Freight market update - 07 February 2024

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• Sea-Intelligence indicates a -5-percentage point drop in global schedule reliability for December 2023 compared to November, reaching 56.8%, the second-lowest level of the year and just 0.4 percentage points higher than December 2022.

• January saw a 10% year-on-year increase in air cargo volumes, attributed to an early Lunar New Year and shippers' concerns over the Red Sea; however, this surge did not lead to higher rates due to ample available capacity.

• High rates and fully booked flights are reported from Shanghai (SHA) to Europe and the US this week.

• Due to the Chinese New Year holiday, long-distance trucking services will cease from January 31, while short-distance services will stop from February 6. Businesses are advised to check and ship out cargo before the holiday.

• Container shipping lines plan to transfer EU Emissions Trading System (ETS) surcharges to shippers based on the "polluter pays" principle, raising concerns about the transparency of these charges.

• The ITS Logistics US Port/Rail Ramp Freight Index notes increased Transpacific volumes on the US West Coast, driven by shippers aiming to avoid potential congestion at US East Coast ports.

• This redirection is also influenced by vessel rerouting due to the Panama Canal and the seasonal Lunar New Year restock.

• China's road logistics price index increased by 0.03 percent week-on-week from January 29 to February 2, reaching 1,038.95 points.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• China's road logistics price index increased by 0.03 percent week-on-week from January 29 to February 2, reaching 1,038.95 points, according to a joint survey by the China Federation of Logistics and Purchasing and the Guangdong Lin'an Logistics Group.
• Sub-indices for all types of vehicles experienced a mild increase week-on-week.
• The full-truckload logistics price, focused on bulk commodity and cross-regional transportation, rose to 1,040.28 points, up 0.03 percent on a weekly basis.
• The survey attributes the slight growth in road logistics prices to slower supply expansion in the sector alongside generally stable demand.
• The price index is expected to see slight increases with fluctuations as the Chinese Lunar New Year holiday approaches, starting on February 10.
• High rates and fully booked flights are reported from Shanghai (SHA) to Europe and the US this week.
• Due to the Chinese New Year holiday, long-distance trucking services will cease from January 31, while short-distance services will stop from February 6.
• Businesses are advised to check and ship out cargo before the holiday.
• Chinese warehouse robot startups are targeting orders in Japan, where the logistics industry faces a potential bottleneck.
• Shenzhen-based Syrius Robotics aims to deliver 3,000 robots annually to Japan within two years, marking a tenfold increase from the current volume. These robots assist human parcel pickers by indicating which items to place in baskets and then autonomously moving the products for shipping.
• CEO Adam Jiang, who co-founded Syrius in 2018 after working at Google and Nvidia, highlights the robots' ability to navigate narrow aisles (less than 1 meter wide), making them suitable for various warehouses with minimal modifications.
• A logistics center on Japan's Shikoku island deployed 60 Syrius robots last summer, resulting in a significant reduction in staff from 90 to 40 individuals.
• Syrius aims to target smaller warehouses covering approximately 3,300 square meters as a key market, emphasizing the robots' efficiency in operating in confined spaces.
• From Ningbo (NGB) to Europe, the market is stable, but it is busy in the US.
• Final rates depend on a case-by-case basis, and booking space 4-5 days prior to the cargo ready date is recommended.
• North China to USA and Europe: Rates have increased for Korean Airlines from Tianjin (TSN), and Asiana Airlines are confirming rates case by case.
• Space is tight to both destinations from Beijing (PEK), with fluctuating rates.
• Major services from PEK to Europe include Singapore Airlines, Cathay Pacific, Lufthansa, Air China, KLM, Air France, Japan Airlines.
• Major services from PEK to the US include Cathay Pacific, Japan Airlines, All Nippon Airways, and Eva Air.
• Space from PEK to both destinations is nearly fully booked before the Chinese New Year holiday.
• From Qingdao (TAO) to Europe and the US, capacity is tight, and rates have increased significantly.
• For TAO to the US, the estimated time of departure (ETD) is 6-7 days after booking, with spot rates available for dense cargo.
• South China to USA and Europe: From Guangzhou (CAN) to Europe and the USA, space is tight, and rates have significantly increased.
• All shipments need to be checked with the carrier for rates on a case-by-case basis.
• From Shenzhen (SZX) to Europe and the US, the market is stable but rates have slightly increased in the US.
• Similar to CAN, all shipments require checking with the carrier for rates on a case-by-case basis.
• From Xiamen (XMN) to Europe and the US, the market is busier as Chinese New Year approaches, and final rates depend on a case-by-case basis.

Turkey → North America

• Container shipping lines plan to transfer EU Emissions Trading System (ETS) surcharges to shippers based on the "polluter pays" principle, raising concerns about the transparency of these charges.
• The EU ETS, effective since January 1, requires vessel owners to purchase EU allowances (EUAs) corresponding to their ships' carbon emissions when visiting EU ports. The market-driven price of EUAs is unpredictable, leading to concerns that a standardized calculation model for surcharges may not accurately reflect actual costs.
• While the surcharges may not be substantial at the current 40% phase-in level, there are apprehensions that they could become a significant cost when the EU ETS fully phases in by 2026.
• James Hookham, Director of Global Shippers Forum, proposes that carriers could save significantly by breaking up their journey before entering EU ports.
• He emphasizes the need for greater transparency in disclosing surcharges, highlighting the inevitable inflationary effect on end consumers due to higher shipping costs.
• DP World and the Maritime Union of Australia (MUA) have reached a four-year agreement, bringing an end to the four-month-long industrial action by wharf workers.
• The prolonged dispute has resulted in an estimated cost of A$86 million per week to the Australian economy.
• While the tentative deal is a positive development, there is a significant backlog of containers in Melbourne, Sydney, Brisbane, and Freemantle ports that will require time to clear.
• Delays and increased costs are expected to persist into March despite the agreement.
• The next steps involve employee voting and approval from the Fair Work Commission, a process that typically takes about 45 days for complex agreements.
• The ITS Logistics US Port/Rail Ramp Freight Index notes increased Transpacific volumes on the US West Coast, driven by shippers aiming to avoid potential congestion at US East Coast ports.
• This redirection is also influenced by vessel rerouting due to the Panama Canal and the seasonal Lunar New Year restock.
• With more freight rerouted through the US West Coast, particularly to circumvent the Panama Canal, congestion is anticipated to worsen, impacting rail ramps across the US.
• Drewry's data reveals that containerships find it easier to reserve slots as other sectors, like dry bulk, vacate the route.
• However, challenges persist for container ships, with daily transits decreasing to an average of 7.4 in November and December, compared to 8.4 in October.
• The Panama Canal Authority's revised starting sum for auctions in the Neopanamax Locks, effective from January 1, is $100,000, rising to $110,000 on high-demand days, especially Fridays.
• It is projected that there will be 3,964 fewer transits through the canal this year, leading to an additional 1,954 transits around the Cape of Good Hope and 998 more through the Strait of Magellan.
• Alternative routes are estimated to extend journey times by 20%, resulting in a 5% increase in overall costs for maritime trade using the Panama Canal, estimated at $1.1 billion.

North America → Turkey

• Security challenges in the Red Sea since mid-December have led major container lines to reroute vessels around Africa, causing disruptions to schedule reliability.
• Container xChange reports that by mid-January 2024, 500 out of 700 scheduled containerships had been diverted.
• Sea-Intelligence indicates a -5-percentage point drop in global schedule reliability for December 2023 compared to November, reaching 56.8%, the second-lowest level of the year and just 0.4 percentage points higher than December 2022.
• The round-of-Africa sailings contributed to an increase in the average delay for late vessel arrivals, rising by 0.30 days month-over-month to 5.35 days, as highlighted by Alan Murphy, CEO at Sea-Intelligence.
• Among the top 13 carriers, Evergreen demonstrated the highest reliability at 63.6%, followed by CMA CGM, making them the only carriers with on-time performance above the 60% mark.
• Large carriers such as MSC, HMM, and Zim, as well as Asia-based carriers like Wan Hai, PIL, and Yang Ming, all experienced a loss of over 10 percent in schedule reliability.
• Rates appear to be stabilizing, but the conflict in the Red Sea persists, with the Houthis targeting commercial vessels and preventing the resumption of routes through the Suez Canal.
• Initially perceived as a short-term crisis, the current situation mirrors challenges seen during the pandemic, including disrupted flows, significant delays in Estimated Time of Arrival (ETA), port congestions, and shortages of equipment.
• Sea Intelligence CEO Alan Murphy notes that the drop in vessel capacity is the second largest in recent years, with the Ever Given incident in 2021, blocking the Suez Canal, being the only event with a more substantial impact.
• Global retailers are warning of product delays in the coming months, leading companies like Tesla, Volvo, and Michelin to temporarily halt production on specific products.
• It is advised to closely collaborate with freight forwarders to minimize disruptions in the supply chain amidst the ongoing challenges.
• January saw a 10% year-on-year increase in air cargo volumes, attributed to an early Lunar New Year and shippers' concerns over the Red Sea; however, this surge did not lead to higher rates due to ample available capacity.
• Global general air cargo spot rates experienced a -21% year-over-year and -12% month-over-month decline, consistent with a three-percentage point drop in the global dynamic load factor to 56%.
• Analysts from Xeneta suggest that the shift from ocean to air transport in January is likely a result of pulling forward shipping schedules ahead of the Lunar New Year, boosting volumes. Observations include surges in air cargo from China and Vietnam to Europe.
• While Northeast Asia to Europe rates rebounded by 11%, rates from Northeast Asia to the U.S. continued to decline, indicating that the increased demand on the Northeast Asia to Europe corridor may be more related to a spillover from ocean transport than actual growth in consumer spending, as per Xeneta.
• Niall van de Wouw, Chief Airfreight Officer at Xeneta, predicts that the Red Sea disruption is unlikely to lead to a long-term shift to airfreight. He emphasizes the industry's unpredictability, considering post-Christmas performance and global economic factors.

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 Port Liberty Terminal Bayonne.
• Average gate turn times: 47 minutes for single transactions, and 71 minutes for double transactions.
• APMT will not have a gate open on Saturday January 20, 2024.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2.5 days for a berth.
• Average gate turn times are 33 / 48 minutes for single and double transactions respectively.
• Berth congestion had relaxed overall but it is expected to worsen after severe weather delays.
• This is mainly for ships arriving from New York later this week.

Charleston Terminal:

• Waiting time for vessel berthing is 2 days at Wando Welch Terminal and 1.5 days at North Charleston Terminal.
• Average truck turn times: 21  minutes at Wando Welch Terminal, and 22 minutes at North Charleston Terminal.
• Sunday gates are by appointment only.

Savannah:

• Waiting time for vessel berth at the terminal is up to 2 days, depending on the size of the vessel.
• Average gate turn times are 34 / 53 minutes for single and double transactions respectively.
• Import dwell time is 2.9 days.
• Berth 2 is back online helping to reduce waiting times.

Houston:

• Barbours Cut Terminal has up to 1 day waiting time for vessel berthing.
• 4 days waiting time at Bayport Container Terminal.
• Bad weather in the Gulf of Mexico continues to cause closures at ports south of Houston and delays on arrival.
• Due to vessel bunching the yard is facing congestion impacting the discharge productivity and extending port stays.
• Average gate turn time at Barbours Cut Container Terminal is 44 minutes and Bayport Container Terminal is 45 minutes.
• Loaded import dwell is at 3.7 days.

Oakland:

• Average wait time of up to 6 days at Oakland Int’l Container Terminal (OICT) and 3 days at TraPac.
• Average import deliveries can take up to 4 days at TraPac and 3.8 days at OICT.
• Average gate turn times are 62 / 68 minutes for OICT and TraPac respectively.
• TraPac has received 6 new RTG’s and are in process of commissioning.
• These should be operational in the coming week or two.
• OICT is still dealing with power issues.
• Berth 55 is closed until cranes 13 and 14 are repaired. Time frame is unknown.

Seattle-Tacoma:

• Wait time of up to 3 days at Husky and 8 days at WUT at Tacoma.
• 2 days waiting time in Seattle.
• Import deliveries are 4.5 days at Husky – due to EB/WB railcar imbalance, 3.1 days at Washington United Terminal, and 1-2 days at T18.
• The average gate turn times are 33 minutes for T18, 38 minutes for Washington United Terminal, and 28 minutes for HUSKY.
• Terminal 18 will be closed on February 2, February 9 and February 12, 2024.

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 days, on-dock rail dwell is 4.1 days, and import units on the street are averaging at 4.1 /5.6 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 / 70 minutes, depending on the terminal.

Chassis Pools

All pools operating as normal except for:

• Columbus – Deficit on 20’ and 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.