Freight market update - 04 October 2023

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• The Ukraine invasion has caused a trade imbalance between China and Russia, resulting in about 150,000 TEU of empty containers stranded in Russia.

• Second-hand container prices in Russia have dropped significantly.

• Qatar Airways Cargo plans to use additional bellyhold capacity for two new destinations in China.

• The US International Longshoremen and Warehouse Union (ILWU) has filed for Chapter 11 bankruptcy while stating that its operations will continue as usual.

• Overall BAI air freight rate index increased by 4.8% compared to the previous week, indicating a positive trend.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• The Ukraine invasion has caused a trade imbalance between China and Russia, resulting in about 150,000 TEU of empty containers stranded in Russia.
• Container xChange, an online platform, analyzed the situation and found that the increase in Chinese exports to Russia post-Ukraine conflict led to a shortage of equipment for Chinese exporters.
• Consequently, second-hand container prices in Russia have dropped significantly.
• Christian Roeloffs, Co-founder and CEO of Container xChange, observed a substantial flow of cargo from China to Russia but minimal movement in the opposite direction.
• This has caused an accumulation of containers in Russia, leading to very low second-hand container prices.
• Currently, approximately 150,000 containers are stranded in Russia, with efforts underway to return them to China, incurring pickup charges for containers sent from Russia to China.
• Many Chinese companies are selling containers at prices below market value to get rid of them since sending them back to China is not cost-effective.
• Qatar Airways Cargo plans to use additional bellyhold capacity for two new destinations in China.
• The airline operates three weekly flights to Chengdu and Chongqing using Airbus A330-300 aircraft for its passenger business.
• Chongqing and Chengdu stations will mainly focus on export markets, offering a weekly capacity of 84 tonnes each way.
• Exports will consist primarily of vulnerable/tech cargo, while imports will include general cargo, fish, seafood, and perishables.
• Elisabeth Oudkerk, Senior Vice President Cargo Sales and Network Planning, highlighted the airline's expansion in Mainland China, emphasizing the direct bellyhold capacity for imports and exports in these key markets.
• Qatar Airways Cargo already serves several Mainland China destinations, including Beijing, Guangzhou, Hangzhou, Shanghai, Shenzhen, and Zhengzhou, with a total weekly cargo capacity of over 2,700 tonnes each way, including the newly introduced destinations.
• The air cargo market is showing signs of strengthening, marking a shift after over a year of declining demand.
• According to TAC Index's latest weekly data, the overall BAI airfreight rate index increased by 4.8% compared to the previous week, indicating a positive trend.
• The year-on-year decline also decreased to 38.5% last week, down from 44.4% in the previous week.
• TAC Index noted a "distinctly firmer tone" in air cargo markets and raised expectations for the peak season, with solid pre-order bookings reported for major product launches like the new iPhone.
• Rates are more stable, particularly for outbound routes from China leading up to Golden Week, with a 2.1% week-on-week increase in the index for Hong Kong routes.
• Speculation suggests that some forwarders, especially in the e-commerce sector, may face challenges in securing sufficient capacity, potentially resulting in higher rates in the coming weeks.
• Rates out of Shanghai increased by 5.9% last week, with improvements in both North America and Europe.
• Container throughput at Chinese ports increased by 4.8% between January and August 2023, reaching 203.7 million TEUs compared to the same period the previous year.
• Cargo volumes at these ports totaled 11.1 billion tons, reflecting an 8.4% year-on-year increase.
• Shanghai Port remains the busiest container port in China, handling 32 million TEUs.
• The second busiest port is Ningbo & Zhoushan, which handled 24 million TEUs.
• The port of Shenzhen is in third place, with a throughput of 19 million TEUs.
• Shenzhen was the only exception among the 12 major Chinese ports listed, experiencing a -2.1% year-on-year decrease in container throughput from January to August.
• The smaller ports of Yinkou, Beibu Gulf, Dalian, and Lianyungang registered the largest percentage growths, with Yinkou reporting a 21.7% year-on-year increase in container throughput, Beibu Gulf achieving a 15% increase, Dalian seeing a 14.3% rise, and Lianyungang increasing its throughput by 14.2%.

Conclusions

Rates - The rates will remain soft on most origin-destination combinations.

Space - Space open, no issues with equipment.

Recommendations - We recommend blank sailings to continue. Book at least two weeks before the date your vessel gets ready to depart.

Turkey → North America

• The US International Longshoremen and Warehouse Union (ILWU) has filed for Chapter 11 bankruptcy while stating that its operations will continue as usual.
• Chapter 11 bankruptcy is a process allowing businesses to address their debts while maintaining regular operations, often called 'reorganization bankruptcy.'
• The bankruptcy is attributed to ongoing litigation costs from a labor dispute with Filipino terminal operator ICTSI dating back to 2012, which led to the closure of ICTSI’s Terminal 6 at the port of Portland.
• Despite the bankruptcy filing, ILWU has confirmed that its operations will proceed normally during this process.
• Daily ship crossings through the Panama Canal will be reduced from 32 to 31 due to a severe drought expected to continue into the next year, as announced by the Panama Canal Authority (ACP).
• Previously, the ACP had implemented various measures to conserve water, including reducing vessel draft and daily passage authorizations from the usual 36 per day.
• In response to the ongoing water crisis, the ACP has introduced additional rule changes, effective from November 1.
• Under the updated regulations, nine vessels will use the Neopanamax lock daily, while 22 will use the Panamax lock, and transit reservation limits will be capped at 30 per day.
• To mitigate potential delays and ship congestion, the ACP will implement a revised timetable for both Neopanamax and Panamax locks. This will allow customers to adjust their schedules and reduce waiting times for vessels that do not adhere to a daily transit schedule.

Conclusions

Rates - The rates will remain soft on most origin-destination combinations.

Space for capacity - No capacity issues or issues with space.

Space for equipment - No issues with equipment.

North America → Turkey

• In August, the Port of Savannah handled 413,300 twenty-foot equivalent units of containerized cargo (TEUs), marking a 28% decrease compared to the same month the previous year.
• Griff Lynch, president and CEO of the Georgia Ports Authority (GPA), attributes this decline to ongoing berth renovations rather than economic factors.
• The Savannah Port is increasingly relying on rail transportation to move cargo, with 49,115 containers (around 89,000 TEUs) handled at the Garden City Terminal, reflecting a 6% increase from the previous year and constituting 21% of vessel lifts.
• Intermodal cargo, which combines different modes of transportation, represented 21.6% of total containers in the past month, showing a 7% increase compared to August 2022.
• The GPA has partnered with CSX to offer daily rail departures between the Port of Savannah and CCX Yard in North Carolina, aiming to attract more cargo transiting the Panama Canal with faster transit times.
• The GPA predicts that population and manufacturing growth in the U.S. Southeast, along with the 'China plus one' strategy shifting sourcing to countries like India, will result in increased delivery of goods through the Port of Savannah.
• The strategic location of the port, as the first or last port of call from the Panama Canal and its access to Suez Canal routings, provides customers with multiple market options.

Conclusions

Rates - Stable rates over the last week.

Space for capacity - No major capacity or space issue.

Space for equipment - Equipment issues have started owing to low levels of import.

Terminal Updates

●   Vessels heading to North America via the North Atlantic Sea are expected to have a change in schedule due to severe weather conditions.

New York:

●   No waiting time is expected for a berth at Maher Terminals LLC and APM Terminals.

●   Up to 4 days waiting time is expected at Global Container Terminals Bayonne.

●   Average gate turn times: 41 minutes for single transactions, and 69 minutes for double transactions.

Norfolk:

●   Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.

●   Average gate turn times are 36 / 50 minutes for single and double transactions respectively.

●      All cranes operating as per schedule.

Charleston Terminal:

●   1 day waiting time for vessel berthing at Wando Welch Terminal.

●   0.5 days waiting time expected at North Charleston Terminal.

●   Average truck turn times: 21 minutes at Wando Welch Terminal, and 20 minutes at North Charleston Terminal.

Savannah:

●   Waiting time for vessel berth at the terminal is up to 3.5 days, depending on the size of the vessel.

●   Average gate turn times are 34 / 52 minutes for single and double transactions respectively.

●   Two new cranes are currently being commissioned on berth 2. Four of the oldest cranes on the same berth are being demolished. Berth 2's capacity to handle vessels will be limited for several months.

Houston:

●   Barbours Cut Terminal has up to 2 days waiting time for vessel berthing.

●   Due to vessel bunching the yard is facing congestion impacting the discharge productivity and extending port stays.

●   The average gate turn time is 45 minutes.

●   Loaded import dwell is at 3.4 days.

Oakland:

●   Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and TraPac.

●   Average import deliveries can take up to 4.4 days at TraPac and 4 days at OICT.

●   Average gate turn times are 62 / 65 minutes for OICT and TraPac respectively.

Seattle-Tacoma:

●   Wait time of up to 3 days at Tacoma and Seattle.

●   Import deliveries are 7.4 days at HUSKY – due to EB/WB railcar imbalance, 3-7 days at Washington United Terminal, and 1-3 days at T18.

●   Rail car availability is a significant concern at present, primarily because there is a low volume of rail cars heading Westbound to balance the high volume going Eastbound. This issue is exacerbated by omissions in Vancouver.

●        The railroads are actively working with all stakeholders to improve the availability of rail cars. However, if more Westbound cargo or empty cars are not made available, this problem will continue.

●       As an alternative to rail transport, inland cargo transportation via truck is also an option to consider.

●   Average gate turn times are 30 / 35 / 43 minutes for T18, Washington United Terminal, and HUSKY respectively.

●   T18 will be closed on September 29 and October 06, 2023.

●       Husky will have Saturday gates on October 4, 2023 specifically for export receiving and dispatching empty containers.

●   WUT has received 2 new Post Panamax Cranes.

●   WUT has commenced commissioning both, operational by the mid/end of September.

Los Angeles/Long Beach:

●   All terminal gates are running as published and in line with the Pier Pass program.

●   Port of Los Angeles dwell time for local import cargo is 3.4 days, on-dock rail dwell is 5.1 days, and import units on the street are averaging at 4.1 /6.1 days for 20 ft and 40+ ft containers respectively.

●   Port of Long Beach dwell times for local imports are stable, and the average terminal gate turn time is between 21-81 minutes, depending on the terminal.

●   Chassis Pools: All pools are operating as normal except:

1. Minneapolis / St. Paul – Deficit on 40’ and 45’ chassis.

2. El Paso – Deficit on 40’ Chassis.

●   Intermodal Operations: Truck power can be secured within 1-3 days for the majority of locations, including marine terminals, rail ramps, and depots.

Port Status

Final Thoughts

In light of the latest updates and trends, it is evident that the market is currently in the course of demonstrating robust performance and is equipped with ample capacity and resources.

Individuals and businesses involved in import/export activities must stay well-informed about market dynamics and strategies to make informed decisions. To ensure a smooth and hassle-free experience with your import/export operations, it is recommended to seek guidance from industry experts.

Conduct thorough research on ports that offer available space and suitable equipment despite the ongoing conditions. By doing so, you can minimize complications, facilitate shipments, and maximize efficiency.

Taking proactive measures and staying proactive in your approach will help you navigate the market effectively. We greatly appreciate your continued readership and encourage you to subscribe to our weekly market updates to stay abreast of the latest developments and insights.