North American Importers Paying Premiums On Freight From Asia
The US-China trade war has caused a stir in the freight forwarding community. With change comes uncertainty, and importers are finding out through their time and their wallets.
One of the byproducts of the trade war importers in North America are paying premiums to have their goods shipped from Asian markets to North American markets. New tariffs are impacting the supply of ocean containers travelling overseas to North America. Container ships are unable to keep up with the demand of companies trying to take advantage of the limited amount of time they have to transport their goods overseas before all of the tariffs come into play.
This imbalance between container supply and demand is causing container rollovers where certain importers are paying premiums to essentially bump other containers to ships sailing at later dates. Roll shipments will occur when customer demand surpasses the capacity carriers can load onto their ships. When demand surpasses capacity importers have to pay premium spot rates to ensure their shipments make it on time. Thus importers bringing goods from Asia to North America truly are playing the market. It really is the wild wild west on the trans-pacific.
When goods are not being shipped when expected and are continually pushed back it can be a major obstacle for North American importers. However those who are willing to pay the premiums are still able to get their goods on time, but at a cost.
According to Drewery Shipping Consultants Limited, the two-year spot freight rate trend for the World Container Index has been on a consistent increase since May where it hit a low of $1,200 per 40 ft container. As of early September 2018, it is now approaching $1,800. Comparing today’s rate with September of 2016 and 2017, where the rate was approximately $1,400, has increased by 25-30%.
Conversely, there is opportunity for exporters moving freight from North America to Asia. Now is your chance to secure more competitive rates. If you have the luxury, take advantage of this opportunity on outbound business to Asia.
As the trade war between the US and China continues, the battle between supply and demand will endure the ebbs and flows of the market. As an importer with knowledge of the trade war you have to calculate what is more important for your shipment, money or time? Whatever your situation is, the experienced team at PCB Freight Management can assist you. Contact our air, ocean or ground freight experts to support your next shipment.