 Carrier GRI could push Asia-US West Coast FEU rates above record high |
Source |
American Shipper |
Post Date |
08/26/2020 |
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Container rates from Asia held firm this week, but with stronger inbound volumes expected into at least mid-September, carriers have been emboldened to impose another general rate increase (GRI) that could elevate rates to the US West Coast to record levels.
Forwarders say shipping lines in the eastbound trans-Pacific are telling them to prepare for a Sept. 1 GRI that a level that appeared inconceivable just a few months ago.
This would be the fifth GRI on US imports from Asia since June 1. In conversations with four non-vessel-operating common carriers (NVOs), utives said carriers continue to leverage tight vessel space and cargo rolling at Asian ports to command ever-higher rates.
¡°It¡¯s crazy. Space is the name of the game right now,¡± said Jon Monroe, who serves as a consultant to NVOs.
However, unlike the GRIs in June and July, when carriers had reduced capacity through more than 50 blank sailings, the current surge in pricing is demand driven. US imports from Asia rose more than 20 percent sequentially between June and July, notching the first monthly year-over-year increase since September 2019, according to PIERS, a sister company of JOC.com within IHS Markit.
¡°Most of the capacity has come back, but we still see high pressure on space because the demand side is growing,¡± Eli Glickman, president and CEO of Zim Integrated Shipping Services, told JOC.com. In June, Zim reentered the Asia¨CUS West Coast trade with an expedited service connecting South China to Los Angeles. ¡°The pressure is coming from increasing demand in the US and Canada in all commodity areas, already for the last two months. We don¡¯t know how long it will continue, but we are expecting strong demand to remain.¡±
Rattled by the rush
Canceled sailings have stopped, and carriers have been adding unscheduled vessel departures from Asia, known as extra-loaders, at a rapid pace. The Port of Long Beach on Wednesday told JOC.com that carriers deployed 10 extra-loaders in July. They are adding 10 more in August and plan five more in September, according to Noel Hacegaba, the port¡¯s deputy utive director and COO. Los Angeles had 11 unscheduled calls in July and is expecting six to eight more in August, according to a port spokesman.
¡°This is volume-driven. It¡¯s definitely based on volume,¡± said Kevin Krause, vice president of ocean services at SEKO Logistics. A wide variety of merchandise, from personal protective equipment (PPE) to office and exercise equipment for home use to e-commerce fulfillment, is in the cargo mix, he said.
Retailers are also importing merchandise from China with a sense of urgency in the event that 20 to 25 percent tariffs that were susped early this year under a phase one agreement with the US that will expire in late September as planned, said Alan Baer, president of forwarder OL USA.. Since vessels departing China arrive two to three weeks later deping upon the routing, some retailers have decided it is better to hold the merchandise in their US warehouses for several weeks rather than risking a large price jump if the tariff relief is not exted, he said.
The premiums are ged to get a shipment on the inted voyage, or for priority disge at the destination port, or for expedited release of the container from the US terminal. Each individual premium ge is added to the spot rate, and can range from $300 per container to more than $1,000 per FEU, according to a rate sheet shared
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