Asia-to-US Shipping Contracts Fully Booked for the Year
It is going to be a challenging year for the entire shipping industry. March imports in the Transpacific jumped 51%. Every major trade publication is predicting that the 2021 space issues will be much worse than what the industry experienced in 2020.
The carriers have sold out all space for the 2021-22 contract period. This unprecedented space crisis is going to present many challenges to ALL importers. Carriers have reacted by reducing the total volume committed under contracts as well as establishing maximum weekly volume allocations. Both of these carrier actions will present space problems for shippers.
Limiting the amount of weekly volume that can ship under a contract is a big concern for the industry. Carriers have been trying to establish weekly volume for years by taking the total contract volume committed divided by 52 weeks. This solution does spread out space requirements which helps the carriers. However, the solution does not address annual peak season surges or seasonal cargo which have been prevalent in the shipping industry for the last 30 years.
Carriers have been advising shippers that they will not accept bookings that exceed weekly allocations. This will be especially problematic during the traditional peak season. Pressuring the carriers to accept ad hoc containers will not be a viable option this year. Ad hoc containers will be rejected as carriers have no additional space to provide.
There are steps shippers must take that can help mitigate supply chain disruptions. Forecasting is critical. Shippers unable to provide accurate forecasts will struggle to secure space in the current environment. Prioritizing containers and accepting any equipment size offered by the carriers will also help.
In summary, 2021-22 contract space is sold out in the Asia to US market. All major global trade lanes are experiencing space and equipment shortages. Carriers are restricting weekly volume that can ship under contracts. Containers not part of the original forecast will be rejected for space. Finally, this is shaping up to be the most challenging year on record for the shipping industry.
