Tight market conditions persist, especially on Asia-US lanes. Vessels are booked out weeks in advance, and carriers are prioritizing higher-paying spot/FAK cargoes by limiting contract/long-term rate space. Extra loaders are being brought in at premium FAK rates. Carriers are implementing additional peak season surcharges effective June 1. Some carriers are also increasing the bunker fuel component of rates for June, while others are waiting until July/Q3. Spot rates overall are expected to increase again for June 1. Many June vessels are completely overbooked, even for spot-rate cargo.
There are various explanations for the surge in demand and rates. Forecasts were not especially strong for May and June, so carriers blanked sailings expecting weak demand. Some are pointing to front-loading by shippers to get ahead of higher Q3 bunker charges. There is also speculation that Amazon’s Prime Day shift from July to June is fueling the market.
These market conditions are likely to last through June, perhaps longer. Advance booking, including pre-booking 4-6 weeks out, is critical to securing space.
On the domestic side, truck capacity has been tightening for several weeks. A recent US Supreme Court decision that opens truck brokers up to more liability has further fueled the market. Carrier vetting is getting stricter, and carriers with poor safety records are being sidelined. Costs are rising due to less capacity, higher insurance costs, and higher fuel costs.
Early booking on all modes is highly recommended.
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Rachel Shames
VP, Pricing & Procurement
CV International, Inc.