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July 6 2020

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16 The Journal of Commerce | July 6 2020 Top Trans-Pacific Carriers and Ports Special Report TENSIONS BETWEEN CONTAINER carriers and some US importers and forwarders are building as tight capacity management and a surge in Asia–US spot rates draw accusations that carriers are artifi cially propping up rates, with two dozen blank sailings scheduled from early June to early August. With cargo forecasting likely to remain uncertain into the peak season and reports of rolled cargo mounting, some container lines concede they may overreach when it comes to canceling sailings, but they maintain they are prepared to reintroduce capacity quickly should imports suddenly pick up. Non-vessel-operating common carriers (NVOs) and carriers agree that the mid-June spike in eastbound trans-Pacifi c spot rates was caused by aggressive capacity management, but where shipper sources see an orchestrated e ort to push rates higher, carriers deny any attempt to manipulate pricing through blank sailings. Furthermore, carriers warn that unless retailers provide more guid- ance as to the size of purchase orders for holiday season merchandise, con- tinued volatility in cargo volumes and spot rates is possible. Spot rates spike The Asia–US West Coast spot rate on June 12 had increased 29.2 percent from the previous week to $2,755 per FEU, a 10-year high, while the East Coast spot rate increased 18.9 percent to $3,255, according to the Shanghai Containerized Freight Index (SCFI), which is published under the JOC Shipping and Logistics Pricing Hub. The spot rate to the West Coast had increased $1,077 per FEU and the East Coast rate by $712 per FEU in the fi rst half of June, while at the same time imports had been down consis- tently year over year each month so far in 2020. US imports from Asia plunged 18.5 percent in May after declining 1.7 percent in April and 18.3 percent in March, according to PIERS, a sister company of The Journal of Commerce within IHS Markit. Carrier sources said that with all arrows pointing down due to the economic devastation caused by Tight lines Trans-Pacific eastbound slot tensions mount as rolled cargoes rise By Bill Mongelluzzo 100,000 300,000 500,000 700,000 900,000 1,100,000 1,300,000 1,500,000 1,700,000 -20% -15% -10% -5% 0% 5% 10% Mar-19 Apr-19 May- 19 Jun- 19 Jul-19 Aug- 19 Sep- 19 Oct-19 Nov- 19 Dec- 19 Jan- 2020 Feb-20 Mar-20 Apr-20 May- 20 TEU year -over -year % change US imports from Asia plunge to lowest level since 2014 Source: IHS Markit © 2020 IHS Markit Total monthly TEU volume of US container imports from Asia, with year-over-year change

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