Lines will be hard-pressed to enforce peak season surcharges from Aug. 15 on Asia-U.S. lanes, said analysts and forwarders based in Asia.
“I don't think this will happen,” said Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics. “Business is very slow at the moment. I think the carriers will make the announcement but still hold off from enforcing (the surcharges) for at least two to three weeks, and wait to see how the market reacts and then decide what to do.”
Janet Lewis, regional head of industrials and shipping research in Asia at Macquarie Capital Securities, said she was “dubious” carriers would be able to enforce an increase amid overcapacity.
“Volumes on both Asia-Europe and trans-Pacific are up year-on-year and are likely to remain well ahead of last year's levels, but vessel supply is up more.”
However, she said the supply-demand balance could level out as the third quarter progressed. “Inventory levels in the U.S. are very low and there are indications that shipments will be strong in September/October,” Lewis said.
The Transpacific Stabilization Agreement said the peak season surcharge would be introduced from August 15 after a two-month delay.
But analysts said that load factors from Asia's main ports were still poor for carriers. As reported by JOC, the average spot rate for shipping a container from China to the U.S. West Coast is now at its lowest point in 20 months as the impact of excess vessel capacity continues to be felt even as the traditional peak season eastbound peak season looms.
Tsui admitted carriers could see more success with PSS in September but added that “lots of direct customers such as the big multi-nationals have already contracted to avoid PSS, so lines are most likely to target smaller shippers.”
“We will have to wait to see if they’ll even manage to implement a PSS this year at all, they have already reduced sailings and slowed ships, but the market has still not picked up even though volumes higher this year. There is just too much new capacity.”
In announcing the PSS, TSA claimed U.S. retailers were restocking and demand was now increasing.
“Carriers have recently experienced a steady increase in traffic that suggests steady, stronger demand in the three months to come,” said TSA executive administrator Brian M. Conrad.
“Based on more robust forward-bookings and other favorable market signals, the consensus is now that the eastbound trade lane has begun the customary seasonal ramp-up to a pronounced peak.”