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.