Danish container shipping giant Maersk Line said yesterday it will soon begin posting on-line offers for trans-Pacific eastbound space on the New York Shipping Exchange (NYSHEX), a maritime futures exchange that contractually binds shippers to tender loads as promised, and for carriers to move them as booked.
Using the platform, shippers can secure guaranteed space and equipment on Maersk's Asia-U.S. lanes, NYSHEX said yesterday in a blog post on its web site. There was no mention of a launch date, but it is believed the platform will be available by the time the peak-season eastbound trade heats up in late September and into October.
Maersk's decision to place futures contracts on eastbound sailings is designed to give customers an alternative to secure guaranteed space in addition to their existing carrier contracts, Matt Hill, head of transpacific trade for Maersk's North American unit, said in the NYSHEX blog.
"It's not enough to just offer the standard contracts that have been the only option for years. We aim to be more flexible for a dynamic customer base that needs innovative supply chains and to improve the financial health of the industry," he said.
Hill said that the marketplace's initial response has been positive, but that the proof will come in the weeks ahead as contracts are secured and bookings fulfilled. Maersk is a founding member of NYSHEX, and currently uses the exchange to execute contracts on the transpacific westbound trade.
The upcoming peak cycle is expected to be one where part of the narrative will be spun around tight vessel space. Industry-wide consolidations and service changes as well as low inventories are to blame, Hill said in the post.
"We typically see a historical market increase in August and September as shippers ramp up for their holiday buying season," he said. "Combine that with the reduction in capacity shippers are experiencing from many carriers in the trade, uncertainty around the impact on imports out of China because of the tariff issues and overall higher than expected year-to-date volumes—and you have the makings for a strong peak season."
A spate of alliances, mergers and acquisitions over the past two years has reduced to 12 from nearly 24 the number of lines claiming global market share. This is expected to yield better operating efficiencies, reinforce pricing discipline, and keep shippers and cargo owners from engaging in such price-destructive behavior as double-booking their cargo on different sailings without any financial consequences.
Inventories remain very lean, based on U.S. government data. According to the U.S. Census Bureau, the July inventory-to-sales ratio, excluding autos, came in at 1.20 percent for the second straight month, one of the lowest readings over the past 50 years. The ratio measures the amount of product in inventory relative to sales in the relevant period.
The recent data imply that retailers will break out their peak-season order books in a big way, especially if consumer demand remains solid. It also flies in the face of conventional thinking that cargo owners have moved large volumes into safety stock into the domestic trade ahead of further tariff hikes imposed by the U.S. on imports from China.