China Ocean Shipping Corporation (COSCO) has postponed their scheduled Trans-Pacific rate increase for September 15 under pressure from the Chinese Government. It is expected that OOCL will follow suit on this postponement.
While the Chinese government can only issue this administrative direction to COSCO and OOCL, it is expected that other members of the consortium who share space with OOCL and COSCO, namely CMA/APL and Evergreen, will likely follow suit. Simultaneously, COSCO announced it will suspend their blank sailing program for the period leading up to and through the national holiday October 1 to October 7.
This will allow them to clear any backlog using the sailings just following the holiday. It remains to be seen how other carriers, specifically those in the Alliance and 2M, will react to this postponement but there is a strong likelihood that they will be forced to postpose their scheduled increases as well.
The postponement will apply to other origins in the Far East even though this is not under the administrative direction from the Chinese government. This announcement comes as rates have reached historically high levels with the carriers implementing increases once a month or more since the beginning of the COVID-19 pandemic.
Trade volumes continue to be extremely strong as importers look to replenish depleted inventories and respond to dramatically increased demand. Volume increases have been driven by strong Internet sales and a large amount of PPE which has been moving in the trade. It is important to note that although the GRI has been postponed this doesn’t preclude COSCO or other carriers from charging surcharges tied to space guarantees which have become more commonplace in the trade over the past few months. Recently we have seen such surcharges reaching a level as high as $1000/container. These surcharges, while still isolated, are becoming more evident and popular among the carriers.
Worldwide Logistics Group will continue to provide updates in this rapidly changing environment. More information is expected by Monday.