Freight market update - 06 December 2023

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• Shipping industry leaders, including CEOs of major European companies such as CMA CGM, Hapag-Lloyd, Maersk, MSC, and Wallenius Wilhelmsen, jointly addressed COP28.

• The shipping industry is undergoing significant changes due to climate regulations imposed by the United Nations Maritime Organization (IMO) and regional initiatives.

• The situation at the Panama Canal is worsening, causing significant delays for vessels without reservations.

• Niall van de Wouw, Xeneta's Chief Airfreight Officer, indicates that after a rapid rate decline earlier in the year, the market might have established a new baseline, leading to the emergence of 'classic seasonality' patterns.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Shipping industry leaders, including CEOs of major European companies such as CMA CGM, Hapag-Lloyd, Maersk, MSC, and Wallenius Wilhelmsen, jointly addressed COP28.
• The leaders called on the International Maritime Organisation (IMO) to take increased climate action.
• Proposed measures involve shifting to well-to-wake emissions measurements to prevent greenwashing of fossil fuels.
• There is a call for a global regulatory framework to drive ambitious investments on a global scale.
• The introduction of a 'vessel pooling option' is suggested, measuring the performance of a group of vessels rather than individual ones, potentially allowing older vessels to remain in service longer.
• A proposal for a binding end-date for the construction of fossil fuel-only newbuilds is made to encourage the adoption of dual-fuel vessels.
• The leaders advocate for a greenhouse gas pricing mechanism, levying fossil fuels equivalent to new zero- or low-emission fuels, with the funds directed to research and development.
• Overall, these proposals aim to ensure sustainable practices, reduce the carbon footprint, and bridge the gap between fossil and green fuels in the shipping industry.
• For Shanghai (SHA) to Europe and the US, bookings for e-commerce cargo are decreasing, and rates have stabilized without further increases.
• Rates remain consistent with the previous week's levels.
• For shipments from Ningbo (NGB) to Europe, space is limited, and final rates are determined on a case-by-case basis.
• It is recommended to book space 4-5 days before the cargo ready date.
• The market to the USA from NGB is relatively stable this week, with final rates offered on a case-by-case basis.
• In terms of North China to USA and Europe (TSN), rates from Tianjin (TSN) to Europe and the US are experiencing continued increases for Korean Airlines.
• Asiana Airlines has limited space, and rates are subject to fluctuations for both destinations.
• The shipping industry is undergoing significant changes due to climate regulations imposed by the United Nations Maritime Organization (IMO) and regional initiatives.
• HSBC's report, "Assessing the impact of future emissions regulations," outlines the varied impact of these changes on customers and shipping companies.
• Several shipping firms have announced surcharges for voyages to and from European Union (EU) ports, averaging around USD 30 per TEU.
• The EU's Emission Trading System (ETS), in which shipping will participate from the new year, is expected to incur a cost ranging from 1-5% of freight rates, according to HSBC's calculations.
• HSBC anticipates these surcharges to be under 1.0% of realized freight rates in 3Q23 or 1-5% of market spot rates, with the expectation that they will be passed through to customers.
• The EU ETS mandates shipping companies to offset CO2 emissions on EU-related routes, constituting about one-third of global container trade.
• The main challenge identified by HSBC for the EU ETS system is the reasonable estimation of emissions and pricing EU allowances.
• Climate requirements from the IMO, including carbon intensity indicators (CII) and the EU's upcoming green fuel requirements (FuelEU Maritime from 2025), will have short-term effects on the shipping industry.
• The report suggests that shipping lines may adopt practices like slow steaming and retrofitting energy-saving technologies on ships to meet these requirements.
• According to Clarksons, average sailing speeds have decreased by 3% compared to 2022, with lower CII-rated ships sailing slower than those with a higher rating.
• A growing trend in orders for ships capable of running on alternative fuels is noted, with 55% of the containership order book (4.1m TEUs) being alternative-fuel capable, and 3.7% alternative fuel adoption in the existing fleet (1m TEUs).
• Ocean shipping companies are shifting their growth strategies from traditional East-West routes to North-South trades.
• According to a survey by Alphaliner, African trades experienced the highest year-on-year growth, with a 21.1% increase in deployed capacity as of November 1. Major companies like Maersk and CMA CGM are adjusting their services with a joint Far East-West Africa route.
• In Latin America, there was a 17.5% growth in trades over the past year, and Israeli carrier Zim is expanding its network with two new services connecting China and South Korea to the South American West Coast.
• Conversely, Asia to North America routes saw a negative growth of -4.5%, losing 243,000 TEU slots since November 2022.
• Despite reduced demand and a lack of peak season, the Asia-Europe trade lane witnessed a 7.4% capacity growth, primarily due to the introduction of newbuild 24,000 TEU ships replacing smaller capacity tonnage vessels.
• Reports suggest that carriers may take drastic measures to restore freight rates, including the potential suspension of services on the Asia-Europe route due to an imbalance between supply and demand.
• The possibility of redeploying smaller tonnage to African or Latin American services is being considered as a strategic response to the challenging market conditions.
• Another growth potential is identified in trades involving India, where the export growth rate was an impressive 15% last year. Japanese carrier ONE plans to launch a standalone service between India and the U.S. East Coast to meet the increased demand for consumer goods export.
• Global schedule reliability remained unchanged month-over-month (M/M) in October 2023 at 64.4%, maintaining a stable trend since March 2023, with exceptions such as an increase in May.
• Year-on-year data indicates a significant 12.6 percentage point improvement in schedule reliability.
• The average delay for late vessel arrivals increased by 0.33 days M/M to 4.90 days, following a trajectory similar to the same period in 2020.
• Maersk led as the most reliable top-13 carrier with a scheduled reliability of 71.1% in October 2023, followed by MSC at 68.5%.
• Six carriers, including MSC, achieved reliability within the 60%-70% range, while the remaining six carriers had scheduled reliability in the 50%-60% range.
• HMM ranked as the least reliable carrier with a scheduled reliability of 53.7%; however, it showed improvement by 7.7 percentage points.
• Wan Hai demonstrated the most significant improvement in reliability, with an increase of 22.8 percentage points.

Turkey → North America

• The situation at the Panama Canal is worsening, causing significant delays for vessels without reservations.
• Daily reservation slots have been reduced, decreasing from 32 in early November to 22 on December 1, and are set to further decrease to 18 slots daily starting February 1, 2024.
• According to data from the Panama Canal Authority (ACP), vessels without reservations traveling from the Atlantic to the Pacific (Southbound) are experiencing a drastic increase in average wait times, soaring from 2.1 days to 11.4 days in November.
• The maximum wait time for Southbound transits has reached 22.8 days, which is three times the maximum wait at the beginning of the month.
• Pacific to the Atlantic Northbound transits are also affected, with average wait times tripling to nine days, and the maximum wait time quadrupling to 24.9 days.
• Ship-position data reveals a growing number of container ships in Panama Canal queues, recording 21 on November 29, double the summer anchorage numbers.
• The reduction in daily reservation slots for Neo Panamax container ships, serving U.S. East Coast and Gulf Coast ports, is expected to prompt carriers to explore alternative routes, impacting operational costs for major shipping companies.
• Carriers like CMA CGM and MSC have reported the canal situation is severely affecting their operations, with increased operational costs due to capacity reductions imposed by ACP.
• Analytics provider Linerlytica warns that the transit restrictions at the Panama Canal are starting to impact container ships, with a rising number of vessels facing delays expected to worsen over the next two months.
• The Panama Canal will introduce a surcharge on all cargo passing through the canal starting January 1, 2024, due to the ongoing drought.
• The surcharge amounts are set at $130 per TEU for HPL, $297 per TEU for MSC, and $150 per TEU for CMA.
• This surcharge is a response to the low water levels in the lakes surrounding the canal.
• Carriers are expressing concern over a 30% reduction in daily transits through the larger neopanamax lock starting January 2024.
• Hapag-Lloyd CEO Rolf Jansen, in response to a question from Alphaliner, expressed worry about the situation in Panama.
• The German carrier is closely monitoring the situation and considering the possible rerouting of one or more loops via the Suez Canal.

North America → Turkey

• The air freight market has undergone significant fluctuations recently, but Xeneta suggests potential stability in 2024.
• Niall van de Wouw, Xeneta's Chief Airfreight Officer, indicates that after a rapid rate decline earlier in the year, the market might have established a new baseline, leading to the emergence of 'classic seasonality' patterns.
• Air cargo transportation costs surged during the COVID-19 pandemic, later dropping in 2023 but remaining 32% higher than pre-pandemic levels.
• Xeneta's Air Freight Outlook 2024 attributes muted consumer spending as a key factor, with air freight demand down by -8% in 2023 compared to pre-pandemic levels and predicted growth of 1-2% in 2024.
• Supply is expected to grow by 2-4% in 2024, contributing to market dynamics.
• The outlook notes a trend toward longer-term contracts, posing potential risks for freight forwarders relying on short-term spot market purchases.
• Van de Wouw highlights the importance of freight forwarders and airlines finding common ground on long-term rates to mitigate risks.
• The Xeneta Outlook 2024 emphasizes the continued recovery of capacity, influencing rates, alongside environmental sustainability and improving schedule reliability in ocean freight shipping.
• Van de Wouw stresses the significance of monitoring the ocean market, as disruptions in that industry could create opportunities in air freight.
• Unforeseen events such as disruptions in the Panama Canal, volcanic eruptions, or conflicts can impact the delicate air freight industry.
• Van de Wouw warns that a black swan event in 2024 could lead to further unpredictability in the air freight market.

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 3 days waiting time is expected at Global Container Terminals Bayonne.
• Average gate turn times: 40 minutes for single transactions, and 67 minutes for double transactions.
• APMT gate will not have a gate open on Saturdays.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 32 / 45 minutes for single and double transactions respectively.
• One crane down at Norfolk Int’l Terminal, however, had no significant impact to the operations.
• Ultra Large Container Vessels (ULCV) berth 1 will be out of service from midnight November 17 to midnight November 18 due to fender repairs and paving work.

Charleston Terminal:

• No waiting time for vessel berthing at Wando Welch and North Charleston Terminals.
• Average truck turn times: 21  minutes at Wando Welch Terminal, and 19 minutes at North Charleston Terminal.

Savannah:

• Waiting time for vessel berth at the terminal is up to 1 day, depending on the size of the vessel.
• Average gate turn times are 36 / 53 minutes for single and double transactions respectively.
• GPA no longer offers a Sunday gate.
• Monday-Saturday gate hours remain the same.
• Berth 2 is back online helping to reduce waiting times.

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 51 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 3 days at TraPac.
• Average import deliveries can take up to 5.2 days at TraPac and 4 days at OICT.
• Average gate turn times are 63 / 66 minutes for OICT and TraPac respectively.
• TraPac has received 6 new RTG’s and are in process of commissioning.
• They are likely to be operational mid-December.

Seattle-Tacoma:

• Wait time of up to 5 days at Tacoma and 4 days at Seattle.
• Import deliveries are 8 days at HUSKY – due to EB/WB railcar imbalance, 7.5 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 38 / 35 / 49 minutes for T18, Washington United Terminal, and HUSKY respectively.
• T18 will be closed on December 1 and 8, 2023.

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 3.1 days, on-dock rail dwell is 2.9 days, and import units on the street are averaging at 3.9 /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 22-81 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal.

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.