Market Update: April 2017

Ocean Rates for April 2017

As the chart shows, no matter where you’re shipping from, space is tight. Booking 2-3 weeks ahead of time is going to be very important over the next couple of weeks.

New Ocean Alliances: Impact on Space, Sailings, and Schedules

On April 1, the new ocean carrier alliances will officially take effect. As a result of the carriers’ realignment, there will be a number of blank sailings, routing changes, and departure date changes over the next few weeks.

• Blank sailings are already leading to tighter space on vessels, causing congestion and delays (for example, if your container is gated in for a blank sailing, it won’t go out until the next departure).
• Service strings are changing. Some service strings will no longer be available, and new ones are being announced.
• With the above-mentioned changes in services and routing, you’ll also see changes in departure dates, and related changes to suppliers’ production schedules. In the short term, this will mean longer gaps between sailings, as ships are being repurposed for new strings (e.g., potentially up to 13 days between sailings, rather than 7).
• As carriers are switching over to their new schedules, they may be slower to release space -- at least initially. Therefore, your supplier may experience a delay in receiving shipping instructions.
• Terminal changes at U.S. ports may cause delays at destination.

Your Flexport team will keep you posted on how these changes may impact you. It could be the case, for example, that a new service string will save you time and money. Let us know if you have any questions!

Other Ocean News

Hapag-Lloyd / UASC Merger Update

The Hapag-Lloyd / UASC merger was originally planned to be complete by March 31, but it has been pushed back two months. Hapag-Lloyd has announced that the new completion date will be May 31.

New Carrier: SM Line

SM Line, which purchased Hanjin’s transpacific assets after that company’s bankruptcy, will begin operating in April. They will add a few new transpacific routes, as well as some intra-Asia services.

Air Market Updates

Air Rates Are Still High, and Space Is Still Tight

The air freight market in Asia continues to be volatile. We expect rates to remain high and capacity to be constrained for the next few weeks -- especially from China and Hong Kong. This is due to a combination of factors:

• Fleet maintenance in an unexpectedly busy season. Carriers took freighters out of service in February and March, anticipating that these would be slower months. Instead, demand increased, putting more pressure on already limited capacity.
• China’s Qingming Festival will be celebrated April 2-4.
• It’s the end of the fiscal year for many companies, which drives a final push for production.

Fuel Surcharge Policies ex-Hong Kong and Taiwan

Additionally, we’ll see the implementation of new fuel surcharge policies for air cargo ex- Hong Kong and Taiwan:

• Hong Kong’s fuel surcharge of $0.09/kg for long-haul flights will go into effect on April 1.
• Taiwan’s fuel surcharge of $0.56/kg for long-haul flights has already taken effect.

Flexport's LCL Service is Expanding

Flexport has expanded its LCL service to include several new lanes. Destinations now include Los Angeles, New York, San Francisco / Oakland, Denver, Chicago, Columbus, Boston, Louisville, Seattle, Montreal, and Felixstowe.

Ask your dedicated Flexport team about specific origin/destination pairings, and read more about Flexport’s LCL service here!