In September and October, sea freight, especially Vietnam-US West Coast tends to decrease, DEEPLY. The number of containers imported into the US decreased, and major ports such as Los Angeles/Long Beach operated stably. However, by the end of December and early January, there was a sudden increase in cargo volume, so there could be congestion at this port.
According to Freightos data, freight rates for 40ft containers from Vietnam to the US West Coast have dropped more than 80% since May 2022, and to the East Coast have also dropped by nearly 2/3. One of the main reasons given by analysts is the reduction in consumer spending due to inflation, economic crisis, and geopolitical fluctuations… this has affected the sales of many importers in the past two years.
EVENTS
The Trans-Pacific East Bound route to USEC or USGC through the Panama Canal was interrupted by drought and low water draft, causing ships passing through here to have limited tonnage or have to wait many days to pass.
Congestion at the Panama Canal caused shipping line operators to redirect their fleets to the East Bound through the Red Sea and enter the Suez Canal. Probably due to heavy ship traffic, the ONE Orpheus ship collided with a bridge in Suez on December 6 (resolved). Also, the violent incident in the Red Sea a few days ago on December 18th caused operators a headache in navigating the ship around the Cape of Good Hope, crossing the South Atlantic Ocean, and reaching the East Coast of the US. This prolongs shipping time by 2 weeks or more, increases fuel costs, and prolongs transportation risks…
SITUATION
Freight rates will increase sharply in Jan 2024
For exporters from Vietnam or importers to the US, there is some information that can affect your business as follows.
- No space available in January 2024 (especially for US East Coast routes)
- Longer transit time.
- Limit Gross weight per container.
- Spot rates have increased sharply in the first half of January, and guideline rates have increased over $1,000/40HC for both coasts.
- There is a possibility of port congestion on the West Coast, due to a sudden increase in cargo traffic in a short period.
- It is expected that in such situations, GRI and PSS surcharges will be applied next month.
SOLUTION
Arrange space soon; change to another shipping option
Advice from a person working in the shipping industry on US trade route for your reference:
- If possible, gate in your container before December 31 to avoid sudden freight increases
- You should arrange space ASAP, or if possible, fix the spot rate for your shipments NOW.
- Anticipate that long shipping times will affect delivery schedules.
- For Reefer Cargo and urgent shipments can choose the MLB or IPI option to speed up delivery. However, you should also note that the weight of goods is also quite limited.
Given the current unpredictable circumstances, it is difficult to know exactly what will happen in the near future. However, with the facts mentioned above, you can refer to the information and make a decision. Or if you need more in-depth advice, please message our team of Tactical Sourcing for support.
The TSC Team,
#tacticalsourcing #freightforwarder #Transpacific #goodfreighfromvietnam #vietnamsourcing
