NEWS 

Tight trans-Pacific capacity leads to rolling of cargo in Asia

Corianne Egan, Associate Editor | Aug 25, 2014 12:10PM EDT

Cargo is being rolled and space allocations are being cut on trans-Pacific eastbound services as capacity continues to tighten to the U.S. East Coast. Space to the U.S. West Coast is also extremely tight, shippers say, reflected in stronger volumes moving through West Coast ports.

Volumes jumped to the East Coast in July, and the spike has continued through August, partly due to peak-season shipments and diversion traffic as shippers sought to avoid potential labor-related disruptions on the West Coast. Ships are reportedly moving at, or very near to, full capacity to the East Coast.

Shippers in Asia say carriers are being selective about the cargo that makes it onto the trans-Pacific trek. Customers who pay higher prices, and whose cargo is therefore more lucrative for the carriers, are getting slots at the expense of those who pay lower contract rates. That is placing some shippers with contracts signed at lower rates than today’s spot rate at a disadvantage versus spot market shippers paying current rates.

“You’re stuck with ships of 7,000 and 8,000 TEUs to the East Coast for volumes you can’t even begin to envision,” a senior executive at a major container line told JOC.com. “Anyone operating in the trans-Pacific is not only sold out but they’re rolling cargo. That’s not good. That’s a bad business practice.”

So as not to antagonize business partners they depend on, many were unwilling to be identified when commenting on the subject. Non-vessel-operating common carriers fear being shut out of ships if they publicly criticize carriers. But several high-level, knowledgeable sources — carriers, 3PLs and shippers alike — have confirmed the rolling of cargo.

Continue reading on www.joc.com 


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