An injection of capacity by container lines has not prevented some shippers from suffering lengthy delays on trades from Asia to North America.
Despite substantial capacity additions by carriers on trans-Pacific ocean services in recent weeks as demand and freight rates have spiralled, rollovers are becoming a growing problem for liner customers.
Jan Hinz, Senior Director of US Oceanfreight at Flexport, told Lloyd’s Loading List that earlier this summer rollovers had been apparent, primarily because lines had blanked so much capacity. “However, current rollovers are due to increasing demand, not blank sailings,” he added. “Almost all trans-Pacific eastbound strings are running at 100% availability but are also over 100% full.”
Brian Wu, chairman of the Hong Kong Association of Freight Forwarding (Haffa) and director of BEL International Logistics Limited, said shippers not considered a priority by carriers were suffering significant delays.
“Rollover always happen during peak season,” he said. “Especially for beneficial cargo owners paying lower levels, consignments are being offloaded by shipping lines due to overbookings with priority given to higher yielding containers.”
Wu said he expected substantial rates increases through August and into September.
As reported by Lloyd’s Loading List, trans-Pacific freight rates have spiralled through the summer reaching record levels during August.
“With ongoing peak season demand, ocean rates from China to the US have now been on the rise for nearly three consecutive months,” reported Freightos yesterday.
The freight marketplace recorded China-US West Coast rates up 7% this week to a new high of $3,281 per FEU, 148% higher than the same time last year.
“Home goods, appliances and increased PPE orders have China to U.S. East Coast prices increasing to $3,703 per FEU, ‘only’ 40% higher than the same time last year,” said a note.
Fear of a second round of lockdowns has been cited as the reason for the surge in demand and rates on services from Asia to North America.
“I don’t want to speculate on consumer behaviour,” said Hinz. “From our perspective, the strong demand is being caused by three factors: traditional peak season surges to replenish volume ahead of the holidays, the annual rush to import ahead of China’s Golden Week (1-7 October) and sustained PPE (Personal Protective Equipment) demand.
“We’ve also seen especially strong growth in retail and e-commerce sectors such as outdoor equipment and home office supplies.”
Both the China and US authorities are now quizzing lines about the role of cancelled sailings and capacity restrictions this summer, not least because spot freight rates have spiked to such an extent that container lines posted healthy profits during lockdowns despite demand being far below 2019 levels.
Eytan Buchman, CMO of Freightos said that with Asia to US capacity nearly completely restored, this month’s price hikes by carriers were “definitively” demand-driven. “Even with the increases, space is tight, with delays, rolled shipments and premiums for guaranteed spots,” he added.
“If anything, this summer’s rebound in trade has demonstrated that with so many different variables at play in these unprecedented times – the extent of US stimulus, the end of tariff exemptions, consumer behaviour leading into the holidays, and possible new restrictions during COVID’s second wave – we may have to get used to expecting the unexpected.”