Ocean Freight Update

As part of our commitment to keeping you informed about news that might impact your supply chain, please take note of the following developments affecting the industry:

  • The year-over-year rate of growth for Trans-Pacific imports slowed from 5.9 percent in the first half of 2017 to 4.6 percent for the first half of this year. This slowdown, along with the series of new tariffs being imposed between China and the US, have been cited by carriers as a catalyst in recent capacity cuts.
  • Thus far, the tariffs imposed between China and the US have affected 6.2 percent (approximately 830,095 TEUs) of the China-US container trade this year; if the tariffs that are currently being reviewed by both sides are implemented, 8.1 percent (or 1.1 million TEUs) of the goods shipped between the two countries may be affected.
  • In response to market conditions, Zim has partnered with the 2M Alliance, and both parties have agreed to remove one string each from their Asia-US routes. The cuts will result in Zim operating just one string on the Asia-US East Coast routes, and 2M operating four. Zim and 2M will have capacity allocations on each other’s strings, but the overall capacity will be impacted. Spokespeople for the firms involved noted rising bunker fuel costs and the threat of reduced demand as reasons for the partnership and elimination of service strings.
  • The Asia-Europe market has seen a similar slowdown trend with container volume rising just 0.7 percent in the first five months of 2018 as compared to 4.4 percent last year. Carriers on these trade lanes have also cut capacity citing the traditional slowdown of freight in the summer before the September peak season as the main driver.

AGL will continue to monitor supply chain related events and advise you of any changes that may impact the efficiency and planning of your supply chain.