News

USPTI Market Update April/May 2018

Over the past several years the landscape of international ocean carriers has changed dramatically. Mergers, acquisitions and bankruptcy combined with ocean carrier alliances restructurings have been at the fore front of international trading news. Some of the changes are:  A brief summary of some of the carrier activities is as follows:

  1. COSCO acquires OOCL
  2. COSCO and China Shipping merge
  3. APL is acquired by CMA/CGM
  4. Hapag Lloyd and United Arab Shipping merge
  5. Hanjin files for bankruptcy
  6. NYK, MOL and K Line new joint venture combining the three companies liner operations into a new organization (ONE)
  7. Maersk acquires Hamburg Sud

Market share of top 4 carriers ( Maersk Line, CMA/CGM/APL, Med Shippings and COSCO/China Shipping after takeover of OOCL) is approximately 54% of global capacity.  The container shipping industry has “officially” become an oligopoly.

As we move forward with our core carriers on anew Trans-Pacific service contracts one should note that the fight for market share is going to continue, there is still a significant amount of new vessel supply that is coming into the market over the next two years. Vigorous competition among carriers will continue with carriers protecting and attempting to increase market share at the expense of profit.

To date carriers have had limited success in implementing increase but one can anticipate that as we move into the historical peak season cost will increase consistent with trading conditions. USPTI will continue to work with our carrier base to insure our clients od quality reliable service at market driven rates.

The carrier industry is historically a supply and demand business whereas rates rise when cargo is readily available and decline when trading conditions are poor. The jury is still out on future trading conditions.   Globalization, protectionism, politics and general economic conditions are all impacting the perception and forecasted volume in the Trans-Pacific import market. Currently the impact of the recently announced China trade sanctions are unknown.

One can anticipate market rates to remain somewhat volatile in 2018. Ocean carriers will continue to adjust rates based on trading conditions and volume.

Although the alliance have been implemented the full impact of the new alliance will not occur until May 2018 and thus the potential for service disruptions will exist.  USPTI opines the disruptions will be minimum.

Reduced capabilities within the US trucking segment will continue and inland delivery rates will continue to increase.

USPTI is well positioned to handle your import needs with competitive spot/market rates as well as the ability to offer long term fixed rates based on a specific volume agreement. In addition to our quality reliable ocean transportation USPTI can offer value added services including but not limited to customs clearance, ISF filings, P.O. management, warehousing and distribution, etc.

Truck Capacity Challenges in the U.S.

The U.S. Domestic & International trucking sectors are currently facing a number of challenges that are causing a significant shortage of available trucking capacity.
Those major factors which are responsible for impacting truck power capacity are as follows:

– Diminishing driver workforce / Difficulty attracting new drivers to the industry
– Limited availability of specialty drivers (HAZMAT, Tank, Refrigerated, Over-weight)
– Restrictive free time schedule / allowance at Rail Ramps
– Tightening truck regulatory requirements – New ELD (Electronic Logging Device) rule taking effect on Dec. 18, 2017, which will strictly limit Hours of Service.
– Growing operational costs for Trucking companies

As the truck power capacity shortage is expected to worsen through the coming months, it may become increasingly difficult for USPTI to pick-up / deliver loads in a timely fashion.
Please allow for additional lead time enabling us to arrange for intermodal pick-ups and deliveries. We continue to work with our inland carriers and will do all that is possible to comply with your requirements but wanted you to be aware of the prevailing operational constraints.
Please contact your USPTI representative with any questions you may have.

USPTI December Market Update

USPTI and our clients continue to watch rates change rapidly. As previously note in our market updates; rates remain volatile. We anticipate rates to remain volatile thru mid-January and then begin to inch upward in anticipation of Chinese New Year. Supply and demand continue to be imbalanced and with trading condition not as robust as anticipated ocean carrier will continue to attempt to find a position where vessel utilization will be acceptable. The below article confirm that spot rate are and will continue to be unstable.

Drewry World Container Index – 30 Nov
The World Container Index assessed by Drewry, a composite of container freight rates on 8 major routes to/from the US, Europe and Asia, is down by 5% to $1147.47/40ft container [updated Thurs, 30 Nov 17].
Two-year spot freight rate trend for the World Container Index:

World Container Index: Drewry assessment on Thursday, 30 November 2017

The composite index is down by 5% this week and down by 19.27% from the same period of 2016.
The average composite index of the WCI, assessed by Drewry for year-to-date, is US $1,480/40ft container, which is $120 lower than the five-year average of $1,600/40ft container. It is also 19.27% lower than a year ago.

Spot rates remain weak on major East-West routes against the backdrop of slowing demand. The World Container Index (WCI), assessed by Drewry on the Shanghai-Rotterdam route, lost $10 from last week to reach $1,304 for a 40ft box. Rates are 21% weaker than in the same period in 2016. Similarly, rates on Shanghai-Los Angeles dwindled by $231 for a 40ft box, and rates on Shanghai-New York shed $23 to reach $1,820 per feu. Rates on Shanghai-Los Angeles are 27% and Shanghai-New York are 29% less than in the same period in 2016

Market Update October 2, 2017

Trading conditions remain volatile in the Trans-Pacific import market.  The anticipated historical peak season was short lived with volume near achieving levels that exceeded supply. Although one could anticipate a spike in volume prior to Chinese New Year, USPTI anticipates the market to be at best relatively flat for the next several months. Although ocean carriers continue to forward file increases we do not anticipate demand for carrier services to improve and therefore also anticipates rate to remain flat. Supply and demand will continue to drive the market with supply typically exceeding demand in any given week thereby creating a competitive environment as carriers attempt to protect market share.

USPTI is committed to providing quality and reliable services at market driven rates and will keep each client updated as market conditions and rate change.

 

World Container Index: Drewry assessment on Thursday, 28 September 2017

The composite index is down by 4.9% this week and down by 6% from the same period of 2016.

The average composite index of the WCI, assessed by Drewry for year-to-date, is US $1,527/40ft container, which is $101 lower than the five-year average of $1,628/40ft container. It is also 6% lower than a year ago.

The rates have dropped ahead of the Golden Week holidays in China. The World Container Index (WCI) between Shanghai and Rotterdam lost another $54 for a 40ft box this week to reach $1,1397. Similarly, the rates from Shanghai to Los Angeles dropped by $82 to reach $1,464 per feu and the rates on Shanghai-New York declined by another $154 to reach $1,981 per 40ft box. We expect the rates to fall further next week on account of the Chinese factory shutdown.

 

Spot freight rates by route – assessed by Drewry

 

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USPTI Market Update

September 2017

The Trans-Pacific import market remains volatile. As carriers continue to attempt to artificially adjust supply and demand rates remain at competitive levels. Carriers continue to file rates increase but have had limited success in implementing the increases in their entirety. The consolidation of carriers (mergers and acquisitions) noted below continue to impact both the quantity of space available and overall service (port of call, etc.)

  1. COSCO acquires OOCL
  2. COSCO and China Shipping merge
  3. APL is acquired by CMA/CGM
  4. Hapag Lloyd and United Arab Shipping merge
  5. Hanjin files for bankruptcy
  6. NYK, MOL and K Line announce new joint venture combining the three companies liner operations

USPTI opines that the strong/peak season will be short lived. We anticipate potential volumes to decrease from early October. To date space has been tight from certain origins (Shanghai for example) but still available creating the need for carriers to maintain relative low rate for peak season. We anticipate rates to stabilize for a few months in the $1300 to $1350 range to the west coast and $2300 to $2400 to east coast.

USPTI continue to actively negotiate with our core carriers to insure that we can provide our customers with quality reliable service at market driven rates.

Please contact your USPTI representative for update rate quotes and resolution of any supply chain issues.


July 20, 2017

Over the past several months the landscape of international ocean carriers has changed dramatically. Mergers, acquisitions and bankruptcy combined with ocean carrier alliances restructurings have been at the fore front of international trading news. Most recently COSCO announced the acquisition of OOCL. A brief summary of carrier activities is as follows:

  1. COSCO acquires OOCL
  2. COSCO and China Shipping merge
  3. APL is acquired by CMA/CGM
  4. Hapag Lloyd and United Arab Shipping merge
  5. Hanjin files for bankruptcy
  6. NYK, MOL and K Line announce new joint venture combining the three companies liner operations

Market share of top 4 carriers ( Maersk Line, CMA/CGM/APL, Med Shipping and COSCO/China Shipping after takeover of OOCL) is approximately 54% of global capacity. The container shipping industry has “officially” become an oligopoly.

The fight for market share is going to continue, there is still a significant amount of new vessel supply that is coming into the market over the next two years. Vigorous competition among carriers will continue with carriers protecting and attempting to increase market share at the expense of profit. Carriers continue to sell based on price and therein continues the problem of lower rates that are not sustainable.

Carriers continue to file monthly rate increase and peak season surcharges. To date carriers have had limited success in implementing increase but one can anticipate that as we move into the historical peak season cost will increase consistent with trading conditions. USPTI will continue to work with our carrier base to insure our clients quality and reliable service at market driven rates.

The carrier industry is historically a supply and demand business whereas rates rise when cargo is readily available and decline when trading conditions are poor. The jury is still out on future trading conditions. Globalization, protectionism, politics and general economic conditions are all impacting the perception and forecasted volume in the Trans-Pacific import market.

Logistic Partners Guidelines

A logistics company partner is often required in order to effectively run all aspects of a business within the transportation industry. However, logistics companies must be organized and consistently improving in order to meet client needs. USPTI proposes the top three ways in which to enhance operations:

1. Communicate well. Both internal and external communication is vital to running any successful company. All departments must work together to deliver optimal results for clients. Be sure to stay in touch with clients on a daily or weekly basis to let them know how things are going. This also provides opportunity for you to address any questions or concerns.

2. Comply with mandates. Always stay educated on what is going on regarding the various regulations and expectations for the transportation industry. These rules may present challenges for you or your clients, so you must beware of every aspect of these mandates in order to come up with a solution.

3. Encourage feedback. Your company’s success relies exclusively on whether or not your clients are happy with your work. Always ask for feedback on each assignment in order to assure you are on the right track and performing your services to perfection. Receiving feedback also an excellent way to ensure you are promoting a positive work environment for strong work ethics and output


April 2017

Even before last October’s announcement that the three Japanese shipping companies would merge their container operations, and the December announcement that Maersk would acquire Hamburg Sud, 2016 was already the most transformational year in the 60 years of container shipping. COSCO and China Shipping merged. CMA CGM acquired APL, Hapag-Lloyd agreed to acquire UASC and Hanjin collapsed. That led to a massive restructuring of global vessel-sharing alliances that will take effect in just weeks. Meanwhile, with ocean carriers still struggling with overcapacity that most analysts say will remain at least for the next two years, if not longer, shippers are facing a new environment with many unknowns.

Trans-Pacific spot rates were more than two-and-a-half times the level in June and they’ve held fairly firm as carriers increase scrapping levels and idle ships. Throw in the new Trump administration and its protectionist rhetoric that appears to be turning into policy, and the trans-Pacific is in the midst of a sea change. Given all these moving parts, what is the pricing and demand outlook for 2017? How will the new alliance rollouts impact service? And how will the new administration’s policies impact US importers and exporters?

The implementation of the new alliances will create disruptions to service as carrier reposition vessels to corresponded to new sailing schedules, port rotations and terminals. The phase in will be longer than normal due to the shear scope and number of carriers in each alliance.

The political impact to trading conditions cannot yet be determined although the current administration policies seem to favor protectionism over free trade.

Once again 2017 will be a challenging year and USPTI is prepared to assisting and resolving any issues impacting your import program.

Thank you for your support and USPTI looks forward to a long term relationship of service.

Feb News !

Despite an apparent recovery in the container shipping industry as seen in higher spot rates and shipping company share prices, there remain parallel, divergent narratives as to how strong the market truly is.

Several observers, analysts and carriers are convinced the market is recovering off an extremely weak 2016; trans-Pacific spot rates are up more than 50 percent since early December.

The massive industry consolidation initiated in 2016, which will eliminate seven of the top 20 carriers, has led many to believe that carriers will have a better shot at higher rates this year after a disastrous 2016 when contract and spot rates hit record lows and carriers collectively lost billions.

“The latest read on key indicators such as freight rates, ordering activity, idle capacity management, scrapping, and charter rates suggest stable to improving trends, which bode well for sector earnings,” JP Morgan wrote in a Feb. 2 research note.

“I do feel that in 2016 we found the bottom,” Dave Arsenault, the former US president and CEO of Hyundai Merchant Marine and now a consultant stated recently. “Last year, you had overcapacity and completely crazy pricing.

This year, you will still have overcapacity, but pricing will be more realistic,” states Philip Damas, director of Drewry Supply Chain Advisors. He said that in trans-Pacific annual tenders with which Drewry is assisting beneficial cargo owners, “we’re seeing rate increases of 40 percent.

“If you were a BCO last year you were a hero because you secured huge reductions in your freight. This year it is going to be a lot harder to be a hero in your organization as a BCO,” Damas said.

But others remain skeptical, citing multiple mega-ship deliveries yet to occur and at least two years of overcapacity still likely remaining in the market, despite much higher levels of scrapping last year and returns of unneeded chartered tonnage to owners.

So obviously with this there will surely be some optimism on the part of the carriers. But the days of destructive rate competition are not over. One view is we are still in the midst of a major battle within the container shipping market.

The relative calm that we are seeing right now was really the result of the Hanjin bonus, because the removal of Hanjin really helped the rest of the market,” he said.

The fight for market share is going to continue, there is still a significant amount of new vessel supply that is coming into the market over the next two years seen to continue for too long.

Vigorous competition among carriers could therefore still be seen in the trans-Pacific this year at rates that have adequate returns when there is an uncertainty about what it is that they are really going to be selling.

Carriers are forced to sell based on price and therein continues the problem of lower rates that are not sustainable which can ultimately lead to further consolidation. Please notify to your vendors to place booking as early as possible. Thanks !

Carriers announce canceled sailings after Chinese New Year

Container line alliances have announced a host of sailing cancellations in the post Chinese New Year period ahead of the traditional sharp decline in cargo bookings after the mainland’s biggest annual holiday.

The Year of the Rooster begins on Jan. 28, with shippers racing to get their cargo loaded before Chinese factories close and workers take off for much of the month of February. Demand is not expected to improve much before April.

The 2M Alliance of Maersk Line and Mediterranean Shipping Co. and the G6 Alliance carriers — APL, Hapag-Lloyd, Hyundai Merchant Marine, MOL, NYK Line, and Orient Overseas Container Line — are blanking several sailings on the major east-west trades.

Although the post CNY period has always been quiet, the run up to the Chinese holiday has been anything but. Spot freight rates on Asia-Europe remained surprisingly strong as year-end approached, with forwarders reporting difficulties in securing space on the trade and that carriers were resisting discounts.

“Space is very tight from China to North Europe and the shipping lines are not prepared to bargain. They have told me that if I book at a discounted rate they will not be able to guarantee my cargo schedule,” the owner of a Hong Kong-based forwarder told JOC.com.

Trans-Pacific shippers are also expecting contract rate hikes. by JOC.com found that 46 percent were preparing for increases of 1 to 10 percent in contract pricing. More than 20 percent of respondents expect rate increases of 10 to 20 percent.

Please notify to your vendors to place booking as early as possible. Thanks !

The Trans Pacific inbound market remains volatile.

During the months of October and November we saw not only increased demand for space but also increased rates. For December we anticipate rates to stabilize in the first half of the month consistent with current supply and demand. One should anticipate increased freight charges in the last half of the month as volumes surge prior to Chinese New Year.

Chinese New Year (Year of the Rooster/ Fire Chicken) will be celebrated on January 28, 2017. Factory closures will most likely begin around January 15 and full production not resumed until early February. One can anticipate a shortage of available container capacity in late December and early January and thus you should plan your import volume accordingly. Additionally many carriers will void sailing on or around Chinese New Year since factories are closed and volume will not be at normal levels.

Merger and acquisitions continue with ocean carrier industry. In addition to previously announce mergers and acquisitions ( China Shipping and COSCO, CGM/CMA and APL, Hapag Lloyd and USAC, MOL,K-Line and NYK, etc.) in was announced on December 1 that Maersk will purchase Hamburg Sud. The acquisition is consistent with Maersk announced strategy of growth by acquisition and will increase Maersk global capacity share from 15.7% to 18.6% or to an estimated global capacity of 3.8 million TEUs. Mergers and acquisitions coupled with changes in the various alliances will reduce the number of carrier options and services available to the international trading community in 2017.

USPTI will continue our efforts to insure we are fully prepared to handle your transportation requirements by maintaining relationships and contractual arrangement with various ocean carriers. Our goal is to provide you with quality reliable transportation services at market driven rates.

We look forward to a long term relationship of service.

If you have any questions or concerns please contact your USPTI representative

The supply and demand in the Trans Pacific import market has shifted dramatically in favor of ocean carriers.

Due to the historical peak season combined with the capacity disruptions created by the financial problems and pending bankruptcy of Hanjin the demand for space to the west coast is currently above available capacity for all carriers servicing the west coast. The shortage of available capacity to the west coast is allowing carriers to charge premium prices for their services. The shortage of available capacity to the west coast will most likely continue thru the middle of October 2016 at the minimum.

Additionally one can anticipate the increased volume coupled with a shortage of chassis created by the inability of truckers to return Hanjin boxes to the terminals will potentially create additional delays at west coast ports of entry.

The situation to the east coast is somewhat better with capacity and demand much closer aligned.

USPTI continues to work closely with all our carriers to insure we can secure space and provide you with a quality reliable service. Our goal is to minimize any potential disruptions to your supply chain.
Please insure your transport requirements are communicated to USPTI as far in advance as possible. A minimum of 14 to 21 days prior to cut off at origin would be appreciated.
Thank you for your support and we look forward to a long term relationship of service.
Please contact your USPTI representative with any questions or concerns.