Date: 04.08.2020

Carriers tighten screws

Westbound Ocean Freight Capacity tightens as carriers turn screws and demand advanced bookings

The unexpected surge in East and Westbound demand in June, exacerbated by carriers withdrawing close to half the market’s capacity in May, to match expected low demand saw China to North Europe and UK rates spiking and the highest Transpacific rates achieved from Asia to The USA on record.

July’s import volumes continue to increase, following their rebound in June and this increase in demand means that many lines are now taking bookings two or even three weeks in advance of vessel closing. Some are even rejecting bookings regardless of rate level.

Carriers are now in the position where they can simply refuse to take late bookings and are imposing premiums on shippers desperate to get late cargo booked. During the Pandemic crisis the shipping lines in all three alliances have tactically and strategically balanced their capacity utilisation supply against demand and at the current time it is definitely a carrier driven market.

While we continue to get all our containers lifted, we are recommending 14+ days MINIMUM advanced notice to guarantee bookings and ensure we have secured allocations to load containers from Asia and The Indian Subcontinent.

In these challenging times it is more important than ever that we have visibility of customers’ shipping forecasts and planned container requirements. We request that you please supply a weekly update and priority list of all known movements and purchase order to ensure that we can manage your shipments, and of course your expectations!

Because lines are now only taking bookings two, three or even four weeks in advance of vessel closing, we need a minimum 14 day booking window to allocate capacity.

We work with our carrier partners on fixed validity long-term contracted capacity and pricing, to provide supply chain stability, but we rely on the support of our clients, in providing forecasts and early notice of booking requirements, in what remains a very volatile and torrid market.

To match the increase in volumes, carriers reinstated some previously blanked sailings and have left more ships active in July compared to June, but FAK spot rates still rose early this month, before settling at stable, but higher rate levels. 

So this year’s unusual peak season appears to have begun, though projections are that volumes will stay flat through to November. However, the surge in COVID-19 cases in recent weeks makes predictions difficult. 

Air freight rates from China have been rising again over recent weeks/ months, as capacity was withdrawn from the market and are now levelling, though no significant reductions are expected before the return of passenger services. 

We note increasing numbers of LCL bookings, indicating that importers are replenishing their inventory and possibly gearing up for peak season. For urgent shipments requiring proactive micromanagement please highlight these to your Metro colleagues so that we can put under scrutiny.

We are also experiencing increases in Sea/Air bookings as importers of time-sensitive shipments take advantage of falling rates from the Indian Subcontinent and Far East, via Singapore and Dubai.

Please provide as much visibility as you can on all known shipments in August through to November and assist us in assisting you to ensure on time delivery is always achieved through careful management. Forecasts are an essential tool for us to deliver seamless service.

For further information, market updates, latest schedules and much more please contact Chris Carlile or Grant Liddell for further details and we will be delighted to arrange a meeting, teams call or alternative communication to provide you with the latest market position and detail.