Ocean and Air Rates Surge

Hello Reader,

With November upon us, importers continue to witness rate increases to trade from Asia. November 1 rates both for US East and US West coasts both saw measurable increases via General Rate Increase or GRI pushing a continued increase in overall shipping costs.

Q4 has historically been a slow period, with much lower demand for space. With that, steamship lines reduce capacity through “Winter Programs” in order to service vessels and reduce costs in a period where vessels are not going to be full.

This year has been quite different and Q4 2018 promises to deviate from every trend from the past. Importers sourcing from Asia have widely ordered factories to accelerate all production and clear factory floors of all goods as quickly as possible in order to land cargo in The United States before the January 1, 2019 tariff increases. This influx of volume has caused a tremendous surge in demand at a time when physical capacity has already been drastically reduced. The result is a market where steamship lines and airlines are easily afforded the ability to drive rate increases based on market demand.

Our prediction is that east coast rates should begin to stabilize and flatten as November continues. We expect to see reductions on east coast lanes as early as mid-November, and no later than December 1. For west coast, we expect rates to continue climbing with GRI expected on November 15th as well as December 1. For the first time, we may see west coast shipping costs exceed east coast costs in December. As December arrives, finally west coast rates may start to flatten and should decrease somewhere in week 2-3 of the month. Once the window to land cargo in the US pre-January 1 passes, expect cargo costs to plummet as the market will be extremely weak. Chinese New Year cargo rushes may be completely absent this season.