BLOG.OCEAN SHIPPING AUGUST 2020

August 4, 2020

Here is a Snap Shot of the current shipping trends in the transpacific trade 8-4-2020.

Spot rates in the eastbound trans-Pacific this week continued to surge, blowing past $3,000 per FEU to the US West Coast in anticipation of an Aug. 1 general rate increase (GRI), the fourth such increase in the last six weeks. 

 The Asia–US West Coast spot rate Friday surged 17.1 percent from the previous week, while the East Coast rate increased 6.9 percent, according to the Shanghai Containerized Freight Index (SCFI). These exceeded the 10-year-high rates for both West Coast and East Coast recorded in July and are also 121 percent higher for the West Coast and 25 percent higher for the East Coast over 2019 rates. 

 Many shippers have argued that space is still tight on vessels leaving Asia because of the dozens of blanked sailings carriers implemented this summer. Carriers have announced only three more blank sailings to the West Coast and three to the East Coast through mid-September, and some BCOs think that indicates carriers believe supply and demand should remain in balance for the next six weeks.

 The spike in rates this week occurred as all carriers in the eastbound trans-Pacific increased their rates in line with the GRIs that carriers had pre-filed last month with the Federal Maritime Commission (FMC), said one maritime executive. “Everyone’s above $3,000.”

 As they do every month, many carriers have pre-filed GRIs of about $1,000 per FEU with the FMC for Aug. 15, but the forwarders do not anticipate increases in mid-month. After implementing rate hikes twice in June and again on July 1, carriers backed off from GRIs pre-filed for July 15. Rather than going after more GRIs, the forwarders see carriers continuing to charge premiums to importers that are under pressure to get time-sensitive cargo loaded onto vessels leaving Asian ports. Those premiums are usually about $300 to $500 per container on top of the spot rate. “Those customers will get space if they pay the premiums,” he said.

 Blank Sailings Declining, but for how long?

 THE Alliance yesterday reinstated a further two US west coast and one US east coast voyages for August, which Hapag-Lloyd said was “in view of the increasing market demand."

 Moreover, the spike in ocean freight rates, the risk of rollovers, an increase in demand for PPE and peak season electronics launches have put air freight back in the picture. The high rates and additional lead time to ship by ocean are pushing some time-sensitive shippers from ocean to air.

 Patrik Berglund, CEO of freight rate benchmarking firm Xeneta, said the current trans-Pacific ocean rate climate “creates a real challenge for carriers to manage rates and for shippers to know what they should be paying."

Also a note that a Peak Season Surcharge of $300/TEU was implemented by MSC this month.