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USPTI Market and Trade Update July 2018

Dear Valued Client;

To date this year, we have seen rising fuel prices, new environmental regulations, tighter intermodal capacity, trucker shortages, occasional labor issues, etc. These factors have created a chaotic environment in world trade and specifically in the Trans-Pacific trade.

Additionally the growing uncertainty regarding Sino-US trade relations has added to the complexity to trading conditions. An additional 200 billion dollar tariff increase was announced by USTR on July 11,2018 regarding an additional 10% duty increase. The most recent announced increase  list will covers general merchandise including but not limited to food products, stationary, household goods, building materials, fabric goods, refrigerators and furniture.etc….. Please note the below link for full details

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/july/statement-us-trade-representative

 

In addition to the 7/11 announcement the link below includes the full details of of the initial list 1 and 2 tariff increases

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/june/ustr-issues-tariffs-chinese-products

 

In addition to above issues impacting our businesses, once again merger Rumors and discussions are surfacing. Carriers are removing entire vessel strings as well as reducing the number of veseels on other strings.

All the above combined will artificially adjust supply and demand. USPTI anticipates space and service to be at a premium during the historical peak season. We request that if possible you provide a  monthly forecast so that we can secure the space and services required. Furthermore we would request that book your cargo at a minimum 14 days prior to departure.

USPTI is confident that with open communication between  our companies, USPTI can provide you with efficient and reliable services.

Thank you for your past support and we look forward to a long term relationship of service.

Please contact your USPTI representative with any questions or if you require further details.

 

 

USPTI Monthly Update June 20, 2018

Duty Increases

As international politics continue in the ongoing trade negotiations, the U S Department of Treasury has issued a first and second set of items that will be impacted and duty increases of 25% to be applied on set one effective July 6,2018.

This list of products consists of two sets of U.S tariff lines.

The first set contains 818 lines of the original 1,333 lines that were included on the proposed list published on April 6.  These lines cover approximately $34 billion worth of imports from China.  USTR has determined to impose an additional duty of 25 percent on these 818 product lines after having sought and received views from the public and advice from the appropriate trade advisory committees.  Customs and Border Protection will begin to collect the additional duties on July 6,2018.

The second set contains 284 proposed tariff lines identified by the interagency Section 301 Committee as benefiting from Chinese industrial policies, including the “Made in China 2025” industrial policy.  These 284 lines, which cover approximately $16 billion worth of imports from China, will undergo further review in a public notice and comment process, including a public hearing.  After completion of this process, USTR will issue a final determination on the products from this list that would be subject to the additional duties.

The HTS lists can be found in this link ( click first/second set)

https://ustr.gov/about-us/policy-offices/press-office/press-releases/2018/june/ustr-issues-tariffs-chinese-products

USPTI Monthly Update June 5, 2018

Below please find several articles outling the proposed increases in bunker as well as scheduled general rate increases. Additional please note the update/changes for China Customs Advanced Manifest,

 

The price of oil continues to escalate carriers are prepared to pass the increases on to the account of the cargo. With an anticipated peak season in the near future carrier are also filing general rate increases. It should be noted that in many cases the bunker and increases will apply to service contracts thereby increasing the base rates on all cargoes.

 

USPTI continues an open dialogue with our core carriers to insure we are able to deliver reliable quality service at market driven rates. USPTI anticipates the market to be relatively robust for the next 60 to 90 days and thus advise clients to potentially anticipate cost increases.

 

Please insure you are compliant with China Customs Advanced Manifest requirements

 

Our commitment to our clients is to develop a long term relationship of service based on service, integrity and honesty.

 

Thank you for your support and please feel free to contact your USPTI professional with any questions or concerns.

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 !