariffs have now begun to negatively affect volumes, predicting a weak September. “Also, Chinese export growth, YoY, will likely slow down from 12.2% in July to 7% in August and 4.5% in September.”
JOC reports that the early peak shipping season could mean earlier-than-usual rate increases for truck and intermodal shipments in the U.S. As capacity tightens and rates increase, we recommend booking shipments as early as possible.
As factories ramp up production to meet the needs of the fast-growing U.S. economy, many businesses report that it’s been very difficult to find trucking capacity in the current market. This is affecting companies to the point of cutting their full-year earnings reports, as they know they won’t be able to move product as previously expected.