Date: Wednesday, June 02, 2010

Re:	Customer Advisory - Trans-Atlantic Trade Alert

Customer Advisory: Trans-Atlantic Trade Alert

Be advised that reduced capacity and increased demand on the North Atlantic Trade continues to influence carrier pricing and equipment availability.

• General Rate Increases Expected July 1, 2010: Current capacity levels have not budged since the beginning of this year (which represents 28% reduced weekly capacity from the prior year). Importers are forewarned to expect another round of general rate increases starting in July.
  
  
• Equipment Availability Alert: Container booking lead times are still hovering around 4-5 weeks but an increased equipment imbalance on 20' foot equivalent units is also affecting shipments. Several carriers are severely restricting bookings for 20' equipment destined for US ports with the extent of the restrictions varying slightly by country and origin port. Importers shipping via Boston direct with MSC are advised to consider 40' equipment secured with bracing and airbags or to ship via alternative ports. Note that seasonal produce shipments from southern Europe (Spain, Portugal, southern France) will affect the availability of reefer equipment this summer; 20' foot reefer equipment will be scarce for all US East Coast destinations and not available for US West Coast destinations. 

To provide some background on the situation, the decreased demand on the trade last year with no foreseeable change (at that time) and the resulting financial impact caused several carriers to reduce or slot-charter existing services and/or leave the trans-Atlantic trade altogether. Now with recovering demand tempered by continued financial strain on carriers, adding capacity back in is not an easy feat. US port structural limitations along with the existing Panama Canal restrictions means simply adding larger vessels is not a short-term fix. To provide a new service schedule requiring 6-7 vessels, a large commitment from one carrier would be required as most existing slot-charter and vessel-sharing agreements between steamship providers have anti-competitive clauses. Whether any other ocean liners decide to return or enter the trade depends on the market forecast as to whether current demand will not only be sustainable, but also will continue to grow enough to merit the increased investment.

While the trans-Atlantic trade continues to require adaptability on the part of US importers, having a strong logistics partner in JF Hillebrand means we will continue to leverage our global beverage business on your behalf. We will continue to provide ongoing updates on the shipping environment and will attempt to mitigate the delays and rate increases wherever possible.