TP Pulse: Asia-US rate increases in March stuck

   There’s evidence that rate hikes implemented by major carriers on the transpacific in mid-March worked.
   According to the latest edition of American Shipper’s Transpacific Pulse survey, roughly 64 percent of respondents said their rates had risen in the last month, with more than 23 percent saying rates had gone up significantly.
   Another 20 percent said rates remained the same in the last month, meaning nearly 85 percent of respondents had either seen rates rise or hold stable in March.
   The survey, conducted March 27-30, included responses from 97 shippers (including beneficial cargo owners (BCO) and 3PLs/intermediaries) and 11 liner carriers.
   3PLs and intermediaries were the hardest hit by the rate hikes, with nearly half saying their rates had risen significantly, and more than 90 percent saying rates had risen. Beneficial cargo owners were less hard hit, with 35 percent saying rates rose modestly, 29 percent saying they stayed the same and only 9 percent saying rates rose significantly.
   Importantly, more than 18 percent of BCOs said they had locked their rates in for the year and were not affected by the March rate increases. Zero 3PLs said their rates were locked in for the year.
   The March Transpacific Pulse signaled a big shift in cargo rolls, as nearly two-thirds of respondents said their cargo had not been rolled recently. That compares to 60 who said in the January Transpacific Pulse that their cargo had been rolled. Another 30 percent responded in March that rolls were happening, but not very often. That leaves only 5 percent of shippers who said rolls are happening at an increasing rates.
   Again, 3PLs have been impacted more heavily, with half of 3PL respondents saying they had been rolled recently, compared to 25 percent of BCOs. What’s more, no BCO respondents said rolls were happening at an increasing rate.
   In this edition of Transpacific Pulse, respondents were also asked what they were doing to prepare for a potential strike action by longshoremen at U.S. East Coast ports and resulting disruptions to transpacific all-water services.
   Nearly 40 percent indicated they would route cargo via the U.S. West Coast to avoid any potential disruptions. Eleven percent said they would route cargo via East Coast Canadian ports (which would be unaffected by an International Longshoremen’s Association). Another 10 percent said they would ship cargo earlier in the year.
   But 42 percent said they weren’t worried about a strike and likely wouldn’t make major changes to their supply chains. Smaller shippers were less concerned about a strike than larger shippers – 51 percent of smaller shippers said they aren’t likely adjust their supply chains, compared to 33 percent of large shippers.
   Another development worth noting: 63 percent of shippers believe carriers will idle services in the coming months, which is almost exactly the same as was found in January. Most (55 percent) believe a moderate amount of capacity will be idled. Nineteen percent believe capacity will remain at current levels, while 15 percent believe capacity will be increased either moderately or significantly.
   It appears that roughly two-thirds of shippers are perpetually fearful of capacity cuts.
   In terms of current capacity levels, 43 percent of respondents see capacity as even at present, 27 percent sees it as tight, and 22 percent see it as soft. Four percent see it as very tight and another four see it as very soft.
   Larger shippers are more likely to see capacity as tight, with half of those shipping more than 25,000 TEUs per year saying they saw capacity as tight or very tight, versus less than 19 percent of small shippers (those moving less than 2,000 TEUs per year).
   Nearly two-thirds of those saying they saw capacity as tight or very tight were 3PLs or intermediaries, compared to 37 percent of shippers.
   Among carrier respondents, six of the 11 respondents see capacity tightening in the next two months, while two said capacity will stay the same and another two expect capacity to increase. Ten of the 11 respondents said they had rolled cargo in the past month, with three of those saying they had “many” rolls.
   Six of the 11 carriers said they will not be removing any capacity in the spring, while two said they would remove a moderate amount. None said they would remove a considerable amount.
   Ten of the 11 carriers said their rates had risen in the last month – seven of which said the rise was moderate. One carrier said rates actually declined in the last month. — Eric Johnson