April Zobel, Export Traffic Manager, Lansing Trade Group

https://www.lansingtradegroup.com
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April Zobel

In preparing to write my commentary I reread several submissions from the 2016 Annual Review and Outlook; 2017 is shaping up to be same song, second verse.

At the risk of sounding redundant, 2017 will offer us an uncertain market, one of volatility and apprehension. Slower foreign demand caused by an oversupply of agricultural products in many of the traditional markets along with the strong US dollar, paired with a surplus of vessel capacity created by the carrier’s need to become more efficient, have driven ocean freight to the floor and insolvency. We’ve seen rates climb a bit in late 2016, driven by the exit of Hanjin, idling of vessels, and changing of service strings by the carriers. Mergers, alliances, acquisitions, and carrier collapse will continue to change the face and scope of the US export program. The glaring problem is that these changes are not being parceled out over several years; instead, the “correction” is coming at once and spurring an unease in shippers.

Uncertainty rings true as the word for 2017, which will be a bit unlike 2016. In 2016, the export market was defined by low rates, low volumes with a glut of carrier capacity. In 2017, the market will see what the Japanese Big 3 merger will do; we anticipate additional sales and mergers, which are yet to be finalized and their impact measured. Shippers are having a hard time marketing forward demand and speculating what forward freight will be, simply because of 2017 word: uncertainty. In 2017’s ambiguous environment, shippers will lean heavily on relationships, select carriers that match the shippers profile and offer flexibility along with forward rates. Now more than ever shippers will place value on industry coalitions to remain informed and participate in the evolution of their market sectors in an uncertain 2017.