[Ocean] Demand on the Far East Westbound (FEWB) lane has been down due to a combination of high inflation, inventory overages, and geopolitical instability—a rebound is expected in early April.
[Air] Asia-EU routes are continuing to see soft demand, which means rates are down and capacity is up.
[Air] On Asia-N. America routes providers are adding flights to the schedule, but a true recovery is not expected until Q3 thanks in part to importers still selling through existing inventory.
[Air] Capacity out of Europe continues to increase, thanks in large part to the ongoing return of regularly scheduled passenger flights.
Recommendations: For most modes and routes, take advantage of the soft market with widely available capacity and rates mostly in line with 2019 numbers.
The largest container ship ever built—with a carry capacity of 24,346 twenty-foot equivalent units (TEUs)—launched last week. Owned by Bank of Communications Financial Leasing, the ship is chartered to Mediterranean Shipping Company (MSC). Chinese officials took the opportunity of the MSC Irinia’s maiden voyage from Zhoushan to highlight the developing expertise of the country’s shipbuilding industry, giving the more established builders in Korea and Japan a run for their money.
The Port of Los Angeles has now dropped to third place for throughput at a U.S. port, behind the Port of New York and New Jersey and its own neighbor, the Port of Long Beach. Total throughput at LA in February dropped to 487,846—that’s a drop of 43% year on year. The article quotes Nerijus Poskus, Flexport’s VP of Ocean Strategy, as saying “I think a lot of the transition from the West Coast to the East Coast is permanent.”
Transpacific Eastbound (TPEB) Carriers look to pick up rate slack amid low volume market.
U.S.: Current TPEB market capacity and demand levels look to hold through the end of March. Prospects of general rate increases (GRI) for April 1st appear more common from the carriers than in previous months. Routine blank sailings on almost all tradelanes will persist through the end of March, as well.
Canada: Market and rate conditions are similar to the U.S. Vancouver continues to see stable vessel dwell counts (1 vessel) as well as berthing delays (3 days, 9 days for rail dwell).
Rates: Soft on most origin-destination combinations.
Space: Open.
Capacity/Equipment: Open.
Recommendation: Book at least 2 weeks prior to cargo ready date (CRD), and keep upcoming blank sailings in mind.
Asia → Europe (FEWB)
Demand and Supply are a bit more balanced this week after the blank sailings seen immediately following Lunar New Year (LNY). Booking intake is gradually improving but still not as strong as pre-LNY. Rates are still under pressure.
Rates: Generally reduced or extended for the first half of March.
Capacity/Equipment: Still seeing around 10-20% blank sailing average in weeks 11/12/13 to adjust for the decrease in demand. Expect the carriers to continue the same trend into March.
Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays (rolls).
Europe → North America (TAWB)
Demand remains low and space continues to be widely available. Capacity is still outstripping demand and we expect this to continue for the foreseeable future.
Rates: The drop continues as demand is not picking up at the same pace as last year and vessel utilization is in the 65-70% range, down from 90% a few months ago.
Space: Due to the easing of congestion, space into the U.S. East Coast (USEC) and U.S. West Coast (USWC) is coming online.
Capacity/Equipment: Equipment availability keeps getting better as congestion disappears. Low empty stacks at inland depots are also getting better in some areas, but prioritize pick-up from the Port of Loading if possible.
Recommendation: Book 2-3 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.
Indian Subcontinent → North America
An increase in rates is expected as carriers announce General Rate Increases (GRIs) for the end of March and April. Full implementation of these GRIs is not expected, but slight increases will be felt across most Ports of Loading (POLs).
Rates: Remain from 1H March.
Space: Open.
Capacity/Equipment: Slight capacity constraints to USWC. Equipment remains top of mind, but varies drastically based on carrier, POL, and equipment type.
Recommendation: Be open to procuring equipment from wet ports vs. inland container depots and to use alternative services that may be slightly more expensive, but with less service disruptions.
North America → Asia
Capacity is available across all major services, and carriers are looking for volume opportunities. No major services to the Asia Pacific (APAC) region are seeing space constraints.
Congestion has been cleared out across most North American container yards with improved operations as a result of lowered demand.
Equipment is available and ample in most major markets.
The outlook at the end of Q1 and headed into Q2 is that most of the existing capacity will remain in place as carriers lightly reshuffle vessel capacity across trades.
Rates: Rate pressures continue the trend slightly downwards MoM on certain lanes from coastal ports to Asia base ports. All carriers are trying to push cargo onto these lanes/services. Deals below existing market levels are available for consistent volume opportunities.
Space: Very open, allocation requests can be made to carriers for high volume weeks or projects with a high probability of acceptance.
Capacity/Equipment: no major capacity changes in the market. No major equipment hurdles to highlight. The only pocket shippers should monitor are IPI’s where chassis availability may be low.
Recommendation: book 1-2 weeks prior to CRD on all coastal to Asia-based port lanes, and book 2-3 weeks prior to CRD on all inland to Asia and feeder port lanes.
North America → Europe
Capacity from the USEC is available, while certain services from the USWC and Gulf remain tight but stable.
Most USEC to N. Europe (NEU) and Mediterranean (MED) services have low capacity utilization levels with no space constraints.
Gulf Coast to NEU and MED services continue to have medium to high utilization levels as the market has seen a reintroduction of capacity. Still there are some inconsistencies in the schedules from the Gulf.
The USWC to NEU, MED services are still limited in options and therefore utilization levels are artificially high.
Rates: Rates trended slightly downward QoQ on USEC to NEU lanes. Carriers made adjustments early in Q1 and since then rates have remained flat. Gulf and USWC rates were not adjusted in Q1 given the utilization levels on those services. Carriers are willing to make deals for USEC opportunities.
Space: Space is open from USEC, manageable from Gulf, and limited from USWC.
Capacity/Equipment: no major capacity changes in the market. No major equipment hurdles to highlight in the US, save for pockets of potential chassis issues out of IPI’s.
Recommendation: book 2 weeks prior to CRD on all EC to NEU, MED lanes, book 3 weeks prior to CRD on all Gulf to NEU, MED lanes, book 4 weeks prior to CRD for all PSW to NEU lanes.
North America Vessel Dwell Times
Air Freight Market Update
Asia
N. China: TPEB demand has decreased this week with rates also lowering as well. The FEWB market is showing an opposite trend with both demand and rates increasing from the week prior.
S. China: TPEB supply is tight with demand increasing in the market, resulting in rates increasing from the week prior. The Far East Westbound (FEWB) market is following at a similar trend but at a slower pace. As demand increases, expect longer booking times at origin.
Taiwan: The market is picking up as we approach the quarter end. Rates are increasing while capacity is getting tighter.
Korea: Rates remain the same as the previous week with no large increases in market demand.
SE Asia: Quarter-end TPEB demand in northern Asia is causing rates to increase and hub capacity to tighten. The FEWB market remains stable.
Europe
TAWB demand continues to fluctuate between point pairs Ex EU and UK, this is reflected in the rate levels increasing and decreasing week over week.
There is sufficient capacity available in the market, however, expect longer lead days for direct routing. Where possible indirect options via secondary hubs are providing shorter lead days and better rates.
No operational disruptions reported in EU & UK.
For all lanes: Continue to place bookings early to secure best uplift options/routings. If the lead time can take a deferred option via a secondary hub, bookings could benefit from lower rate levels.
Americas
Export demand remains steady from all markets.
US airports are running at a normal pace.
Capacity is opening up further, especially into Europe.
Rates remain stable week over week.
Trucking & Intermodal
Europe
Inland waterway shipping, or in short barging, is becoming more and more the transport modality of choice for moving containers from the Rotterdam Ocean Port to the ‘Hinterland’, not only into the Netherlands but also cross border to Germany and Switzerland.
There is an expectation that container transport to and from the main port of Rotterdam will grow significantly over the next 20 years. If this growth is accommodated by road transport, our roads will become completely blocked. There is a lot of unused capacity in the system of inland waterways and inland shipping is capable of transporting large volumes. Compared to transport by lorry or plane, inland shipping produces far less CO2. Moreover, inland shipping accidents are rare.
Americas
Import/Export Market Trends
Congestion is improving at Canadian ports and rail ramps, there are no significant operational delays.
CP Vaughan Intermodal Terminal is an exception where truckers, at time, are still experiencing 4-6 hours of waiting time.
CN continues shuttling containers from Brampton terminal to the CN Misc terminal, charging $300 per container.
Memphis, Houston, Detroit, Savannah, and Oakland are seeing some delays and import dwells > 10 days.
The port of Houston will be discontinuing Saturday operations at Bayport + Barbours cut on April 29th.
Congestion fees will no longer be active, effective March 1.
Majority of US ports and rail ramps are fluid, and not experiencing any significant delays.
Highway Diesel have remained relatively stable YTD.
US Domestic Trucking Market Trends
The FreightWaves SONAR Outbound Tender Volume Index (OTVI), which measures contract tender volumes across all modes, was down 25% year-over-year (3.3% month-over-month), or 9.6% when measuring accepted volumes after the significant decline in tender rejection rates. ‘
In addition to this, the Cass report indicated year-over-year volumes were down 3.9% in December after falling 3.3% month-over-month from November. This trend illustrates shipment volumes are declining compared to last year, but much more gradually.
The Morgan Stanley Dry Van Freight Index is another measure of relative supply; the higher the index, the tighter the market conditions.
Throughout December, trends closely followed this curve, indicating that market pressures were consistent with average historical trends. Looking forward, we expect to see softening through at least February as seasonal demand eases in the first two months of the year.
CBP’s Commercial Customs Operations Advisory Committee (COAC) will next meet March 29, 2023 in Seattle, CBP said in a notice. The trade community can submit comments, which are due in writing by March 24, 2023.
On March 14, 2023, Acting CBP Commissioner Troy Miller announced a new Uyghur Forced Labor Prevention Act (UFLPA) interactive dashboard. The statistics provided on this dashboard include shipments subject to UFLPA reviews or enforcement actions. This dashboard shows the commodity type found in detained shipments and their country of origin.
After ceasing operations in Ukraine, Maersk announced a return to service via freshwater ports along the Danube estuary in the northern part of the country. The shallow-draft terminals have operated relatively smoothly throughout the year, so Maersk has implemented container-on-barge services via the Constanta/Danube Channel and the Black Sea with a transit time of approximately a day and a half.
U.S.: TPEB rates are back to seeing minor mitigations to most U.S. gateways and inland destinations this week. Overall, delays and congestion are down but the consistent weekly blank sailings can expect to remove 30% of capacity from the market. Current capacity remains above any projected container volumes, spurring recent rate reductions.
Canada: Market and rate conditions are similar to the U.S. Vancouver continues to see stable vessel dwell counts (3 vessels) and berthing delays (13 days, 9 days for rail dwell). The low TPEB demand is further playing a key role in keeping West Coast port and rail congestion low.
Rates: Soft on most origin-destination combinations.
Space: Open.
Capacity/Equipment: Open.
Recommendation: Book at least 2 weeks prior to cargo ready date (CRD), and keep upcoming blank sailings in mind.
Asia → Europe (FEWB)
Demand and Supply are a bit more balanced this week after the blank sailings seen immediately following Lunar New Year (LNY). Booking intake is gradually improving but still not as strong as pre-LNY. Rates are still under pressure.
Rates: Generally reduced or extended for the first half of March.
Capacity/Equipment: Still seeing around 10-20% blank sailing average in weeks 11/12/13 to adjust for the decrease in demand. Expect the carriers to continue the same trend into March.
Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays (rolls).
Europe → North America (TAWB)
Demand remains low, space continues to be widely available. Inventories stock in the US are still very high so demand is not picking up as expected.
Rates: The drop continues as demand is not picking up at the same pace as last year and vessel utilization is in the 65-70% range, down from 90% a few months ago.
Space: Due to the easing of congestion, space in the U.S. East Coast (USEC) and U.S. West Coast (USWC) is coming online.
Capacity/Equipment: Equipment availability keeps getting better as congestion disappears. Low empty stacks at inland depots are also getting better in some areas, but prioritize pick-up from the Port of Loading if possible.
Recommendation: Book 2-3 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.
Indian Subcontinent → North America
Continued rate reductions were seen in the 2nd half of February, but the expectation is that stabilization will occur as we head into March.
Rates: Decreased week-over-week.
Space: Open.
Capacity/Equipment: Capacity is open with few blank sailings and limited disruptions. Equipment will continue to be an issue based on carrier choice and empty pickup location.
Recommendation: Be open to procuring equipment from wet ports vs. inland container depots as equipment deficits are being felt in many areas.
North America → Asia
Capacity is available across all major services, and carriers are looking for volume opportunities. No major services to the Asia Pacific (APAC) region are seeing space constraints.
Congestion has been cleared out across most North American container yards with improved operations as a result of lowered demand.
Equipment is available and ample in most major markets.
The outlook at the end of Q1 and headed into Q2 is that most of the existing capacity will remain in place as carriers lightly reshuffle vessel capacity across trades.
Rates: Rate pressures continue the trend slightly downwards MoM on certain lanes from coastal ports to Asia base ports. All carriers are trying to push cargo onto these lanes/services. Deals below existing market levels are available for consistent volume opportunities.
Space: Very open, allocation requests can be made to carriers for high volume weeks or projects with a high probability of acceptance.
Capacity/Equipment: no major capacity changes in the market. No major equipment hurdles to highlight. The only pocket shippers should monitor are IPI’s where chassis availability may be low.
Recommendation: book 1-2 weeks prior to CRD on all coastal to Asia-based port lanes, and book 2-3 weeks prior to CRD on all inland to Asia and feeder port lanes.
North America → Europe
Capacity from the USEC is available, while certain services from the USWC and Gulf remain tight but stable.
Most USEC to N. Europe (NEU) and Mediterranean (MED) services have low capacity utilization levels with no space constraints.
Gulf Coast to NEU and MED services continue to have medium to high utilization levels as the market has seen a reintroduction of capacity. Still there are some inconsistencies in the schedules from the Gulf.
The USWC to NEU, MED services are still limited in options and therefore utilization levels are artificially high.
Rates: Rates trended slightly downward QoQ on USEC to NEU lanes. Carriers made adjustments early in Q1 and since then rates have remained flat. Gulf and USWC rates were not adjusted in Q1 given the utilization levels on those services. Carriers are willing to make deals for USEC opportunities.
Space: Space is open from USEC, manageable from Gulf, and limited from USWC.
Capacity/Equipment: no major capacity changes in the market. No major equipment hurdles to highlight in the US, save for pockets of potential chassis issues out of IPI’s.
Recommendation: book 2 weeks prior to CRD on all EC to NEU, MED lanes, book 3 weeks prior to CRD on all Gulf to NEU, MED lanes, book 4 weeks prior to CRD for all PSW to NEU lanes.
Air Freight Market Update
Asia
N. China: TPEB demand continues to increase leading to tight capacity conditions. Space is already quite full through the end of the week. The main contributing factor is an increase in e-commerce demand. As a result, rates have increased this week. The FEWB market remains unchanged with rates remaining the same as the previous week.
S. China: Supply is tight with demand increasing in the market, resulting in rates increasing from the week prior.
Taiwan: The market is slack with some carriers canceling freighter flights on the TPEB tradelane.
Korea: Rates remain the same as the previous week with no large increases in market demand.
SE Asia: Markets are soft and demand remains unchanged with no signs of increases heading into March.
Europe
Overall Demand has increased with more fluctuations in rates WoW across point pairs.
Currently direct routings have a longer lead time and higher rates.
More indirect options available with one or more connections at a cheaper rate but with a slightly longer TT.
No major disruptions or delays across major hubs.
Americas
Export demand remains steady from all markets.
US airports are running at a normal pace.
Capacity is opening up further, especially into Europe.
Rates remain stable week over week.
Trucking & Intermodal
Europe
Inland waterway shipping, or in short barging, is becoming more and more the transport modality of choice for moving containers from the Rotterdam Ocean Port to the ‘Hinterland’, not only into the Netherlands but also cross border to Germany and Switzerland.
There is an expectation that container transport to and from the main port of Rotterdam will grow significantly over the next 20 years. If this growth is accommodated by road transport, our roads will become completely blocked. There is a lot of unused capacity in the system of inland waterways and inland shipping is capable of transporting large volumes. Compared to transport by lorry or plane, inland shipping produces far less CO2. Moreover, inland shipping accidents are rare.
Americas
Import/Export Market Trends
Congestion is improving at Canadian ports and rail ramps, there are no significant operational delays.
CP Vaughan Intermodal Terminal is an exception where truckers, at time, are still experiencing 4-6 hours of waiting time.
CN continues shuttling containers from Brampton terminal to the CN Misc terminal, charging $300 per container.
Memphis, Houston, Detroit, Savannah, and Oakland are seeing some delays and import dwells > 10 days.
The port of Houston will be discontinuing Saturday operations at Bayport + Barbours cut on April 29th.
Congestion fees will no longer be active, effective March 1.
Majority of US ports and rail ramps are fluid, and not experiencing any significant delays.
Highway Diesel have remained relatively stable YTD.
US Domestic Trucking Market Trends
The FreightWaves SONAR Outbound Tender Volume Index (OTVI), which measures contract tender volumes across all modes, was down 25% year-over-year (3.3% month-over-month), or 9.6% when measuring accepted volumes after the significant decline in tender rejection rates. ‘
In addition to this, the Cass report indicated year-over-year volumes were down 3.9% in December after falling 3.3% month-over-month from November. This trend illustrates shipment volumes are declining compared to last year, but much more gradually.
The Morgan Stanley Dry Van Freight Index is another measure of relative supply; the higher the index, the tighter the market conditions.
Throughout December, trends closely followed this curve, indicating that market pressures were consistent with average historical trends. Looking forward, we expect to see softening through at least February as seasonal demand eases in the first two months of the year.
On March 1, the Office of the United States Trade Representative (USTR) released the Biden Administration’s 2023 Trade Policy Agenda and 2022 Annual Report. Trade priorities for 2023 include advancing a worker-centered trade policy, realigning the U.S.-China trade relationship, engaging with trading partners and multilateral institutions, promoting policy confidence through enforcement, and expanding stakeholder engagement.
Expanding into omnichannel shopping options has been a winning strategy for many retailers over the last few years. Walmart has proven to be no exception, with a 3x increase in store-fulfilled deliveries in just the last 2 years. They now have 3,900 of their 4,717 U.S. locations providing inventory to fill customer orders.
The conversation with MSC CEO Soren Toft ranges pretty widely, but always comes back to one main point—he sees a positive turn for the shipping market coming in the second half of 2023. U.S. and European consumers remain active, and major retailers are selling down their overstocks from last year. Touching on the recent announcement of the end of the 2M alliance between MSC and Maersk, Toft says he remains optimistic and that the dissolution was the result of the two companies simply having different visions for their respective futures.
Carrier alliances are undergoing a major shift as rates plummet and costs look set to increase, analyst Lars Jensen told TPM23 attendees.
The Ocean Alliance could be the next major ship-sharing agreement to sink, possibly sometime this year, as its members chart different strategies and look to gain market share during the current “rate war” among ocean carriers, industry analyst Lars Jensen said Wednesday.
Speaking at the Journal of Commerce’s TPM23 conference in Long Beach, Jensen said ocean carriers face a market similar to the one seen during the 2008-09 financial crisis when a massive buildup of ship capacity came up against weakening demand.
While demand could recover should inventory destocking occur through the spring and US consumers keep spending, Jensen said the industry faces other headwinds, such as political scrutiny over the alliances’ anti-trust exemptions and higher costs from stringent carbon emissions rules. The result, he added, is that carriers are thinking more about “who do I want to spend the next few years with” as has happened with the pending dissolution of the 2M Alliance.
“It’s a normal downcycle we are going through, then there are some elements that are slightly different,” Jensen, CEO and partner of Vespucci Maritime and a Journal of Commerce analyst, said. “Rates are coming down faster than they went up. It is a rate war.”
“2M is the just the first domino to fall,” he added. “When it was formed, you had two parties with the same strategic interest. Now you have two parties whose interests are no longer aligned.”
China-US spot rates saw freefall in H2 2022
Spot container rates for Shanghai to Los Angeles and New
Cosco has second-largest orderbook
Jensen, one of the first to predict the breakup of 2M, said at the time that Mediterranean Shipping Co.’s large orderbook of new vessels allowed it to operate on a standalone basis across many trade lanes, without having to share space on Maersk vessels. A similar dynamic could play out with Ocean Alliance member Cosco Shipping, which has the second-largest orderbook of new ships behind MSC, Jensen said.
Cosco faces renewed urgency to fill those new vessels due to a loss of market share over the last two years that Jensen attributed to China’s COVID-19 lockdowns and the resulting shipping delays out of the country.
“I’m going to expect Cosco to be very aggressively going after market share,” Jensen said. “Who’s the easiest prey to go after? That would be customers already on your ships through your alliance partners.”
“That’s not going to sit well with [Ocean Alliance members] CMA CGM and Evergreen Marine,” Jensen said, adding that Taiwan’s Evergreen faces the additional tension of working with a China-based carrier.
Indeed, Cosco recently upsized capacity on an Asia to US Gulf service it operates on a standalone basis, but that is also offered through the Ocean Alliance. The new capacity on that Cosco service now evenly matches one that CMA CGM also offers on a standalone basis to the US Gulf.
Likewise, CMA CGM is pursuing a strategy not similar to Maersk’s, “but somewhere in the same direction,” Jensen said.
As does Maersk, CMA CGM looks to own US terminal assets after striking acquisition deals on the US East and West coasts. CMA CGM’s North American President Peter Levesque said during his appearance at TPM23 Tuesday that owning terminals allows the carrier to “determine our own destiny.”
The Ocean Alliance’s agreement is set to expire in 2027, Jensen said, but he noted the current market uncertainty and the pending breakup of 2M could hasten a decision not to renew the Ocean Alliance in 2023.
Regarding THE Alliance, Jensen said “it’s slightly stable” due to similar operating strategies and less aggressive ship ordering. However, he said the changing carrier landscape may make THE Alliance’s two biggest members, Hapag-Lloyd and Ocean Network Express (ONE), reconsider their partnerships. Jensen even posited that the two could decide to merge as a way to take on ever-larger ocean carriers.
“This is not the first time we’ve seen alliances break up and get re-formed,” he said. “The challenge is once everyone’s dance card is open, Hapag and ONE will have some thinking to do about who do we actually want to be lined up with now that everything is shifting.”
Transpacific Eastbound (TPEB) demand continues on a declining trend:
U.S.: Rates continue to fall for all gateways, nearing rate levels seen pre-pandemic. Although carrier reliability is up YoY and overall TPEB capacity is continuing to grow, port and rail congestion is still seen at the major US gateways to some extent, most notably at Houston for vessel dwell (12 days) and Los Angeles/Long Beach as rail dwell (14 days).
Canada: Market and rate conditions are similar to the U.S. Vancouver saw an improvement in the vessel count but a deterioration in berthing delays (29 days).
Rates: Remain soft on most origin-destination combinations.
Space: Open.
Capacity/Equipment: Open, except in a few pockets.
Recommendation: Book at least 2 weeks prior to cargo ready date (CRD) and keep in mind upcoming blank sailings.
Asia → Europe (FEWB)
No change in the sluggish demand throughout November with a similar outlook going into early December. Rates are still following a downward trend. Space is readily available but schedule reliability is affected. Port congestion in Europe continues to cause delays and late return of vessels to Asia.
Rates: Ongoing pressure on spot rates due to low demand.
Capacity/Equipment: Space is generally open despite the impact of blank sailings and vessel delays.
Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.
Air Freight Market Update
Asia
N. China: TPEB demand is picking up slightly due to an increase in month-end shipping orders and rates have increased compared to last week. Far East Westbound (FEWB) demand and rates remain stable.
S. China: Market rates remain at similar levels to last week. The Covid outbreak in the Guangzhou area continues to affect manufacturing operations, resulting in cargo output delays.
Taiwan: There is a slight peak before the Thanksgiving holiday, however, overall demand is low in the market.
Korea: The market remains soft for the Thanksgiving holiday. Additional freighter capacity to Los Angeles (LAX) has been added to the market.
SE Asia: The overall export markets in Southeast Asia continue to be soft.
Europe
Overall demand levels out of Europe remain low for this time of the year.
Capacity available in the market is sufficient to meet demand levels, with slightly higher lead days into some main hubs in North America.
Terminal congestion in Amsterdam (AMS) and London Heathrow (LHR) might lead to delays.
Watch out for the upcoming holiday season, which might create bottlenecks both in the air and on the ground.
Americas
Export demand remains steady from all markets.
US airports are running at a normal pace.
Capacity is opening up further, especially into Europe.
Mediterranean Shipping Co. (MSC) and Maersk are halting a trans-Pacific US East Coast service after freight rates have been cut by more than half from the summer peak.
MSC and Maersk, partners in the 2M Alliance, said in separate statements this week that they will temporarily suspend their jointly run Liberty/TP23 service until further notice, adding that the suspension “will help alleviate port congestion.” The last sailing will be Nov. 23 from Indonesia. Liberty/TP23, which was introduced in March 2021, offers service from Indonesia, Vietnam and China to the US ports of Charleston, Savannah, and New York-New Jersey with a string of ships in the 8,000 TEU range.
The service suspension comes as rates into the US East Coast see further weakening as the end of 2022 nears. After dropping about 25 percent from October, average US East Coast freight rates now sit at $4,500 per FEU, with bookings done as low as $3,700, according to a trans-Pacific forwarder who asked not to be identified. That is down 55 percent from levels seen in June, the forwarder added.
“Ocean carriers are cutting rates and voiding sailings left, right, and center,” the source said.
With rates returning to pre-pandemic levels, ship supply to the US East Coast appears too high to offset rate declines. Sea-Intelligence Maritime Analysis said in its most recent Sunday Spotlight newsletter that November vessel capacity into the USEC is 19.5 percent above the level seen in November 2019, with December capacity running even higher at 37.7 percent above the same month in 2019.
Meanwhile, more service changes could be coming. MSC’s standalone Santana service, which was shifted from a West Coast to an East Coast service last year, is reportedly moving to every three weeks instead of a weekly service, according to a maritime shipping source who did not want to be identified. The service change could not be independently verified.
Some of the slowdown in container activity is showing up in the most recently available cargo figures for New York-New Jersey. Although New York-New Jersey has been the busiest US port for three consecutive months, the October volume of 792,548 TEU was essentially flat with the year-ago month. In a statement to JOC.com, the Port Authority of New York and New Jersey said it forecasts full-year 2022 volume to be about 9 million TEU, which would be up only nominally from 2021.
Dwell times for cargo bound for Toronto remain high as the inland terminals face congestion challenges;
Fairview Terminal is receiving consistent rail supply to match current volumes;
Vancouver
The dwell is still high for all the terminals. Centerm and Delta have the worst performance, with dwell time more than 7 days;
Halifax
Fairview Cove Terminal is at 3.1 days average dwell last week.
Atlantic Hub Terminal remains congested, with 5.9 days dwell time.
KEY PERFORMANCE INDICATORS
USA Long Beach
Seattle + Tacoma ( The Northwest Seaport Alliance)
Highlights & Updates
• PCT will have a limited gate Friday, 11/18. Contact ETS for more details. • All terminals will be closed Thursday, 11/24 for the Thanksgiving holiday. • T5 will be closed Friday, 11/25. For a complete list of next week’s gate schedules visit our website here. • There is ample warehouse & transload capacity available across the gateway. Our monthly Warehouse & Transload Availability report, which shows many providers with space, is found on page 3 and on the website here. • The USDA’s Commodity Container Assistance Program (CCAP) is still available to exporters who use T46 and West Hylebos Yard to stage export loads. More info on reimbursement and eligible commodities found here. • At PCT Everport now requires all trucking companies to secure valid empty out appointments. • Husky and PCT currently are not accepting TRAC or DCLI bare chassis drops until further notice.
Chassis Status
As of March 31st, the PNW Market Pool has transitioned to single-provider neutral pools to service the region: o TRAC Intermodal operates the TRAC Pacific Northwest Pool (TPNP) o DCLI operates the Direct Chassis Link Pool (DCLP) • For more details on pool changes please visit our website for a Pacific Northwest Pool Operations Update • If you have questions or would like further information on chassis in the PNW, please contact operators directly: § TRAC Intermodal: Cindy Davies, Director, Western Region cdavies@tracintermodal.com § DCLI: Amy Hume, General Manager, Logistics West amy.hume@dcli.com § FlexiVan/AIM: Susan Duran, Director, Western Region sduran@flexivan.com § Milestone: Sandra Magallanes, Account Executive, West Coast sandra.magallanes@milecorp.com • Chassis Start Stop Locations for The Northwest Seaport Alliance can be found on our website.
The White House is monitoring labor talks in the logistics industry as unions representing 115,000 rail workers and 22,000 West Coast dockworkers negotiate fresh contracts, but won’t get directly involved in either bargaining process now, its supply-chain envoy said.
“The administration is watching as closely as it can be watched without being a point of interference, which would not be appropriate,” Stephen Lyons said in a virtual briefing Wednesday. “Negotiations are at a place where you’d think the negotiation should be at this particular point.”
Labor impasses are spreading across the US logistics network in the busiest months of the year for shipping, as retailers stock up on back-to-school and year-end holiday goods. Dock- and railroad-worker unions are currently negotiating contracts with employers, with the latter threatening to strike as soon as July 18.
Talks between the nation’s largest railroads and workers — which started in January 2020 — are in a 30-day cool-off period after a union rejected a binding mediation offer from the National Mediation Board. Next, the Biden administration could appoint a presidential emergency board to resolve the dispute.
“We’ve got to get these folks some wage increases; we’ve got to address some of these issues,” Lyons said, adding he doesn’t want to get ahead of President Joe Biden as he makes a decision. “We’ll see what happens on the 17th. But I do think there’s a commitment there.”
Contract Discussions
Separately, the International Longshore and Warehouse Union and the Pacific Maritime Association, which represents about 70 employers, began discussing a new contract in May and are continuing to do so after their previous pact expired July 1. Officials from the ILWU and the PMA, which represents employers, met with Biden when he visited the Port of Los Angeles last month and have recently reaffirmed their commitment to keeping cargo moving despite the lack of a contract.
Any slowdown in operations at the two ports that are responsible for 42% of all containerized trade with Asia could stoke annual inflation that’s running at the fastest pace since 1981, and damp economic growth.
Biden, who’s pledged to be the most pro-union president in US history, has directed Cabinet members and logistics-area experts to smooth out pandemic-era port logjams that spurred shortages and delays. Lyons and Labor Secretary Marty Walsh have been in touch with both parties, the port envoy said.
Port of Los Angeles Kicks Off Peak Season with Record June
Meanwhile, about 70,000 truck owner-operators in California — home to the nation’s biggest port complex at Los Angeles and Long Beach — are now in limbo as a local gig-work law starts applying to them.
California’s Assembly Bill 5 requires workers satisfy a three-part test to be considered independent contractors, or else be seen as employees entitled to job benefits. The state’s truck owner-operators must now comply with AB5 after the Supreme Court on June 30 refused to review a case challenging the legislation that sets out the tests for employment-status classification.
‘So Critical’
On Wednesday, truckers demonstrated against the changes at the port gateways of Los Angeles, Long Beach and Oakland, according to the Harbor Trucking Association.
L.A. operations weren’t affected, and the port had planned for the protest days ahead Executive Director Gene Seroka said.
“We gave them the breadth and depth and space they needed to voice their opinions but kept this cargo moving; these drivers are very respectful of just that,” Seroka said at the virtual briefing Lyons also attended. “They have a message to put out there and are continuing to do so. I applaud them for coming out here today.”
The Biden administration is still assessing the AB5 issue in California, Lyons said.
“The truckers are so critical to their supply chain — we’ve got to make sure that we’re setting the conditions to take care of them to the best of our ability.”
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