30 The Journal of Commerce
|
Januar y 7 2019 www.joc.com
Maritime
2019 Annual Review & Outlook
AFTER ENDURING EXTREME rate
volatility in 2018, carriers and
importers in the eastbound Pacific
will enter service contract negotia-
tions cautiously this spring, seeking
to achieve mutually agreeable rate
levels that truly reflect supply and
demand in the largest US trade lane.
"There will not be a return to last
year," when annual service con-
tract rates were, from the carriers'
perspective, disappointing and
unacceptably low at about $2,200
per FEU to the East Coast and $1,200
per FEU to the West Coast, predicted
Lawrence Burns, senior vice presi-
dent of trade and sales at Hyundai
America Shipping Agency. Carriers
responded by reducing capacity by
6 percent to the West Coast and
1.3 percent to the East Coast.
When imports increased strongly
last summer, due in part to front-load-
ing of shipments to get ahead of
Trump administration tariffs on
China, spot rates soared by more than
$1,000 to each coast, and remained
high through the peak season as the
threat of an increase to 25 percent
tariffs loomed on Jan. 1 this year.
Michael Klage, solutions director
at TOC Logistics International, said
carriers and importers learned from
last year's roller-coaster ride that
started with low service contract
rates in May and led to unusually
volatile spot rate adjustments later
Contracting
caution
A rocky 2018 peak season
and the IMO's low-sulfur fuel
rule will shape annual
trans-Pacific service contracts
By Bill Mongelluzzo
