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August 28 2023

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14 Journal of Commerce | August 28, 2023 www.joc.com Container Shipping Quarterly Special Report CONTAINER SPOT RATES from Asia to the US West Coast continued to move higher in August, though forwarders caution that despite a ramp-up in blank sailings that began to thin capacity in July, the rally may still be short-lived. Retailers and forwarders braced themselves for another general rate increase (GRI) mid-August in the eastbound trans-Pacific, although they said spot rates would likely hit a ceiling of about $2,000 per FEU to the West Coast that will carry the Asia-US trade into October. Spot rates to the US West Coast have more than doubled since June thanks to a seasonal increase in import demand and labor-related supply chain disruptions, but mostly because carriers have managed capacity by aggressively blanking — i.e. canceling — sailings, according to industry analysts. According to Sea-Intelligence Maritime Analysis, carriers blanked nearly 20% of total capacity to the West and East coasts of North Amer- ica in July. That is the highest level of blanking since February through April, when import volumes hit their lows for the year thus far. Asia–US West Coast spot rates reached $2,150 per FEU as of Aug. 14, up from $1,050 per FEU at the end of June and the highest since September 2022, according to data from Platts, a sister product of the Journal of Commerce within S&P Global. Spot rates have been pushed higher by seasonal demand for merchandise, draft restrictions on the Panama Canal, cargo-handling disruptions in Vancouver and Prince Rupert during recent labor contract negotiations, and most importantly, blank sailings. "Spot rates are getting pretty high," David Bennett, CCO at for- warder Farrow, told the Journal of Commerce Aug. 14. Carriers "across the board" announced another round of GRIs for mid-August, Bennett said, filing for increases of $1,000 per FEU. Although that is the maximum they intend to charge, the increases generally end up being several hundred dollars. A good indication that carriers feel confident about their ability to get another GRI to stick is that they are strictly holding customers to their cargo allocation limits, Bennett said. A shipper's or forwarder's allocation is its total annual minimum quantity commitment divided by 52. This spring, when import vol- umes were weak, carriers provided as many container slots as customers sought, even if the number exceeded a customer's weekly allocation, Bennett said. However, beginning about two or three weeks ago, carri- ers began enforcing allocation limits contained in service contracts. Any shipments above the allocation have either been rolled to subsequent voyages or the customer had to pay spot rates, or in the case of forward- ers, freight all kinds rates, which are higher than service contract rates, Bennett said. "It's tough getting on vessels," Rachel Shames, vice president of pricing and procurement at the for- warder CVI International, told the Journal of Commerce. "You really do have to book three to four weeks out, even the beneficial cargo owners." Hitting the 'ceiling' However, Christian Sur, execu- tive vice president for ocean freight contract logistics at Unique Logistics Topping out Spike in trans-Pacific spot rates may already be waning By Bill Mongelluzzo "It's tough getting on vessels."

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