Vessel Capacity All But Gone

Hello Reader,

As 2018 comes to an end, importers would normally be winding down purchase orders and inbound shipments preparing for a calmer November and December. But this year is anything but normal! The reality of Q4 2018 is that there is a nationwide race to prepare, complete and ship every last piece of product possible before December gets too close, especially if that cargo is manufactured in China.

Why? Importers sourcing from China are taking all available possibilities to land cargo in the USA before the forthcoming Jan 1 2019 tariff increase to 25%, set to impact a huge assortment of commodities manufactured in China. This next step in a global trade war, dubbed the “Trump Tariffs” is the next obstacle in what has turned out to be an extremely chaotic shipping season so far.

With this incredible rush and the demand it brings, import rates are surging to levels not seen in November or December ever before. In fact, if surge continues, we may soon see west coast shipping rates ex Asia equivalent to rates to east coast; typically they are half. Rates are up because space has become a very illusive commodity at this point. Steamship lines have enacted Winter Sailing Programs, pulling large percentages of active fleets for downtime, repairs and maintenance. This removal of capacity coupled with huge demands has overwhelmed the shipping market from Asia to The United States.

Book early and remain flexible! This is the most effective advice you can follow given the market conditions. Importers may need to entertain steamship lines that are not the lowest cost, or have a slightly longer sailing time. Besides this, booking early is the other critical step to take with manufacturers. Regular space is being absorbed three weeks before departures and in some cases as much as five. Communicate with your factories and logistics providers and ensure they are aware of your needs.

Market conditions will directly impact the performance of providers, all sizes and types. The difficult reality is that there will be too much cargo to ship from Asia compared to the finite capacity available to move it. If we can help you, please don’t hesitate to reach out!