09/26/2024 | Press release | Distributed by Public on 09/26/2024 08:47
From rate changes to port delays: A recap of recent ocean freight trends
The maritime market has seen plenty of shifts recently, from increased volumes from China to changes in port congestion and capacity. For importers, these factors can have a direct impact on everything from shipping timelines to costs. Additionally, the potential dockworker strike at East and Gulf Coast ports could further complicate the situation for both importers and exporters.
With all that in mind, let's unpack the most significant trends and developments to give you a clearer picture of the complexities shaping ocean transportation.
Imports continue to rise, but shipping times are still slow
The import market has been full of activity, as volumes keep climbing and surpassing what many analysts had predicted. Specifically, transpacific shipments from Asia to the U.S. West Coast surged by 19% year-over-year in August, though this is down from the 41% spike seen in February of this year.
Demand for goods from China remains high, driven by American consumers. However, it's not all smooth sailing. Geopolitical events, such as attacks on commercial liners by the Houthis, have forced cargo ships to take longer, alternative routes.
What this means for you:
The combination of increased import volumes and extended transit times could be the cause of any delays or rate changes you've seen. Work with your logistics provider to understand current sailing schedules and consider adjusting your strategy to accommodate longer lead times and potential rate increases.
High demand and low contract rates are shaping today's prices
As import volumes continue to climb, we're seeing a sharp increase in ocean rates. Earlier this year, shippers secured contracts at lower rates when the market was depressed. However, with the surge in demand, this pricing now seems outdated.
Spot market rates have increased to offset the low contract prices. For instance, year-over-year rates from Shanghai to New York increased by 119.5% in September, and from Shanghai to Los Angeles, they jumped 165.2%. It is expected that rates will decrease during Q4 but will remain higher than 2023, reflecting the ongoing demand.
What this means for you:
Though contract rates are in place, you could still face higher costs in certain situations. For example, if you need to ship more than what was agreed upon in your contract, you may have to pay higher spot market rates.
It's also important to remember that surcharges like fuel fees or peak season charges can still apply to contracted shipments, adding to your overall expenses. So, while your contract rates might be secure, these extra factors can lead to unexpected costs. Work with your logistics provider to find a solution that makes sense for your shipments and budget.
Carriers are adding containers to offset market changes
High spot rates are often tied to a capacity shortage, but that isn't the case today. In fact, ocean carriers have added more containers, and it's all to help offset lost revenue. Since contract rates were negotiated in a down market, carriers are compensating by moving more goods at once. By increasing capacity, carriers can handle higher volumes, which helps them make up for the reduced earnings from those lower contract rates.
What this means for you:
Extra capacity gives shippers a bit of breathing room for now, with more space available to ship freight. But if demand keeps climbing, carriers may issue blank sailings to boost their earnings, which could tighten things up again.
Port congestion may cause shipment delays
Dwell times - the amount of time vessels wait to unload - have been increasing at both East and West Coast ports. Dwell times for local pickups on the East Coast are now over five days, the highest they've been this year.
West Coast ports are seeing slightly better conditions, with dwell times around three days, down from four earlier this year. But this improvement may be short-lived, as freight is being diverted from the East Coast due to ongoing contract negotiations and a potential strike.
Increased dwell times can lead to chassis shortages at nearby rail yards, which will add further complications to the unloading process if this occurs.
What this means for you:
Longer dwell times can create delays in getting your goods to their destination. To avoid disruptions, consider building more time into your shipping plans or using time-sensitive solutions for the last leg of delivery. With congestion likely to persist, being prepared can help keep your supply chain running smoothly.
Surcharges and restrictions occurring in anticipation of dockworker strike
The potential strike by the International Longshoremen's Association (ILA) at East and Gulf Coast ports, scheduled for October 1 if no new labor agreement is reached, has already caused some proactive changes.
Though a work stoppage is not a sure thing, the uncertainty has led some shippers to advance their schedules or reroute shipments to other ports. Some carriers have stopped accepting new export bookings from inland U.S. destinations, and others have imposed surcharges for cargo en route to the potentially affected ports.
What this means for you:
While it's too late to divert cargo already headed to these ports, there are still steps you can take to mitigate potential disruptions. Consider booking new imports to West Coast ports, and then using rail or another transportation option to deliver to the East Coast. This approach can help you navigate the complexities and uncertainties of the current situation, ensuring your supply chain remains as resilient as possible. Remember, this is a potential scenario, and the duration and impact of the strike, if it occurs, remain unknown.
If you're an ArcBest customer impacted by this developing situation, please contact [email protected] for help finding a solution.
ArcBest is here to help you navigate the maritime market
With access to 90% of transpacific carriers, ArcBest can help find the capacity you need. Our strong relationships with ocean liners give us a unique advantage, allowing us to navigate any potential disruptions seamlessly.
We offer flexible shipping options, including full-container-load (FCL) and less-than-container load (LCL). And once your cargo arrives in the U.S., we can transload it into various modes like FTL, LTL, intermodal or expedite shipments to reduce transit times. For urgent needs, we provide international air freight solutions.
Contact us today for help shipping your next ocean load.