TRANS-PAC CARRIER QUESTIONABLE PERFORMANCE AND DELAYS LIKELY TO CONTINUE
TOC LOGISTICS INTERNATIONAL INC. would like to provide the following update regarding Trans-Pac delays:
The recent implementation of 25 percent tariffs on Chinese-made goods by the Trump administration have the potential to cause imports to drop this peak season, possibly by double digits. However, this decrease in volume does not mean that freight rates in the eastbound Trans-Pac will drop, as carriers will likely manage capacity by scheduling “blank sailings” or cancelling sailings in order to keep demand high and prices high.
This means that current delays in the eastbound Trans-Pac, caused by poor performance, congestion, and bad weather, will likely continue or worsen. When carriers choose to schedule “blank sailings” there will be more delays to the supply chain transit times. Many carriers, in the past, have responded to the fluctuating US import volumes by adding blank sailings when bookings are low, and adding in extra loaders during surge periods. However, adding extra loaders increases capacity and the ocean carriers are not likely to give up the leverage they’ve earned over the last year and risk having the spot market pricing drop and reduce or eliminate their margins.
While many importers are moving quickly to reserve space in Foreign Trade Zones, the already-limited FTZ space in the country could be at full-capacity in short order. FTZ activity in certain areas has reportedly tripled over the last nine months, meaning this option is not a fail-safe.
TOC Logistics strongly suggests that Buyers, Planners and Logistics personnel make all necessary preparations to review lead times, consider extending lead times, and prepare for a season of possible continued delays.
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