Freight Market Update: February 29, 2024

Trends to Watch

[Air – Global] (Data Source: WorldACD/Accenture)

  • Strong Surge in Tonnages at Asia-Europe Sea-Air Hubs: Recent weeks have seen a notable increase in air cargo volumes at key Asia-Europe sea-air hubs such as Dubai, Colombo, and Bangkok, driven by shippers seeking alternatives to container shipping disruptions due to attacks on ships in the Red Sea. This surge is attributed to the need to replenish European stocks affected by longer container ship voyages around the Cape of Good Hope.
  • Significant Year-on-Year Growth: Analysis highlights a year-on-year increase in air cargo tonnages to Europe from Dubai (+71%), Colombo (+61%), and Bangkok (+58%) in the first seven weeks of 2024, significantly outpacing growth at other hubs like Singapore and Doha.
  • Impact of Lunar New Year Timing: The later occurrence of Lunar New Year (LNY) in 2024 complicates week-by-week comparisons but underscores a clear pattern of increased tonnages from these hubs to Europe. Despite this, the impact on pricing remains uncertain due to various factors, including market-wide declines from the previous year.
  • Seasonal Demand Fluctuations: Post-LNY, a traditional decline in demand from Asia Pacific is observed, affecting global air cargo tonnages and rates. However, there’s a structural improvement in demand compared to the previous year, with specific regions like the Middle East & South Asia experiencing tonnage and rate increases, likely reflecting the shift from ocean freight to sea-air solutions.
  • Global Air Cargo Trends: Overall, despite a slight year-on-year decrease in worldwide tonnages for weeks 6 and 7, structural improvements in demand levels are evident. Notably, worldwide air cargo capacity has increased, with significant rises from Asia Pacific and Middle East & South Asia, indicating a robust recovery and adaptation within the air cargo industry to ongoing logistical challenges.

[Ocean – ISC to North America]

  • Rates: Reduced down after the 2H February GRI. Carriers had initially posted a March 1st GRI of $1000/container, but as of this week have postponed it until 2H March. Without any changes to the market it is likely the GRI will be canceled entirely.
  • Space: Vessels delayed getting to destination and back to origin are resulting in a lack of capacity. The short term disruption is expected to be more challenging, while longer term we expect some normalization due to new builds, faster vessel speeds, and implementation of idle capacity.
  • Equipment: Although equipment availability is carrier-specific for each port of loading, the overall situation is challenging. This is especially true at inland container depots and smaller/less connected ports.

[Ocean – FEWB]

  • Red Sea: This remains unresolved as most vessels continue to reroute via the Cape of Good Hope, adding 2-4 weeks of transit time (round trip). Vessel schedules will continue to fluctuate as a result, and regional equipment shortages will occur in some Asian ports.
  • Demand: Demand has softened as expected after the LNY holiday. Bookings have slowed down in week 9; we expect them to pick up from week 11 onwards. As roll pools have been created in the past few weeks, vessel utilization is positive at the moment, and carriers are continuing to assess capacity and rates.
  • Capacity: All alliances implemented massive blank sailings pre-LNY for weeks 8 and 9, which cut about 30+% of capacity on average. After the LNY holiday, Ocean Alliance announced two more void plans for March. If demand remains flat, there might be more blank sailings to be announced. Occasional space constraints due to smaller vessel deployment and schedule re-shuffling due to current re-routing will also impact the available capacity each week.
  • Rate Development: As the Red Sea situation continues to impact capacity and equipment, carriers are upholding rates via GRI / PSS / Contingency Charges, however there’s pressure and questions about the amount of additional costs of re-routing via Cape of Good Hope. Expectations are that the Peak Season quantums will be mitigated or even be dropped in March. Rates are expected to go down as of March 1 and continue to decline going forward due to low demand.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

 

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New! Flexport Ocean Timeliness Indicator

Due to ongoing global shipping events in the Panama and Suez Canal, we have refined our previous report by splitting the Transpacific Eastbound trade lane into two subtradelanes: TPEB to the U.S. West Coast, and TPEB to the U.S. East Coast.

Ocean Timeliness Indicators for China to Northern Europe and China to U.S. East/West Coast Stabilize

Week to February 26, 2024

This week, the OTI from China to Northern Europe due to the Suez Canal Crisis remains high above 60 days. We anticipate these transit times have begun to normalize at these new highs as vessels sail around the Cape of Good Hope. The OTI for the China to U.S. East Coast remains steady at 59 days as does the OTI for China to the U.S. West Coast at 37 days.

 

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The Methodology: The Flexport Ocean Timeliness Indicator (OTI) utilizes data from Flexport’s ocean shipping operations for an expansive view of a container’s journey. Updated on a weekly basis, the Flexport OTI shows the time taken to transit from the Cargo Ready Date at the exporters’ gate to the Destination Port Departure date when products are ready to leave port to go to importers. The ocean shipping world tends to run along “trade lanes.” The three biggest trade lanes carry goods from China to the U.S. West Coast of North America, China to the U.S. East Coast of North America, and from China to Northern Europe. The OTI captures the timeliness of each of these. To show the most realistic picture, the OTI will exclude premium services and will utilize a trailing two-week approach.

See full report here.

The contents of this report are made available for informational purposes only. Flexport does not guarantee, represent, or warrant any of the contents of this report because they are based on our current beliefs, expectations, and assumptions, about which there can be no assurance due to various anticipated and unanticipated events that may occur. Neither Flexport nor its advisors or affiliates shall be liable for any losses that arise in any way due to the reliance on the contents contained in this report.

Freight Market Update: February 22, 2024

Trends to Watch

[Air – Global] (Data Source: WorldACD/Accenture)

  • China’s Inbound Tonnage Decline: In the week leading up to the Lunar New Year, China experienced a significant drop in inbound air cargo tonnages by 15% week-over-week, contributing to a global tonnage fall of 12%. This was against a backdrop of only a 2% decline in China’s outbound tonnages, indicating a sharp contrast in trade dynamics as the holiday approached.
  • Stable to Rising Average Global Rates: Despite the drop in tonnages, average global air cargo rates remained steady and even saw a slight increase during week 6, mirroring trends from the previous year. This suggests resilience in pricing amid fluctuating volumes.
  • Intra-Asia Pacific Market Slowdown: A notable 17% fall in intra-Asia Pacific traffic largely drove a 3% global tonnage decline, highlighting the region’s quick response to the Lunar New Year compared to long-haul markets. Conversely, tonnages from Asia Pacific to certain regions like Central & South America increased, demonstrating varied market reactions.
  • Year-on-Year Tonnage and Capacity Increase: Comparatively, weeks 5 and 6 saw a 10% increase in worldwide tonnages year-on-year, with significant rises from Asia Pacific and Middle East & South Asia origins. This was accompanied by a substantial 16% increase in global air cargo capacity, indicating an overall growth in the air cargo sector from last year.
    Pricing Trends and Pre-Covid Comparison: Despite a year-on-year drop in average worldwide rates by 14%, the gap is narrowing, and rates remain significantly above pre-Covid levels (34% increase compared to February 2019), suggesting a sustained recovery and adaptation in the air cargo market post-pandemic.

[Ocean – ISC to North America]

  • Rates: Increased due to 2H February General Rate Increases (GRIs), but as of week 8 are starting to mitigate. Overall levels still remain significantly inflated compared to November levels at +250% to United States East Coast (USEC) BP and +90% to United States West Coast (USWC) BP.
  • Space: Vessels delayed in getting to destination and back to origin are resulting in a lack of capacity. The short-term disruption is expected to be more challenging, while longer term we expect some normalization due to new builds, faster vessel speeds, and implementation of idle capacity.
  • Equipment: Although equipment availability is carrier-specific for each port of loading, the overall situation is challenging. This is especially true at inland container depots and smaller/less connected ports.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

 

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This Week In News

Cargo Diversions To West Coast Have Started, LA Port Director Confirms
Shippers are rerouting their cargo to the West Coast of the United States, particularly to the Port of Los Angeles, to avoid security concerns in the Red Sea and drought-related issues at the Panama Canal. Despite not experiencing a surge in freight, the port has observed an increase in cargo volumes, with January marking the second busiest month on record. Retailers are actively replenishing inventories ahead of Lunar New Year closures, and positive economic indicators suggest continued spending by American households.

Import Demand Growth Robust Leading Into Lunar New Year
Bookings for freight bound for the top four U.S. port complexes had surged compared to last year in the lead-up to the Chinese New Year, particularly from China, prompting a notable shift in the supply chain. This spike in orders signifies a departure from the minimal increase seen last year due to pandemic-related inventory surpluses. The rise in demand, especially in Southern California ports, may be influenced by geopolitical conflicts and disruptions like the Red Sea conflict and drought in Panama. Importers are willing to pay higher rates to ensure timely delivery of goods, indicating potential spring demand.

Freight Shipments And Expenditures See January Declines, Notes Cass Freight Index

The January edition of the Cass Freight Index reveals sequential and annual declines in freight shipments and expenditures. Shipments fell 7.6% annually, continuing a trend from previous months, while expenditures dropped 24.3% annually, following a record surge in 2021 and subsequent increases in 2022. Despite harsh winter weather, the decline in shipments aligns with normal seasonality, indicating a potential improvement in freight trends. ACT Research suggests that with destocking and rising goods consumption, the freight downturn may be nearing its end, anticipating improved freight demand fundamentals in 2024.

Rising Inflation Driving Food Supply Chain Robberies
Food theft in the global supply chain has surged, now comprising a third of all hijacking incidents, with a 29% increase in 2023 compared to 2022 levels, according to the British Standards Institution (BSI). This rise is attributed to thieves targeting basic goods experiencing significant price hikes due to inflation. Notably, food and beverage items now represent 22% of overall theft, with agricultural products accounting for 10%. While thefts from facilities have decreased, thefts from containers or trailers have risen sharply. Lack of secure truck parking is cited as a major factor, with road haulage sectors in Europe being particularly vulnerable.

Source from Flexport.com

Freight Market Update: February 14, 2024

Trends to Watch

[Ocean – TAWB]

  • Various rate indices are starting to show levels jumping by around $500 per TEU as of Feb. 1. This was expected due to carriers introducing surcharges related to the Red Sea situation (Contingency Surcharges, Emergency Surcharges, PSS, etc.).
  • Rates are expected to increase further in March due to equipment becoming limited in most parts of Europe (mainly south of Germany, Poland, and Western Mediterranean areas).
  • Capacity remains relatively stable even though we have seen blank sailings and vessels redeployed on other trade lanes in order to help with the Red Sea situation.
  • Panama Canal drought issues had minimal impact on container vessels transiting in January year-over-year.

[U.S. Exports]

  • Inland rail yards and export loading points are dealing with increasingly spotty equipment (EQ) levels. Please place bookings four weeks in advance of Cargo Ready Date (CRD). If that’s not achievable, consider loading trucks and transload at a coastal port to avoid ongoing EQ concerns.
  • For shipments loading at a coastal port, please book an additional 2-3 weeks or more ahead of CRD to ensure loading is optimized to avoid blank sailings and ensure equipment is available in a timely manner.
  • For Transatlantic Eastbound, capacity is available from base port to base port.

[Air – Global](Data Source: WorldACD/Accenture)

  • Increased Rates from China: Air cargo rates from China to North America and Europe surged by more than 14% and more than 8%, respectively, in the week before Lunar New Year, although still below early December peaks.
  • Impact of Red Sea Disruptions: Disruptions in container shipping in the Red Sea may have contributed to the rate surge, prompting some sea freight from China to Europe to convert to sea-air shipments.
  • Strong Traffic Demand: There is strong ongoing air cargo demand from China to both Europe and North America, despite current disruptions and the seasonal impact of the Lunar New Year.
  • Rising Global Demand and Rates: Global air cargo demand and rates have continued to rise due to Lunar New Year, with significant year-on-year tonnage increases supported by strong ecommerce traffic.
  • Substantial Yearly Increases: Worldwide tonnages saw a more than 25% increase in weeks 4 and 5 compared to the previous year, with significant rises from Asia Pacific, the Middle East, and South Asia, partly due to the conversion of sea freight to sea-air shipments.
  • Rates trend at over 32% compared to Feb 2019.

[LATAM North Bound]

  • The Port of Navegantes in Brazil is undergoing civil works to adapt pier infrastructure for the upcoming two years, which started on Jan. 5, 2024. This will be done in two phases. While one side will be under construction, the other will continue to operate normally. The work will begin on the east side, and when this stage is completed, it will move to the west side.
  • While the port is currently operating without restrictions, we will likely see operational challenges and higher wait times for all services through Navegantes during this period. Some shippers may choose to switch to nearby ports (Itapoá and Paranaguá).
  • CMA announced they will be switching to Imbituba on their BRASEX service. MSC, on the other hand, is committed to serving customers ex Navegantes. MSC has two main services from Brazil and will optimize these services to service USEC, USGC, and USWC/ CA.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

 

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This Week In News

Major Delays In Cross-Border Cargo Flow After Glitch In Mexican Customs System
A series of persistent glitches in Mexico’s National Customs Agency (ANAM) computer system severely disrupted freight movements across the U.S. border and caused delays at ports and airports. The glitches, occurring over several days, affected the agency’s ability to process import and export documents electronically, prompting ANAM to operate in “contingency” mode.

Upcoming Indo-Pacific Trade Deal Adds To U.S. Supply Chain Priorities
The Indo-Pacific Economic Framework for Prosperity (IPEF) supply chain agreement is set to go into effect on Feb. 24, to strengthen supply chain resilience among Pacific Ocean trading countries. Signed by partner countries such as the U.S., Australia, and Japan, the agreement emphasizes data sharing, warehousing near ports, and collaboration on policy best practices to build resilient and inclusive supply chains.

Despite Dim Outlook, January Imports Grew At Fastest Pace In 7 Years
Despite geopolitical tensions and challenges at the Suez and Panama Canals, U.S. imports surged unexpectedly in January, rising 7.9% from December and 9.9% year-over-year, according to Descartes. This growth, driven by a rush of Chinese imports ahead of the Lunar New Year, saw West Coast ports benefiting the most, with Long Beach and Los Angeles experiencing significant increases.

 

Source from Flexport.com

Freight Market Update: February 7, 2024

Trends to Watch

[Air – Global](Data Source: World ACD/Accenture)

  • From January 1-28, 2024, global international air cargo capacity increased by 10% compared to 2019.
  • Over the last four weeks, global international air cargo capacity decreased by 4% compared to the four weeks prior.
  • Air cargo capacity out of China and Hong Kong around Lunar New Year is expected to drop by 30-40% this year, in line with previous years.
  • Yields for Transpacific and Asia-Europe routes have increased in the last weeks of January due to the Red Sea crisis and the anticipation of the Lunar New Year, even though average yields for January 2024 remain lower than those of January 2023.
  • A consistent rise in air freight volumes has been observed over recent months, significantly fueled by strong e-commerce activity originating from the Asia Pacific region since the last quarter of the previous year, alongside a noticeable shift of some goods from sea freight to air and combined sea-air transport, attributed to recent disturbances in container shipping operations in the Red Sea.

[U.S. Exports]

  • Inland rail yards and export loading points are seeing less, or increasingly spotty, equipment levels. Customers are advised to place bookings 3-4 weeks in advance of cargo ready date (CRD). If that’s not achievable, consider truck and transload to load at a coastal port to avoid ongoing equipment concerns.

[Ocean – FEWB]

  • Asia-North Europe: the Red Sea crisis continues to impact freight market development. CMA CGM suspended Red Sea transits again until further notice due to security risks.
  • With vessel delays back to Asia, equipment is getting tight prior to Lunar New Year departures. Most carriers are arranging container repositioning to get shipments moved as planned. We highly recommend shippers be flexible and accept container substitution to avoid further delay as well as arrange empty pick-up as early as possible. Carriers are offering extended origin free time to mitigate Lunar New Year impact.
  • Demand is expected to remain flat for the second half of February. Carriers are further adjusting rates down to cater fresh cargo from the first half of February, preparing for rollpool to fill second half of February vessels. Even though massive void plans have been announced (WK08/09 cut by 30% in average), Ocean Alliance announced seven more voids, with three planned for February departure and the rest in March. We foresee more void plans will be released soon by the other two alliances.
  • To mitigate the disruption of operational challenges (sailing schedule adjustment, vessel downsized, equipment shortages, rollover, etc.), shippers can explore premium services offered by liners with higher cost to get guaranteed space and equipment and to shorten delays.
  • Asia-Med: Following North Europe, MED floating rates remained on the higher side. They are trending slightly lower from Week 06 onwards in a push to get more cargo to fill up ships before Lunar New Year and also rollpool preparation for 2H February onwards due to the weak demand and holidays in Asia.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

 

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This Week In News

Q4 U.S. Bank Freight Payment Index Shows Annual Freight Shipment And Spending Declines
The U.S. Bank Freight Payment Index for the fourth quarter revealed declines in freight payments and expenditures, with the shipment index down 10.9% from the third quarter and 15.7% annually, marking the largest decline since the index’s inception in 2017. Regionally, the Southeast, Northeast, and West experienced the steepest annual shipment declines.

Port Of Virginia Cargo Volumes Dip 2% In December
In December, container volumes at the Port of Virginia declined by 2% year-over-year to 268,107 total TEUs, marking the eleventh consecutive month of decreasing cargo volumes at the port. Despite the recent dip, container volumes were 19% higher compared to pre-pandemic levels, indicating long-term improvement despite the lull experienced in 2023.

Retailers Are Planning To Shake Things Up In 2024, Survey Finds
A new survey from Carl Marks Advisors reveals that mid-market retail and consumer packaged goods companies are planning changes to their supply chain strategies. The survey involved 250 responses from executives at mid-market retail and CPG companies with annual revenues between $25 million and $300 million.

 

Source from Flexport.com

Freight Market Update: February 1, 2024

Trends to Watch

[Air – Global](Data Source: WorldACD)

  • January’s worldwide air cargo demand showed a significant increase compared to last year. This rise in demand was seen across all main global regions except for ex-North America traffic.
  • Due to disruptions in the Red Sea, some cargo owners are moving Asia-Europe cargo from sea to air or sea-air (e.g. air to ocean conversions). This shift, combined with the effects of the later Lunar New Year in 2024 (February 10) and typical mid-January seasonal trends, contribute to the increase in air cargo demand.
  • Despite major disruptions in international container shipping and a tripling of ocean freight spot rates from Asia to Europe, global air cargo rates remain relatively stable. However, ex-Asia Pacific air cargo rates had already risen in late 2023 due to seasonal and product-related demand factors.
  • Forwarders are preparing for challenges in the next few weeks, including port delays and cargo build-up in Europe, as the booking window for air freight is closing ahead of the Lunar New Year. This situation may lead to increased reliance on air cargo.
  • Comparing weeks 2 and 3 of 2024 with the same period last year, there’s a 6% increase in overall global demand, with notable increases from the Middle East and South Asia, Africa, and Asia Pacific. Average worldwide rates are 22% lower than last year but remain above pre-COVID levels. Air cargo capacity has also seen a significant year-over-year increase.

[Indian Subcontinent to North America – Ocean]

  • Ocean freight rates continue to increase into the first half of February as Red Sea disruptions show no sign of mitigation. Vessels that were delayed getting to their destination, and then back to origin, due to diversions around the Cape of Good Hope have created capacity shortages. This short-term disruption is expected to be more challenging, while we expect some normalization in the longer term.
  • Container deficits are carrier-specific, but recently there has been an increase in equipment issues being reported across many major wet ports and inland container depots.
  • There are several service updates to report, including MSC’s removals of INDUSA (India → USEC) service which is resulting in a capacity crunch on their remaining INDUS EXPRESS service. MSC has also removed the direct Karachi, Pakistan port call which had just been rolled out in late December. OOCL/COSCO removed AWES/ISE service (Mundra → BOS/NY/ORF) due to operational cost increases from Cape of Good Hope diversions. By removing this service there is no longer a direct connection from India to Boston.

[TAWB – Ocean]

  • Demand remains stable with no peak expected to occur in February. Carriers are still managing capacity based on the latest Red Sea developments. We expect capacity to be down by an average of 15-20%.
  • Rates are expected to increase in February as several Red Sea-related surcharges go into effect on February 1. Indexes are expected to show the same in the next couple of weeks.
  • The equipment situation in Europe is tightening (mainly in Germany and various locations in Eastern Europe). This is a direct consequence of transit time increases caused by the Red Sea situation.
  • On-time performance decreased from 72% in July 2023 to 50% in December 2023 (based on Sea Intelligence data). This is quite normal during winter months as it is mainly caused by weather-related issues.

[FEWB – Ocean]

  • The Red Sea crisis continues to impact freight market development. Vessels traveling back to Asia continue to face delays. Moreover, carriers have started announcing a lack of equipment availability ports ex-South China and some outports in Asia. Shippers should remain flexible and accept container substitutions to avoid further delays. Demand remains flat for the second half of February as the Lunar New Year approaches. As a result, carriers are adjusting rates to cater to fresh cargo from the first half of February and to prepare for roll pool to fill vessels in the second half of February, despite massive void plans (weeks 8 and 9 are expected to see a 30% decrease on average). To mitigate the disruption of operational challenges (sailing schedule adjustments, vessel downsizes, equipment shortages, rollover, etc.), shippers should explore premium services offered by liners with higher costs. This approach will help guarantee space and equipment and shorten delays.
  • In other news, although the German rail strikes ended on January 29, there’s now a protest by German farmers blocking access to key ports which is impacting road transportation and imports/exports.
  • Following North Europe, MED floating rates remain on the higher side despite trending slightly lower from week 6 onwards to fill up ships before the Lunar New Year. Additionally, roll pool preparation is now expected to take place in the second half of February onwards due to weak demand and holidays in Asia.

North America Vessel Dwell Times

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This Week In News

Congested Ports Choking the Supply Chain
In January 2024, the ports of Los Angeles and Long Beach faced increased congestion, threatening the U.S. economy. The ITS Logistics U.S. Port/Rail Ramp Freight Index reveals a surge in trans-Pacific volumes due to restocking for the Lunar New Year, combined with rerouted shipments avoiding the Suez Canal crisis.

Not All Shipowners Able to Trade EUAs, Despite EU ETS Already in Effect
The implementation of the EU Emission Trading System (ETS) this month poses challenges for shipowners, with many not yet prepared for the new emission regulations. Shipowners under the EU ETS are required to pay for EU allowances (EUAs) corresponding to their ships’ carbon emissions at EU ports, underscoring the need for emissions data verification to ensure the accuracy of annual reporting.

FTR Shippers Conditions Index Hits Highest Level Since June
The Shippers Conditions Index (SCI), an indicator reflecting market influences on the transport environment for shippers, reached a solid reading of 6.3 for November, according to freight transportation consultancy FTR. The SCI, which considers readings above zero as favorable for shippers, showed the most favorable market conditions since June 2023, driven by a decrease in diesel prices.

Source from Flexport.com

Freight Market Update: January 24, 2024

Trends to Watch

  • [Air – Global] Air cargo volumes are rebounding in early 2024, surpassing previous years’ trends. Global air cargo tonnages witnessed a strong recovery in the second week of January 2024, rising by 24% compared to the previous week, countering the typical end-of-year slowdown. This rebound is notably more pronounced than the same period in the previous year, with a marked increase in cargo from Asia Pacific and Middle East & South Asia to Europe, potentially influenced by shipping disruptions in the Red Sea. Despite an overall 7% decrease in global tonnages compared to the preceding two weeks, Middle East & South Asia saw a 2% rise, while major intercontinental lanes experienced significant declines. Year-on-year data shows a global increase in demand by 2%, with a notable 6% surge ex-Asia Pacific, despite lower rates that remain 24% below the levels from the same time last year but 31% above pre-COVID levels. The increase in tonnages to Europe from Asia Pacific and Middle East & South Asia did not lead to higher average prices, indicating a complex interplay between demand, capacity, and pricing in the global air cargo market.
  • [FEWB – Ocean] Asia-North Europe: The Red Sea Crisis continuously impacts freight market developments. Rates remain on the higher side. Over the past few weeks, demand has been strong and with Lunar New Year approaching, a slowdown in demand in Asia has ocean carriers reducing freight rates. Two more void plans announced by carriers led WK08/09 capacity to be cut by more than 25% on average. As a result of vessels rerouting via the Cape of Good Hope, vessels and containers face longer transit times. Expect a shortage of empty containers in Asia in the coming weeks, especially outports. To mitigate the disruption of operational challenges (sailing schedule adjustment, vessel downsized, equipment shortages, rollover, etc.), shippers can explore premium services offered by liners with higher cost to get guaranteed space and equipment and to shorten delays. German Rail Strike: There’s another strike on the German railway infrastructure of DB InfraGO AG. From January 23, 2024 6:00 PM CET to January 29, 2024, the entire traffic on the German infrastructure will be affected. The end of the strike is announced for January 29, 2024, at 6:00 PM CET. Please stay close to the situation and plan delivery if any. Asia-Med: Following North Europe, MED floating rates remained on the higher side. Rates started trending slightly lower in WK04 in a push to get more cargo to fill up ships before Lunar New Year and also rollpool preparation for WK07 onwards due to the weak demand and holidays in Asia.

North America Vessel Dwell Times

 

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This Week In News

West Coast To Experience Increased Transpacific Volumes
The ITS Logistics US Port/Rail Ramp Freight Index reports increased transpacific volumes on the U.S. West Coast due to the seasonal Lunar New Year restock and the potential for congestion at East Coast ports. As more freight is routed to the West Coast, congestion is expected at rail ramps across the U.S., affecting long-term contracted rates and capacity during the ocean carrier contract season.

U.S.-bound Imports Are Up In December And Down For All Of 2023, Reports S&P Global
Containerized freight imports to the United States experienced growth in December 2023 for the fourth consecutive month, with a 9% increase reaching 2.2 million TEU (Twenty-Foot Equivalent Units). This marks a recovery after 14 months of annual declines. S&P Global Intelligence noted widespread growth in various sectors in December.

Cargo Theft Spiked Over 57% In 2023 Vs. 2022, New Data Shows
Cargo theft incidents in 2023 increased by more than 57% compared to the previous year, reaching an unprecedented level, according to CargoNet. The total reported cargo theft amounted to nearly $130 million, but the actual figure is likely higher due to the non-mandatory nature of reporting.

Source from Flexport.com

Freight Market Update: January 17, 2024

Trends to Watch

  • [TAWB – Ocean] Market demand has remained relatively stable in January with no spikes expected until March at the earliest. While the total vessel filling factor is still not at 100%, it has slightly increased as a direct result of the winter blank sailing program and some carrier capacity cuts. Overall capacity remains high despite an anticipated 20% decrease on average for January and February due to blank sailings. We expect carriers to pull more capacity in the coming weeks to help with the Red Sea situation. We’ve already seen members of the Ocean Alliance and 2M (Maersk and MSC) doing this. As a direct impact of the Red Sea situation, rates for vessels traveling on Transatlantic routes have started to increase, and are expected to increase further in February when most carriers announce GRI/PSS and emergency surcharges. In other news, equipment shortages have started to impact Austria and some areas of South Germany as reported by a few shipping lines. The full impact is likely to be seen at later stages and will also depend on the outcome of the current German railway situation.
  • [FEWB – Ocean] Asia-North Europe: Market demand is moving up for the second half of January and all ships are filling up, will roll pool by carriers in progress for the coming weeks. Week 3 spot rates slightly increased due to the Lunar New Year rush and week 4 spot rates are stabilizing at high pre-Lunar New Year levels. As the Red Sea crisis continues, it’s now estimated for a vessel to take 2-4 weeks (round trip) depending on the destination. As a direct impact, Ocean Alliance and 2M announced 15+ void plans for February with more to be expected from THE Alliance soon. Equipment shortages can be expected in the coming weeks if the situation remains the same. German Strike: The strike ended on January 12 but no agreement was reached. We expect there will be another round of strikes as a result. No immediate impact is expected. Gemini Cooperation: Maersk and Hapag Lloyd announced an official cooperation agreement that will start in January 2025. More to follow on the actions of additional carriers.
  • [MED Trade] Following North Europe, MED spot rates for the second half of January are increasing in week 3. Week 4 spot rates are expected to be slightly lower as carriers are pushing cargo to fill up ships before the Lunar New Year.
  • [U.S. Exports] As the Red Sea situation continues, U.S. exporters shipping globally can expect equipment shortages due to mislocated containers. We highly recommend booking shipments 4+ weeks in advance to ensure Expected Quantity (EQ) can be secured.
  • [Air – Global] The first week of 2024 saw a continued decline in worldwide air cargo tonnages, following a typical slump in the latter half of December. Preliminary data for week one shows a 6% week-over-week drop in global air cargo tonnages, with significant declines noted particularly in shipments from the Asia Pacific to North America and the Middle East & South Asia, and within the Asia Pacific region. This year’s decline in tonnages during the first week contrasts with the stability observed in the same period of 2023, potentially influenced by the inclusion of January 1, a holiday, in this year’s week one calculation. On a two-week comparison basis, the total tonnage for the last two weeks of 2023 and the first week of 2024 was down 28%, with average rates dropping by 5% and capacity decreasing by 8%. Despite these declines, global tonnages for the same period were around 3% higher year-over-year, with worldwide average rates currently 19% below last year’s levels but still 30% above pre-COVID levels, according to World ACD.

North America Vessel Dwell Times

 

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This Week In News

Container Shortage Starts To Bite, Adding to Pressure on Costs
Global container shortages are causing disruptions in shipping, particularly in the Red Sea region, leading to re-routings, delays, and cancellations. Despite earlier predictions, the industry is feeling the impact, with difficulties in obtaining 40ft high-cube and 20ft General Purpose containers in major Chinese ports. Forwarders are reporting similar issues, with concerns about higher costs arising from these shortages, especially in China, indicating potential turbulent times in 2024 for the outbound leg from Asia to Europe.

Shifts in Chinese Exports Show Ties With U.S. Economy Fraying
In a notable shift, China exported more goods to Southeast Asia than to the United States last year, indicating a change in global trade patterns amid strained economic relations. Data from China’s General Administration of Customs reveals that the 10 ASEAN nations purchased $524 billion of goods, surpassing the $500 billion sold to the US. While this suggests a gradual separation between China and the U.S., the situation is complex. Chinese exports to Mexico increased by over 5%, potentially to avoid U.S. tariffs. Exports to Thailand and Vietnam also declined less than in other regions, reflecting the trend of shipping goods there for finishing and re-export.

Port Houston Cargo Volumes Dip 15% YoY in November
In November, Port Houston experienced a 15% year-over-year decline in cargo volumes to 297,622 total TEUs, although empties decreased by 34%. Compared to the previous month, cargo processing dropped by 19%, but there was a 21% increase in total containers processed compared to pre-pandemic levels. Despite these changes, Port Houston welcomed the CMA CGM Lisa Marie, one of its largest vessels with a capacity of nearly 11,000 TEUs. The port is strategically planning for growth, expanding the Houston Ship Channel to accommodate larger vessels and increasing wharf and yard capacity at container terminals to support regional growth.

Source from Flexport.com

Freight Market Update: January 10, 2024

Trends to Watch

  • [FEWB – Ocean] Asia-North Europe: Market demand is increasing in January and all ships are filling up. Spot rates for the second half of January are expected to continue to increase due to the Lunar New Year rush and the Red Sea threat. Transit times for vessels rerouting around the Cape of Good Hope are currently 2-4 weeks (round trip) depending on the ship’s final destination. Hence, there will be more blank sailings expected in February coupled with a spot rate level similar to January, as equipment shortages can be expected. In other news, German railways will face a strike again from January 10 through January 12. The strike of the Trade Union of German Locomotive Drivers GDL is planned as follows:
    • GDL members at Deutsche Bahn AG, Transdev, and City Bahn Chemnitz have been asked to stop work from January 10, 2024 at 2 AM to January 12, 2024 at 6 PM. The work suspension at DB Cargo begins on January 9, 2024 at 6 PM.
    • Most rail carriers and their drivers are not organized in the GDL, but as the infrastructure is also affected, consequences are not known at this stage, but interruptions are to be expected. We also anticipate there will be an additional Demurrage / Detention charge incurred between January 10 and January 12, affecting deliveries in weeks 3-4 (if the strike does not extend beyond January 12). However, if the strike goes further, larger interruptions (and affected areas) can be expected.
  • [MED Trade – Ocean] Following North Europe, MED spot rates for the second half of January are climbing up due to similar reasons as North Europe trade.

Please reach out to your account representative for details on any impacts to your shipments.

 

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This Week In News

The Red Sea Attacks Are Throwing Supply Chains Into Chaos — But U.S. Oil Exports Appear To Be Benefiting From Them
The situation in the Red Sea has resulted in a notable increase in U.S. petroleum exports, rising by 35% on-week to nearly 5.3 million barrels a day for the week ending December 29, according to the U.S. Energy Information Administration. Analysts anticipate that U.S. petroleum exports will continue to surpass 5 million barrels a day amid escalating geopolitical tensions in the region. The U.S., leading a multinational effort to protect shipping lanes in the Red Sea, is positioned as a safer and cheaper alternative for oil buyers compared to the Middle East.

NY Fed Says Global Supply Chain Pressures Eased in December
The Federal Reserve Bank of New York reported a cooling of supply chain pressures in December, with its Global Supply Chain Pressure index dropping to -0.15 from November’s 0.13. The negative reading indicates below-normal supply chain pressures, potentially contributing to decreased inflation pressures. Despite supply chain issues being a key factor in the inflation surge during the early stages of the pandemic, the Fed has seen a decline since December 2021. However, recent challenges in shipping routes, geopolitical factors, and a reversal in supply chain pressure indicators, including increased air and shipping freight costs, raise concerns about potential future disruptions.

Extreme Weather Tops List of Possible Logistics Disruptions in 2024 Forecast
According to Everstream Analytics’ “2024 Supply Chain Risk Report,” wild weather events are predicted to be the primary disruptor for logistics in 2024, with the “Era of Extremes” exacerbating the impact of hurricanes, winter storms, wildfires, and floods on supply chains. The report also identifies five other looming threats: increased administrative burdens and costs due to environmental regulations, trade war tensions between the U.S. and China affecting semiconductor sourcing, rising geopolitical instability centered around Taiwan, commodity shortages driven by various factors including extreme weather and protectionism, and the persistent risk of cybercrime, particularly ransomware and data breaches, continuing to threaten supply chains in 2024.

Source from Flexport.com

Freight Market Update: December 13, 2023

Trends to Watch

  • [Air – Global] Global air cargo tonnages have rebounded faster than in 2022 following the Thanksgiving holiday in the U.S., with a notable increase in tonnages and global average rates. Particularly, rates ex-Asia Pacific continue to rise strongly, especially trade lanes to North America and Europe. Year-on-year, global cargo volumes are up, driven primarily by a significant increase ex-Asia Pacific, while available capacity has also substantially increased across various regions compared to 2022. Despite a year-on-year decrease in worldwide average rates, they are still considerably higher than pre-COVID levels, reflecting ongoing strong demand and a market recovery in the air cargo industry.
  • [FEWB – Ocean] Market demand is moving up in December and ships are filling up. As the rate gap between long-term deals and the spot market is widening, the long-term deal space was largely impacted by the carriers due to serious bleeding over the past few months. Thus, a significant peak season surcharge is expected before the Lunar New Year. Blank sailings in December are less than 10% per week (excluding the service suspension of FE5 by The Alliance that impacts the Southeast Asia export). We expect rates to continue climbing as we approach the second half of December and there is a high likelihood that another wave of GRIs effective first of January will reflect the pre-Lunar New Year rush demand. In other news, the Antwerp operation was partially impacted due to last week’s strike (roughly 49 ships were impacted as a result), which has already resumed full operation this week. Plus, ONE Orpheus (FP1 service calling Asia-NEUR at the moment) struck a bridge during its transition in the Suez Canal. The inspection has finished and the vessel is currently at the shipping yard for temporary repair. MED trade: Following North Europe, MED GRI is also thriving in December supported by the strong demand. However, space is very tight at the moment as we observe a cargo rush before the Lunar New Year. As in North Europe, there is a high likelihood that another wave of GRI effective first of January will reflect the pre-Lunar New Year rush demand. Similarly, the EU Emissions Trading System is going to apply effective the first of January, but so far we don’t see any mitigation of this surcharge by carriers.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

This Week In News

Supply Chain Coalition Presses Background Check Reform
A coalition of supply chain stakeholders, including the American Trucking Associations (ATA), is urging Congress to quickly pass the Transportation Security Screening Modernization Act. The legislation aims to eliminate redundant background security checks for essential workers such as truck drivers, creating a streamlined, one-stop process for obtaining credentials like the Transportation Worker Identification Credential, Hazardous Materials Endorsement, and TSA PreCheck. Approximately 140 signatories, representing various sectors, argue that subjecting workers to duplicate checks for different credentials from the same agency is inefficient and burdensome.

Carriers Pushing Rate Hikes Ahead of New Year Service Suspensions
To improve rates on the Asia-Europe trade route, Hapag-Lloyd and CMA CGM have increased their FAK rates for 40ft containers from Asia to North Europe to $3,000 starting January 1, 2024. Despite this, the Drewry WCI Asia-North Europe rate remains at $1,343 per 40ft. Hapag-Lloyd’s rate for West Mediterranean ports will be $3,200, $200 higher than CMA CGM’s proposal. Other carriers are expected to follow suit.

The Logistics Sector Was Weak in November, but That’s Not Necessarily Bad News
The latest Logistics Managers’ Index reveals a weakened state of the shipping industry in November, with the index experiencing its most significant fall since April 2022. Unlike the concerns around excess inventory last year, the current weakness is less alarming as it stems from reduced inventory levels due to heightened consumer buying during events like Thanksgiving, Cyber Monday, and Black Friday. Experts suggest that as supply chains stabilize, retailers are maintaining leaner shelves, contributing to lower warehousing storage costs. The emphasis is now on improving efficiency in the logistics sector through investments in technologies like electric delivery vehicles and artificial intelligence for enhanced inventory management, rather than expanding inventory levels.

 

Source from Flexport.com

Freight Market Update: December 6, 2023

Trends To Watch

  • [U.S. Exports – Ocean] Routing changes are happening related to the bypassing of the Panama Canal for some key services from USEC/U.S. Gulf to Asia.
  • [TAWB – Ocean] The pandemic introduced a level shift in favor of MED-USEC when it comes to the total port-pair connections, while not having any negative impact on the total distinct connections. New Orleans, for example, is completely cut off from direct Europe services, while Saint John is heavily introduced as a direct port call. Spot rates continue to be under pressure and are now heavily below the 2019 levels. Weak demand and over-capacity continue to impact the sustainability of this trade. From now until the end of the year, there will be more blank sailings introduced in the market; average capacity will decrease on average by 25-40% between WK52 and WK2 2024. The expectation is for some rate action to be taken by carriers to alleviate the pressure. In other news, the Panama Canal situation will have an impact on Transatlantic routes to West Coast ports but at a much smaller scale compared to Trans-Pacific. At the moment only two shipping lines have announced a Panama Canal surcharge even though the current vessel delay is only 1-2 days on top of published proforma transit time.
  • [FEWB – Ocean] GRI Implementation: With freight costs remaining on the lower side, liners are implementing General Rate Increases (GRI) to push up the rate even when there’s no significant cargo rush or general capacity issue; For the first half of December, liners are trying to push up the rate by $300-500/FEU, and another $400-600/FEU for the second half of December; Prior to Christmas and the New Year holidays, we’re expecting there might be a slight cargo rush for some specific commodities, and it’s also the last chance for Liners to hold the rate into 2024. Capacity/Deployment adjustment: With the THEA FE5 services suspension, the carrier CMA-CGM in Ocean Alliance also adjusted their FAL1/FAL3, taking out Cai Mep and some port rotation aiming to expedite the first calling port ETA as well as maximizing capacity via other POL; 16-18% capacity was cut as a result. With all the changes, for South East Asia (especially Vietnam and Thailand), capacity is getting tight, but compared to the export volume in 2023, the impact is limited. We foresee it will cease soon in a couple of weeks and eventually get back to normal. If there is no significant demand increase, we may see more last-minute blank sailings announced, especially prior to/post-Lunar New Year.
  • [Air Freight – Global] In week 47 of 2023, worldwide air cargo experienced a 3% decrease in tonnages and a 2% increase in global average rates compared to the previous week, with a less severe Thanksgiving-related decline in North America than last year. Tonnages and rates varied regionally, with notable decreases from North America to Europe and Asia Pacific, and increases from ex-Africa to Europe and ex-Europe to Central and South America. Year-over-year, global volumes are 2% higher, with significant increases in capacity from several regions (particularly Asia Pacific) and decreases in tonnages from North America and Europe. Despite current average rates being 21% lower than last year, they remain 42% above pre-COVID levels.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

The Week In News

Atlanta Becomes Casualty of Imports Returning to West Coast
Over the past year, Atlanta’s share of the total U.S. freight market volume has decreased by more than 11%, while the Ontario, California, market has seen a recovery of over 14% in its outbound trucking market share. Supply chain shifts and a cost-effective transportation market are key factors driving this trend. During the pandemic, overwhelmed West Coast port and rail infrastructure led importers to divert shipments to Eastern ports. However, recent challenges, including drought affecting the Panama Canal and Middle East conflicts disrupting the Suez Canal, are prompting importers to return to the Los Angeles and Long Beach port complex.

OOCL Box Ship in Red Sea Hit by Rocket Fired From a Drone
Container vessels in the Red Sea region face increased risks following an attack on an OOCL ship by a Houthi drone. The 4,250 TEU Number 9 issued a distress call after being hit by a rocket near the Yemen coast, resulting in engine damage and water ingress. Houthi rebels ordered the vessel to dock at the port of Hodeidah, where another captured ship is reportedly held, but the damaged engine prevented a change of course. The vessel, part of the Ocean Alliance’s Asia-Mediterranean service, continues its schedule despite the incident.

Manufacturing Down Again in November Amid Low Orders: PMI
Manufacturing orders in the U.S. remained soft in November, according to the Institute for Supply Management’s Purchasing Managers’ Index (ISM), which held steady at 46.7%, indicating economic contraction. The ISM Manufacturing Business Survey Committee noted that the industry is in a “low-end” trough with depleted inventories and expects it to remain subdued, especially in terms of new orders. S&P Global’s PMI index was slightly more positive at 49.4, down from October’s 50.0, attributing the decline to weak demand and low stock levels.

 

Source from Flexport.com