The Asia to United States Capacity Crunch

Overview:

• Shippers opt for a premium charge to guarantee to load

• Fixed-rate capacity cut

• USEC and Gulf routings offer some relief

Jessica Wang, Global Pricing Manageress at Honour Lane Shipping, in her weekly market update - notes the alarming capacity shortage on Asia to US and Canada West Coast lanes.

“The current space to the USWC is serious,” Ms. Wang says. So much so, that shippers are resorting to paying a premium charge to increase their chances of getting their containers loaded. As Ms. Wang notes though, “Not all carriers can provide this service, it depends on carriers’ actual space situation and policy… Carriers cut a lot of space normally dedicated to their fixed rates due to the big rate difference between the Spot and Fixed rates.”

The capacity crunch is as much to do with carriers imposing their own blank sailings and rerouting popular sailing routes which had been left depleted during the height of the COVID-19 global shutdown, as it is to do with a surge in bookings as the US begins to reopen. Carriers are expected to add additional vessels into their rotation to address the backlog, but the impact of that capacity will be incremental. Ms. Wang expects the space to improve “… step by step around the end of June or early July.”

Ocean container rates continue to stay strong. The China to US West Coast spot rates are around 30% higher entering June than they were this time last year. eShipping is encouraging US consignees who have the flexibility to route their containers through the Gulf or US East Coast to consider doing so. The capacity crunch is less severe on many of those lanes, and rates remain flat relative to the same time, 2019.