Market Update: April 18, 2018
Ocean, air, and trucking freight rates and trends for the week of April 18, 2018.
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Ocean Freight Market Updates
GRI Announcements for May 1st & 15th
A General Rate Increase (GRI) has been announced for the following lanes and dates:
- Transpacific Eastbound (TPEB): May 1st
- Far East Westbound (FEWB): May 1st
- India-US: May 1st
- US Exports: May 15th
The Shipping Industry Makes a Bold Move to Reduce Carbon Emissions
On Friday, the shipping industry made a historic step toward cutting carbon emissions. The deal, which aims to reduce emissions by at least half by 2050 (compared with 2008 levels), represents a compromise among 173 International Maritime Organization (IMO) member states.
“The plan is far from perfect, but the direction is now clear—a phaseout of carbon emissions.”
-Veronica Frank, Greenpeace
According to The Wall Street Journal, “The emission cuts will also affect thousands of exporters world-wide. Brazil, for example, exports large amounts of iron ore to China and fears strong caps will push up freight rates, helping rival Australia, whose iron exports sail half the distance to China.”
Concrete actions to reduce emissions are still to come, as shipping companies consider options such as reducing vessel operating speeds and replacing carbon-intensive fuels with cleaner options.
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India - U.S. East Coast: New Service in June
Pacific South Loop (PS3), the first direct service from Northern India to the USWC, will begin in June.
Air Freight Market Updates
Ex-U.S. Rates Expected to Increase
Select carriers (both passenger and cargo-only) have indicated that rates will increase slightly over the coming months. This is despite the fact that there is typically increased capacity heading into summer months due to additional seasonal flights for holiday travelers.
Ex-Vietnam Demand Expected to Increase
Export demand is expected to increase following these upcoming public Vietnam holidays:
- April 25th: Hung Kings Temple Festival
- April 30th: Reunification Day
- May 1st: May Day
Air Freight Demand Increases With E-Commerce Trend
According to a recent UPS study, online shoppers are increasingly looking to international vendors when shopping. The e-commerce trend places pressure on air freight, as shoppers look for fast delivery times. The increase in demand could lead to rate increases and capacity shortages.
**Companies Look for Fast Delivery When Ordering Online **
More companies are placing orders online, and they expect service to mirror that for delivery of personal items. Referred to as the “Amazon effect,” businesses expect fast delivery times, real-time tracking, and more general visibility.
The result is a shift from supply chain management to one based on demand, as companies place a heavier focus on the customer experience.
Trucking Market Updates
U.S. Spot Market Truck Volumes on the Rise
As spring retail and produce demand increase, so too do the U.S. spot truck rates. After the minor dip in rates in February, the trucking industry is again feeling the pressure on capacity and rates.
This news aligns with the record-breaking pace of big rig orders placed by trucking companies in the first quarter. According to The Wall Street Journal, “The gap between demand and capacity has led truckers to charge higher prices, giving fleet owners more cash to replace older vehicles and greater confidence in future demand.”
LA-LB Terminals Agree to Restructure PierPass Program
Agreeing to restructure the 13-year-old PierPass program, Los Angeles-Long Beach marine terminal operators will reduce the traffic mitigation fee to $31.52 per TEU, a 55% reduction.
Assuming the Federal Maritime Commission approves the restructuring, the new pricing will take effect in August 2018.
**Canadian Pacific Railway Ltd. Planned Strike **
The Teamsters Canada Rail Conference (TCRC), representing about 3,000 CP workers, voted 94.2% in favor of a strike, planned for April 21st. The union’s strike, if carried out, will be the third one in six years, with the stated purpose of obtaining “fair and reasonable contract renewal.”
Please expect rail delays and plan accordingly.
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