If you follow freight forwarding transportation news and events, it’s likely that you will have heard quite a bit of bad news lately. Phrases including rail congestion, sulfur surcharge, duty rates, trade wars, tariffs, truck shortages, port congestion, and rate increases have predominated the news. It’s time to flip the switch.
This month, our Cargo Services team is seeing positive news. And best of all its spring.
THE SUN IS STARTING TO SHINE (FINALLY) WITH SPRING
AND OCEAN SHIPPING RATES FOR ASIA ARE DOWN!
That’s right, you read correctly. Rates are down on ocean shipping from Asia to North America. After a tumultuous year that saw a change in peak season patterns, including three duty rate hikes and a trade war with China, it’s finally beginning to look rosy for companies buying import ocean freight.
- There’s space. It’s basic economics. When the supply is high, the price goes down.
- There’s always a natural lull after Chinese New Year. Importers pushed hard to get everything shipped prior to Chinese New Year and now the volume hasn’t returned to 2019 levels.
- Alliances are managing volumes better. Vessels are larger, which means lower “per container rates.” Over the past three years, massive consolidation and resource allocation among ocean lines has allowed for higher capacity on heavy lanes, which means there’s space available.
- Tariffs paused indefinitely. The duty hike to 25 percent was “indefinitely” postponed. While most clients are still paying 10 percent on products from China, the announcement means planning without fear of rushing to get product into the United States before higher duty rates would have taken effect.
And don’t forget the sun is shining. Temps are above freezing.
That’s great for trucking and railroad companies. Cargo is moving and that make us all smile.
Let’s not bask in the sun too much though. We know the good times won’t last forever. Here are some action items we recommend now to avoid challenges later:
- If you haven’t taken the time to diversify your supply chain over the last few months/years, do it now. You can take some risks with lower costs and see if other options work for you. New ports, ramps, truckers and vendors. Look at it all while you have the time to spare. It’ll be busy again very soon.
- Create some breathing room in your shipping cycles. Higher rates will be back. Contract season is not fully upon us and carriers are going to be looking to increase rates as soon as volumes come back up. Consider spending a bit extra now to save later.
- Pay attention to transit time and watch for blank sailings. It’s not uncommon for carriers to skip a port or combine a sailing causing delays while it’s slow. We sometimes joke that ocean shipping is not like Burger King – you don’t always get it “Your Way.” Sometimes cheaper means longer transit.
- Go outside and enjoy the sun. Schedule personal down time. Go on a vacation. Spring Break is upon us. Enjoy your friends and family.
Thank you for your support and continued trust in our tenured team.
As Cargo Services embarks 27 years in business, our team promises to continue
providing honest and expert information and advice.