Shippers see TP roll-up, rates falling

   The number of eastbound transpacific shippers whose cargo was rolled has increased markedly since November, according to American Shipper’s latest survey of shippers, intermediaries and carriers in the trade.
   In November, American Shipper found that 31 percent of shippers had experienced recent cargo rolls, but that number spiked to 60 percent, according to the most recent poll, conducted Jan. 27-30.
   American Shipper’s Transpacific Pulse survey drew responses from 124 shippers or intermediaries and 16 liner carriers, who gave their views on capacity and rate issues on the most crucial U.S. trade lane.
   Most shipper respondents expect to see capacity tighten in the next few months, with 3PLs much more likely to witness tight or very tight (56 percent) capacity, compared to retailers (36 percent) or manufacturers (26 percent).
   Large shippers, in particular, are more inclined to see their capacity as tight, with 70 percent saying they see capacity as tight or very tight, compared to 35 percent of mid-sized shippers and 26 percent of small shippers.
   For reference, 40 percent of respondents move less than 2,000 FEUs per year (defined as small shippers), while 24 percent move more than 25,000 FEUs per year (defined as large shippers), and the remainder move 2,000 to 10,000 FEUs (defined as mid-sized shippers).
   Unsurprisingly, there also appears to be a significant correlation between shippers’ impression of capacity and whether their cargo has been rolled recently. Exactly 60 percent of shippers surveyed said they experienced cargo rolls recently, while virtually the same percentage who said their cargo had been rolled saw capacity as tight or very tight.
   Roughly one-third of overall respondents see capacity as tight and another third see it as even.
   It’s important to note that 51 percent said rolls are not happening often, while only 9 percent noted it’s happening at an increasing rate.
   The rolls are still afflicting large shippers to a greater degree than other shippers. Nearly 80 percent of large shippers have been affected by rolls, compared to 56 percent of mid-sized shippers and 50 percent of small shippers. In addition, nearly one-fifth of large shippers are seeing rolls happening at an increasing rate (double the overall percentage).
   Meanwhile, two-thirds of shippers said they expect capacity to be removed in the coming months, with the vast preponderance of those saying a moderate amount will be removed.
   Nearly 60 percent of shippers expect rates to fall after Chinese New Year, compared to only 20 percent who expect rates to rise. Only 1 percent of shipper respondents expect rates to increase significantly, compared to 13 percent who expect rates to drop significantly.
   Large shippers have the highest expectations of rate declines in the coming weeks. Eighty-four percent anticipate rates will drop moderately or significantly, compared to 65 percent of mid-sized shippers and 41 percent of small shippers. It’s clear that small shippers are more worried about the impact of capacity reductions on the eastbound transpacific. Nearly 30 percent expect rates to rise after Chinese New Year, compared to only 16 percent of mid-sized shippers and 8 percent of large shippers.
   One area where most respondents agree: they expect carriers to idle a moderate amount of transpacific capacity in the next few months. Around two-thirds of shippers concurred, and the percentage hardly varies by category or size of shipper.
   More than 80 percent of shippers saw their rates rise in the last month – little surprise given that rate indexes trended up in the weeks prior to Chinese New Year – while only 2 percent saw rates decline.
   Fifteen percent said the increases didn’t affect their rates because their rates were locked in for the year. Of this group, retailers were more successful than manufacturers or 3PLs. Nearly 30 percent of retailers locked in their rates, compared to 21 percent of manufacturers and only 2 percent of 3PLs. Another benefit to locking in annual rates: shippers were less likely to be rolled. Only 12 percent of shippers whose rates were locked in had experienced rolls, compared to 60 percent of total respondents.
   Among the 16 carrier respondents, nearly three-quarters expect to see capacity tighten in the coming months.
   In terms of capacity being removed from the eastbound transpacific, there appears to be a gap between what shippers expect and what carriers are planning. Sixty percent of carriers said they don’t plan to remove capacity in the spring, while only 31 percent of shippers expect capacity levels to remain stable or increase. Twenty percent of carriers said a moderate amount of capacity will be removed, while 13 percent said a small amount will be removed.
   Carriers predominantly said their rates have improved in the last month, with nearly three-quarters saying their rates rose moderately or significantly. In comparison, 55 percent of shippers said their rates increased moderately or significantly.
   But carriers largely don’t expect rate momentum to sustain. Thirty-eight percent said they expect rates to drop post-Chinese New Year, while another 38 percent said they would remain the same. The remainder expect rates to rise moderately. — Eric Johnson