[Ocean – TPEB] Effective capacity still is at an oversupply as carriers announce more blank sailings and try to reign in further rate drops. Space remains wide open and rates have dropped to pre-pandemic levels.
[Ocean – TAWB] Rates continue their downward trend as demand is not recovering and capacity remains open, expect this trend to continue for all Q2 2023 and beyond. Equipment is now widely available in all major European ports.
[Ocean – LATAM] Capacity has opened up due to softer demand and ocean carriers deploying new services or adding additional capacity to existing service rotations. This is putting pressure on rates as supply exceeds demand, we expect the situation to remain beyond Q2.
[Air – Asia] The market is stabilizing and rates will remain higher than Q1 while demand has recovered and remains relatively stable. Some freighter capacity is being retired, specifically on Transpacific. An increase in passenger capacity as summer approaches should keep the overall capacity (freighter + passenger) relatively stable and maintain a healthy supply demand balance.
[Trucking – N. America] The port of Houston discontinued Saturday operations at Bayport + Barbours as of Apr 29, 2023. The majority of US and Canadian ports and rail ramps are fluid, and not experiencing any significant delays—Gulf ports are slightly congested but truck power is available nationwide.
Expert Voices
Container throughput at Laredo on the U.S. – Mexico border reached a new monthly high in March, jumping by more than 30,000 twenty-foot equivalent units (TEUs) from February to reach nearly 235,000. To date, the evidence for near-shoring has been murky. Here we look at how it is perhaps coming into clearer view.
Turning back to Laredo, with the exception of a likely-seasonal drop in the May of 2022, volumes have remained well-above that average for the past twelve months, culminating in the March spike, which represented a 14.8% month-on-month increase and 17.5% increase year-on-year. By contrast, total seaborne TEUs into the U.S. were only up 6.6% month-on-month and still 24.9% lower than March 2022.
[Ocean-TAWB] As more vessels and carriers have entered the market, there is plenty of supply with shipping lines looking for extra cargo to fill the additional capacity. This situation is expected to last beyond Q2 2023.
[Ocean-LATAM] Capacity has opened up due to softer demand and ocean carriers deploying new services or adding additional capacity to existing service rotations. This has put pressure on rates as supply exceeds demand—we expect the situation to remain beyond Q2.
[Air-Asia > N. America/EU] We expect freighter capacity to drop as older aircrafts are retired or scrapped as they cannot make money under current economic conditions. Overall capacity should be slightly net positive in Q2 but will reduce in Q3 with the end of the summer travel period.
[Air-LATAM] Brazil: Required lead time is similar month over month—the lead time from requesting the booking to the airline until uplift is 2 to 4 days for Standard service on average, but will vary depending on the airline and route. Shorter lead time available on Express service.
[Air/Ocean-India] Space is available and schedules are reliable for both modes out of India/Sri Lanka/Bangladesh. Air cargo space is tight into the U.S. and EU for Pakistan with occasional flight delays. Equipment has good availability.
The latest forecasts released by Flexport Research show a steady increase in consumption, among other signs that recession isn’t as imminent as previously thought. “A recession may well be on the way, but from the latest data, we’re not seeing it arriving in the next few months,” said Phil Levy, Flexport chief economist. At the same time, the U.S. domestic trucking industry showed the largest decline in tonnage hauled since the beginning of the pandemic, as the truck tonnage index fell 5.4% in March over February.
[Podcast] What Are Responsible Supply Chains and What Role Does Trust, Transparency and Technology Play in Achieving Them?
In this latest episode of Zero100’s “Radical Reinvention” podcast, Zero100 Co-Founder Kevin O’Marah is joined by: Dave Clark, CEO of Flexport, Anne-Laure Descours, Chief Sourcing Officer at PUMA, and Reginaldo Ecclissato, Chief Business Operations and Supply Chain Officer at Unilever. The discussion is a deep dive into responsible supply chains and the role that trust, transparency and technology play in achieving them—as Dave says, “I don’t think you can be in the supply chain anymore without waking up and thinking about your impact on people and the planet.”
[Ocean-All Lanes] Environmental regulation compliance resulting from IMO 2023 has led to vessels not returning to pre-Covid speeds, effectively removing ~8% capacity from the market.
[Ocean-TAWB] Recommend booking two or more weeks prior to Cargo Ready Date (CRD) to secure space and minimize CRD changes as much as possible. Alternatively, leverage premium products to guarantee equipment and loading for your most time sensitive cargo.
[Air-Correction] We previously reported that runway work was being conducted at Beijing Airport, which was incorrect. The maintenance work is happening at Shanghai Pudong Int’l Airport. Estimated impact (per Shanghai Airport): ~10% capacity on PVG-US, and ~25-30% capacity on PVG – EU, and work will be ongoing through June.
[Air-Asia > N. America] Carriers are NOT sharing significantly reduced fixed rates, in order to not engage their capacity at the lowest of the market. Expect rates to stay around the same level as at the end of March.
[Air-Transatlantic] Passenger traffic is beginning to pick up and flight frequencies will continue to increase on Trans-Atlantic routes. The summer schedule of major European and US airlines is already significantly higher from mid-April onwards.
According to the World Bank’s recently released report, “Falling Long-Term Growth Prospects: Trends, Expectations, and Policies,” global GDP growth will slow significantly in the coming years. For the freight forwarding and global shipping industry, the time may be perfect to invest in technology upgrades and improved data practices. Neel Jones Shah, Flexport’s EVP of Air Strategy & Carrier Development, had this to say: “My advice for everyone working in supply chain right now is to take advantage of this time to plan for the future.”
Shifts in consumer shopping habits, environmental concerns, brand reputation, and direct-to-consumer models stemming from the early days of the COVID pandemic have all contributed to changes in how goods are shipped to buyers. Specifically, Ships-In-Own-Container (SIOC), in which an item arrives in the original packaging without any additional box or packaging needed, has seen a major uptick in recent years.
[Ocean] On Transpacific Eastbound (TPEB), effective capacity remains at an oversupply with carriers continuing to announce more blank sailings in an attempt to reign in further rate drops. Meanwhile, the trends of shifting imports to the U.S. East Coast (USEC), as well as Canada & the Gulf, from the U.S. West Coast (USWC) continues to be seen in YoY volume data.
[Ocean] Meanwhile, on Transatlantic Westbound (TAWB), rates continue their downward trend as demand is not recovering and capacity continues to increase. Expect this trend to continue for all Q2 2023 and beyond. Further, equipment is now widely available in all major European ports.
[Air] A portion of Beijing Airport, the 3rd busiest in the country, is shut down for maintenance through the month of April. This is expected to remove approximately ⅓ of the facility’s air cargo volume, or ~2.6% of China’s overall air cargo volume.
[Air] Transatlantic routes are continuing to see increasing numbers of passenger flights being scheduled, thereby increasing belly capacity from Europe to N. America. This has brought capacity on these routes back to pre-COVID levels; however rates remain high due to fuel prices.
[Trucking] The majority of US and Canadian ports and rail ramps are fluid, and not experiencing any significant delays—gulf ports are slightly congested but truck power is available nationwide and highway diesel rates remain stable.
The Consumer Price Index rose 0.3% in February, which is less than expected. Core inflation, which strips out food and energy prices, decreased to 5.5% from 5.6%, the lowest since late 2021. This is encouraging news for policymakers, as it indicates that inflation may be stabilizing after a period of rapid growth. According to Flexport’s Chief Economist Phil Levy, “You look at this report and think, we’ve got to keep applying the brakes.”
Seventeen European shippers, led by Dutch multimodal operator Samskip, have signed on to the “Switch to Zero” campaign by the Port of Rotterdam Authority and GoodShipping. The Renewable Energy Directive (RED II) mandates that 32% of all energy usage in the EU, including at least 14% of all energy in road and rail transport fuels, must come from renewable sources such as biofuels. Flexport also partners with GoodShipping to enable our customers to work toward carbon neutrality via the Impact Dashboard, part of the Flexport platform.
[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.
