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September 17 2018

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6 The Journal of Commerce | September 17 2018 www.joc.com Spotlight cap Trans-Pac peak-season tightness persists When will the tightness end? That's the questions trans-Pacific shippers and carriers are asking as eastbound slot capacity remains overbooked, keeping spot rates elevated and resulting in some cargo missing booked sailings. Spot rates from Asia completed a six-week run in the last week of August and before carriers further flexed their pricing power via Sept 1 general rate increases (GRIs). FEU spot rates to the US West and East coasts are well above $2,000 and 3,000, respectively, according to the Shanghai Shipping Exchange's Shanghai Containerized Freight Index. Tight capacity and elevated spot rates have spurred some ocean importers to turn to air cargo services, just as that market heads into another high rate-low space peak season. C.H. Robinson noted that tight space was pushing load factors up into the middle- to high-90 percent range in some cases. "Ocean vessels are overbooked so shippers are coming to us to convert required shipments to air," the forwarder said, with China's e-commerce boom adding extra air volume to the amount of freight that typically moves this time of the year. There is a general acceptance among both direct importers and non-vessel-operating common carriers (NVOs) that at least through September the upward pressure on rates is likely to continue, said Michael Klage, solutions director at TOC Logistics. "The feeling is this isn't going away, so we'll have to deal with it." Global Port Tracker, which is published monthly by the National Retail Federation and Hackett Associates, predicts that August will be a record month, with imports increasing 4.4 percent over August 2017. Global Port Tracker projects a 2.1 percent year-over-year increase in September and 4.9 percent in October. The next few weeks will be marked by additional uncertainties. The GRIs were scheduled to take effect on Sept. 1, and the Sept. 6 deadline marked the third round of Trump administration tariffs. Carriers and shippers are uncertain as to when the fast-forwarding of shipments to get ahead of the tariffs will have depleted the bulk of the holiday season imports this year. Some forecast that the spike in imports in August will be followed by another surge around Oct. 1, when factories in Asia will close for the Golden Week celebrations. "There could be a double peak this year," said Bruce Chilton, vice president of trade management at Ascent Global Logistics. There is general agreement among shippers that the intensity of imports experienced so far is not sustainable through October. They believe volumes will drop off, either in mid-September or aer the pre-Golden Week shipments leave Asia. "I can't imagine that this will last more than one week aer Golden Week," Klage said. "When it does end, I can see it going from 110 percent booking to 70 percent very quickly," he said. The trade also anticipates a shorter slack period this year between the end of the holiday shipments and the beginning of the pre-Chinese New Year spike. The factory closures for Chinese New Year in 2018 began on Feb. 16, but next year Chinese New Year will be on Feb. 5. Blank sailings blanket Asia-Europe trade Sailing withdrawal announcements on trades between Asia, North Europe, and the Mediterranean are beginning to flow in for the slow season, as ocean carriers try to take advantage of improving market fundamentals and rebound from first-half losses exacerbated by higher-than-usual fuel prices. The Ocean Alliance of Cosco Shipping, OOCL, CMA CGM, and Evergreen is canceling two Asia-North Europe sailings, and two sailings each to the East and West Mediterranean in October. 2M carrier Maersk Line has announced it will suspend an unspecified Asia-North Europe 2M service in either late September or early October to "balance our network in line with market Advertisers 18th Annual Port of New York-New Jersey Port Industry Day, portindustryday@yahoo.com .................. 19 45th Annual S.C. International Trade Conference, www.scitc.org/keynote-speakers.html .................................... 15 Alabama State Port Authority, www.asdd.com ...................... 53 CN, www.cn.ca ................................................................................ 2 Cosco Shipping, www.cosco-usa.com ..................................... 25 CP, www.cpr.ca ................................................................................ 5 CT Logistics, www.ctlogistics.com ............................................ 79 Florida Ports Council, www.flaports.org ................................. 49 Hamburg Sud, www.hamburgsud-line.com ........................ 103 HMM, www.hasaspecialbusiness@hmm21.com .................. 67 IMC Companies, www.imccompanies.com............................ 81 Jaxport, www.jaxport.com ........................................................ 57 Litco, www.litco.com/export-grade-pallets ............................ 23 MSC, www.msc.com/intermodal ............................................... 9 North Carolina Ports, www.ncports.com ................................ 71 nVision Global, www.nvisionglobal.com ................................ 97 Ocean Network Express, www.one-line.com ....................... 104 Penske, www.gopenske.com .................................................... 13 Pilot Freight Services, www.pilotdelivers.com ...................... 75 Port Everglades, www.porteverglades.net ............................. 89 Port Houston, www.porthouston.com, .................................... 55 Port of Baltimore, www.marylandports.com......................... 85 South Carolina Ports, www.scspa.com/supplychainauthority .................................. 63 Watson Land Company, www.watsonlandcompany.com............................................... 43 Yang Ming, www.yangming.com ............................................... 59 Shutterstock.com

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