How COSCO’s New Trans-Pacific Route Avoids Blank Sailings and Rolled Cargo Issues
On June 24th, the “COSCO Shipping New Africa” vessel arrived at Shenzhen Yantian Port, marking the launch of COSCO Shipping’s new West Coast Express route, “China Yantian – Long Beach, USA” (SEA3). This route aims to provide a more efficient and reliable logistics channel for South China’s cross-border e-commerce clients and exporters.
How Does COSCO SEA3 Address Blank Sailings and Rolled Cargo Issues?
Stable Vessel Operation: The SEA3 route operates with six vessels on a fixed weekly schedule, ensuring no blank sailings or rolled cargo issues.
Route and Schedule: The route starts from Kaohsiung, proceeds to Xiamen, then Yantian Port, and heads directly to Long Beach, Los Angeles, USA. The transit time is 14 days, with vessels docking at the fully automated LBCT terminal, enabling rapid unloading within 2 to 24 hours and fast cargo pickup within two hours.
Optimized Timing: SEA3 arrives on Mondays, in contrast to the previous COSCO SEA route, which arrived on Thursdays. This scheduling allows ample time for logistics providers to pick up, deconsolidate, and deliver cargo without delays due to weekend closures. For shipments ready between Monday and Thursday, SEA3 is ideal. For cargo not prepared by Thursday, the next SEA3 departure is available.
The coordination between SEA3 and SEA routes provides optimal scheduling options for cross-border e-commerce sellers’ inventory replenishment needs.
Impact of May US Retail Data on Freight Rates
The US Department of Commerce released May 2024 retail sales data on June 18th:
1. Retail Sales (Including Retail and Food Services): Increased by 0.1% month-over-month, below the expected 0.3%. Previous values were revised from 0.0% to -0.2%.
2. Core Retail Sales (Excluding Autos and Gasoline): Decreased by 0.1% month-over-month, compared to an expected increase of 0.2%. Excluding food services, retail sales grew by 0.2% month-over-month and 2% year-over-year, with the previous value revised from +0.2% to -0.1%.
Analysis of Retail Data
Despite weaker overall retail data, some sectors saw growth driven by holiday shopping:
• General Merchandise Stores: Increased by 0.1% month-over-month.
• Grocery Stores: Increased by 0.4% month-over-month.
• Non-store Retailers: Increased by 0.8% month-over-month.
• Restaurants and Bars: Decreased by 0.4% month-over-month.
With fluctuations in May U.S. bond yields and oil prices declining, industries closely tied to interest rates performed well:
• Automobiles: Month-over-month growth of +0.8%.
• Household Appliances: Month-over-month growth of +0.4%.
• Gas Stations: Consumption declined by -2.2% month-over-month.
Demand and Supply Side Impact
On the demand side, inventory replenishment reflects normal behavior after continuous stock reductions. The strength and duration of replenishment depend on importers’ outlook on the US economy. Advance shipping is a response to ongoing supply chain disruptions.
On the supply side, global shipping capacity remains tight. Drewry’s report on June 17 indicated a 24% increase in vessel numbers on the Asia-North Europe route and a 17% increase in capacity. For the Asia-North America East Coast route, despite a 9% increase in vessel numbers, effective monthly capacity has not increased.
Supply Chain and Capacity Issues
Rolf Habben Jansen, CEO of Hapag-Lloyd, noted that despite an increase in vessel numbers on Asia-Europe routes, longer voyages and port congestion mean “effectively, we have less available capacity per week.” Hapag-Lloyd’s spokesperson also highlighted that higher-than-expected demand, driven by both increased consumption and replenishment, may continue through the summer.
Drewry’s analysis suggests that the early peak season may signal a volume vacuum after the peak season ends.
Uncertainty in Freight Rate Trends
The early arrival of peak season and potential trends in freight rates remain uncertain. Analysts are closely monitoring these developments.
Conclusion
May’s US retail data suggests a cooling in consumer spending, though some sectors show improvement due to holiday shopping and replenishment needs. Ongoing global supply chain and capacity issues add complexity and uncertainty to freight rate trends. As the peak season approaches, it is essential to monitor supply and demand changes and freight rate fluctuations closely.
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