Rate Outlook + Weather
Readers,
We are luckily not discussing any new tariff actions this time around — a welcome respite from the chaos that has gone on far too long.
The topic on everyone's mind of late has been one major point: rates. Shipping costs from Asia to North America have been climbing since late April, with prices more than tripling in recent weeks and reaching levels not seen outside the COVID-era market.
Others and I have been hinting, hopefully, that prices would be turning by now — in fact, August 1st was our initial expectation for pricing declines and carrier pullback. As we now approach September, the unfortunate reality is that this has yet to happen.
On the positive side, incentive pricing options have become more available, though they remain rare. Quotations should be viewed as the "worst case" cost scenario, and we will relay any special pricing case by case. Steamship lines are again discussing increases for September, and we will have to wait out those decisions before drawing conclusions as to whether pricing holds steady, climbs, or falls.
Market Conditions: The increased pricing levels are not without at least some legitimacy. Triggered by a new war, higher fuel costs, and significantly stronger shipping demand, the market continues to face challenges that support carrier price hikes.
Weather in Asia has been a key factor over the last month. The "Super" El Niño is likely driving a more active season in the western Pacific, bringing consistent typhoons to China and the broader region. The same system is bringing less precipitation to the eastern Pacific, directly impacting the Panama Canal.
Overall shipping volumes in August are down compared to July, but three typhoons in five weeks have left ports with extensive congestion, operational challenges, and omitted port calls. The effect is a substantial live loss in capacity. In Shanghai, vessels awaiting berth hit a two-year high of 201 on 8/13, with waiting time reaching 12 days. Shanghai may see two additional typhoons in the next 10 days.
The Panama Canal Authority is the other factor at play as we look ahead. Effective September 3, it may reduce daily transits:
Current: 35–36 vessels per day
From September 3: 9 slots for Neopanamax vessels (no change); Panamax slots reduced to 25 (-2), then to 23 (-4) on 9/15
Space:
China: Shanghai, Nanjing, and Ningbo are facing very tight space as a result of typhoons.
Vietnam: Very tight for premier carriers through the end of September. Second-tier options are open at higher cost and slower transit.
Malaysia: Normal
Thailand: Normal
Indonesia: Moderate — booking in advance is key
Philippines: Tight
Cambodia: Normal
India: Extremely chaotic; many shippers will wait 2–3 weeks for the first available sailing. We encourage all clients to book as far in advance as possible.
— The Chain Logic Team
