Trans-Pacific Cargo Space Vanishing Fast Ahead of Tariff Deadlines
Glenn Taylor
5 min read
Retailers, brands and other importers are in a scramble for ocean freight space as they seek to bring goods into the U.S. ahead of two tariff deadlines in July and August, and a batch of new expected surcharges.
The logistics services provider says it doesn’t expect additional space to open until June.
“Almost all clients who had cancelled shipments have started booking again,” said Clint Dvorak, vice president of ocean freight at Seko Logistics, in an update Monday. “Peak season surcharges and general rate increases are due to be implemented, and additional space won’t be available until next month—and we are coming into the normal pre-holiday peak season.”
According to Frank Wiltgen, senior vice president at freight forwarder American Shipping Company, “with limited capacity at this time, the talk has changed from the tariffs to space.”
In a customer update posted on LinkedIn early Wednesday, Wiltgen shared similar concerns as the Seko team about low capacity and tight space in the trans-Pacific ocean freight market.
“It is likely at this stage, reading this news flash, that all new bookings from this point forward are for June vessel sailings,” the update read.
American Shipping Company told customers that booking requirements are now at a minimum of three to four weeks before the target vessel sailing date. Several carriers in contact with the company are recommending booking five weeks in advance, if possible, due to the volume surge.
While importers had sought to avoid the higher prices caused by the tariffs by cancelling bookings, they are now ramping up orders to get out in front of costs added by the new surcharges and rate increases.
For example, as of June 1, Maersk is hitting customers with peak season surcharges totaling an extra $1,000 per 20-foot equivalent unit (TEU) and $2,000 per 40-foot container (FEU) for any cargo shipped from China and east Asia to the U.S. and Canada.
And on June 1, major ocean carriers on the trans-Pacific trade lane will implement a GRI that will add approximately $3,000 more cost per 40-foot container, according to Wiltgen’s analysis.
“Those capable of pushing orders out now, want to avoid the higher rates and are trying to a sailing before the end of the month,” said Wiltgen. “This has put major constraints on the ocean carriers in the last two weeks of May and while they contend with a short supply of capacity. The savings can be thousands of dollars for shippers, yet many will not get space in time to avoid this.”
This rush is compounded by the fact that some carriers started to cancel bookings already made in advance in favor of higher-revenue cargo or higher-priority clients as they look to capitalize on the increased volumes. The update indicated that carriers were honoring larger contract holders that have been sidelined in recent weeks, due to the high China tariffs, which at one point were 145 percent.
The back and forth has exacerbated the ongoing reshuffling out at sea.
After weeks of blanking sailings due to the drop in demand when the tariffs were put in place, many carriers are now working to normalize vessel capacity and reinstate services they removed and insert vessels back into their normal rotation. In one such recent example, ZIM reinstated its trans-Pacific Z2X service that it scrapped in April.
According to American Shipping Company, the carriers have said this realignment could take another two to four weeks to balance out.
As more services come back online and vessels keep rushing out of China, port congestion in the market has start to become more of a concern.
Hapag-Lloyd said in a customer advisory that vessels are waiting up to 72 hours to berth at Qingdao and at Shanghai’s main Yangshan offshore port complex due to heavy vessel bunching and congestion.
Qingdao has a 1.75 queue-to-berth ratio, with 232,196 TEUs at anchorage and 131,529 TEUs docked at the port, according to data from Linerlytica. This represents the second-highest queue-to-berth ratio of any major port with more than 100,000 TEUs at anchorage and at port, after the Port of Gibraltar.
The vessel bunching has also impacted the Port of Ningbo, which is seeing berthing delays of up to 36 hours.
Outside the country, ships at the Port of Singapore are enduring berthing delays of as much as 36 hours, while those in Busan’s Newport International Terminal could see backlogs extending to 72 hours.
Congestion is also befalling some European ports. In a webinar on Thursday, Jannik Amstutz, senior manager of ocean freight, Germany at Flexport, said Europe’s ports including Bremerhaven are averaging “roughly about five to six days of congestion.”
While the congestion in Bremerhaven is due largely to labor constraints, weather patterns have impacted major northern European gateways like Antwerp and Rotterdam.
“Too little rain is not helping the Rhine levels to allow us to use barges to the full extent, especially from Antwerp and Rotterdam, so this is likely to impact the congestion,” Amstutz observed.
While Port of Los Angeles executive director Gene Seroka noted that there won’t be “a deluge of freight” at the port when the newest wave of cargo orders flocks in next month, there’s no guarantee U.S. ports won’t encounter a similar fate to their Asian and European counterparts.
“The U.S. infrastructure and West Coast Canadian ports (Vancouver and Prince Rupert) will be tested in the coming weeks to see if surging freight can be managed seamlessly without congestion, transit delays and equipment shortages after reaching the port of unloading,” said the update from American Shipping Company. “Past surges have shown weakness at times, yet ports and railroads in the U.S. say they are ready.”
