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HomeIndustry NewsAn Overview of the Transpacific Market in Q4 2019

An Overview of the Transpacific Market in Q4 2019

The traditional August-September peak shipping season this year has been a bit disappointing for carriers as many shippers reduced shipments due to the U.S.-China trade war.

While China reduced its exports to the U.S. 6.5% in 2019 compared to 2018, overall, Asian exports only increased around 1.6%. This directly affected transpacific spot rates, and the market rates were the lowest since early 2018.

In September, carriers faced very low spot market rates and entered the month of October looking for cargo. However, upon the end of the golden week in China – the 7-8 day-long Chinese national holiday during the first week of October, with the start of production in Chinese factories, along with aggressive blank sailings and space cuts managed by carriers, the November spot market experienced a substantial increase in rates within the transpacific market.

Blank Sailings and Capacity Cuts

More than 30 blank sailings are being implemented in the October-November season, as carriers withdraw vessels from circulation to both fit them with scrubbers to get the old vessels up to code for IMO 2020 regulations or have vessels ready for low-sulphur fuel adjustments.

Carriers must dry dock vessels for about a week in order to flush high-sulfur bunker fuel from tanks and replace it with the low-sulfur fuel oil mandated by the International Maritime Organization (IMO). Under IMO 2020, all vessels must either burn low-sulfur fuel or be retrofitted with scrubbers in order to keep burning high-sulfur fuel.

Low Sulphur Surcharge

Since recently the proposed low-sulfur surcharge issue has been a big question mark, one by one in the first week of November carriers started to announce their guidelines for their intended low-sulfur surcharge up to $200 per FEU on the U.S. West Coast and $350 per FEU on the U.S. East Coast.

Tariffs and the Ongoing U.S.-China Trade War

The media is reporting that a deal may be reached soon between the U.S. and China, and a potential cancellation of further tariffs may be possible before the December 15th tariff deadline. However, considering the Chinese New Year holiday in 2020 will begin in January 25th, the shipping industry will most likely experience a further cargo rush in mid-December and space issues will continue until mid-February as the back log in shipping is cleared.

In the last quarter of 2019 shippers are once again realizing the importance of diversifying their options and the importance of working with a competent logistics partner that can provide them multiple options and sailings in the last quarter of 2019.

As MTS Logistics, we work with all major steamship lines and provide multiple sailing options in times of need.

Orkun Gonen
Orkun is originally from Turkey and raised in the southern coastal city of Mersin, well known for its warm weather, and commercial marine port and free zone. Orkun’s interest in the shipping industry can be traced back to his childhood and his proximity to Mersin Port and free zone operations. He received his Bachelor’s degree in Global and International Affairs from Binghamton University. Orkun also holds a Bachelor’s degree in international relations from Middle East Technical University Ankara. He previously worked for a global container shipping line and a New York City based freight forwarder holding various positions in operations, customer service, and sales. Orkun is currently our award-winning sales executive covering and developing several areas: Texas, Kansas, Missouri, Tennessee, and New York. He travels to each of these locations every month to meet his clients, prospective clients and vendors in-person to ensure harmonious supply chains. Due to his operational background in the shipping industry, his clients appreciate his knowledge as value in their supply chain and lean on his expertise. His customer service background ensures that his clients experience a very pleasant shipping experience based on open communication, proactivity, and the satisfaction of selecting the right service. Orkun is a firm believer in trust built from the promise and delivery. He tailor fits the service specifically for each of his clients, covering all their special expectations and requirements. Fun Facts: His parents tricked him to taking classical music education and piano lessons since the age of 6. In time, he turned his attention onto other musical instruments and genres, but this eventually turned him into a music nerd playing several instruments. In his spare time, he plays piano, guitar, and drums, and goes to concerts.
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