The market situation on the Transatlantic westbound seems to be governed by pretty full ships, this to avoid the term “overbooked ships”!
Some US West Coast cargo can only be booked for the earliest sailing in July, capacities to the East Coast are also pretty full, but not as much as to the West Coast.
Obviously carriers try to take advantage of that situation and are working on rate increases as soon as possible to improve the profits on this trade lane.
Most lines are still complaining that the transatlantic trade is a loss maker, but at the rate level that has been reached westbound, the loss cannot come from the w/b direction.
We know that the “real headache leg” of this trade is the eastbound trade that needs to fight for cargo and drives the freight rates downward.
The result is that the westbound customers are more or less supposed to pay for the” whole show”, i.e. for westbound and eastbound. The present filling degree of the ships seems to support the possibility for a GRI, however, there are voices that say that the lack of space situation is more or less homemade.
There were quite some problems in the early months of 2014, when heavy weather caused ships to turn round to go back to Le Havre for an emergency call or to slow down. Then on top we saw some performance problems at the US terminals where bad weather, equipment problems and other issues caused stoppages and slow downs.
The schedule was disturbed to the extent that we saw 3 ships of one alliance on the North Atlantic in one week recently while there were considerable gaps at other times.
As the summer comes up, the schedules will be re-established and a cleaner service pattern will make sure that the cargo will be carried evenly spread, which could lead to the circumstance that the ships will be well filled, but the overflow situation we presently face could be a story of the past.
Notwithstanding these risks we had to face the very short notice GRI of OOCL, increasing their rates by June 1st in a very considerable way, while Maersk had increased their rates more than dramatically on April 1st.
Most carriers, however, had fixed their rates to the end of June and we take it that there will be quite some GRI announcements for July 1st.
It remains to be seen, if by that time the schedules will be back to normal and if the volume that is pushed from one ship to the next will have disappeared.
History tells us that rate increases in the middle of the summer are short lived as vacation time starts and factories, companies, traders etc are closing down, reducing the cargo volume considerably. If that happens, rate erosion will most likely start which would reduce the July 1st GRI or even stop it totally.
Be warned, the chances of a wb GRI on the Transatlantic by July 1st are still out there, so be careful in quoting rates beyond that time without a GRI remark.
For the future, we believe that we are headed for interesting times as the new alliances like P3 and G6 may stand for increasing freight rates, just because a certain leadership will be established, which could cause other carriers to follow the rate increases of the big groups.
We will keep you informed.