Trans-Pacific Eastbound Space Situation

Posted on May 21

The recent unprecedented wave of voided sailings that ocean carriers in the TPEB trade used to reduce capacity after a COVID-19-related drop in demand was met by a sudden surge in export volumes from China over the last two weeks as especially retailers were starting to increase their restocking volumes in light of the lifting of restrictions in the US and other countries.

The resulting tightened space situation led to more cargo than usual being subject to rolling, as carriers that had already overbooked their available sailings by up to 110% now did not have additional capacity available to lift all cargo that arrived at the ports. In some ports, especially Shanghai, the number of rolled containers on certain sailings was reportedly as high as 1,000 TEU.

The current level of cargo is actually not so much atypical but rather normal for this time of the year, the problem is on the capacity side where carriers cut over 17% of available vessel space through voided sailings over the last few months by voiding over 120 sailings to the US coasts.

The market expects that the phase of voided sailings will be over after in the next few weeks moving into the second half of June and that booking levels will gradually be reduced to lower 90% planned utilization factors which should result in a return to a more relaxed situation once the backlog created by the capacity crunch has been resolved.

However, the market will most likely remain volatile. Although carriers appear to not plan further voided sailing in Q3/2020, usually the busiest season in the TPEB trade, it will be extremely difficult for the carriers to judge the space and demand levels that are very much driven by uncontrollable items, mainly the development in the destination countries after they open their economies again. Spikes in new COVID-19 cases that result in countries returning to strict measures that negatively impact retailers and manufacturers can lead to a quick return to capacity limits which would then be a repeat of what we see at the moment.

Carriers have pre-planned voided sailing until the end of June, so the tight space situation will most likely not resolve before mid- to late-June, by then it will also be known if the countries that are currently opening up will stay open which would in turn result in demand levels increasing further and carriers returning capacity into the market.

Cargo rolls are unpredictable as they depend on various factors and cannot really be controlled. Booking and delivering cargo to the port early can definitely lower the chances of containers getting rolled, and premium services are available with certain carriers to protect space and avoid rolls if certain criteria are met.

Please contact your Sales Representative or your Account Team to learn more about options for your cargo.