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Freight market update - 14 February 2024

Beeontrade

·

February 2024

8 min read

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Freight market update - 14 February 2024

From the Editor’s Desk

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Key takeaways for the US

  • CMA CGM has halted ships from using the Suez Canal and is rerouting them through the Cape of Good Hope, following the lead of other major carriers.

  • Rates from Asia to North Europe have been decreasing among various carriers in the second half of February.

  • Long-term deal negotiations are expected to take place after Chinese New Year (CNY), as carriers reevaluate demand patterns.

  • US container import volumes increased by 7.9% in January 2024 compared to December 2023, the largest month-over-month growth for January in the last seven years.

  • The growth is fueled by a 14.9% rise in imports from China, with the ports of LA and Long Beach handling the majority of the volume.

  • The daily limit of ships transiting the Panama Canal will remain at 24 until the end of the dry season in April.

  • BIMCO's recent Shipping Number of the Week report reveals a 0.2% year-on-year growth in the container market for 2023, contrasting with a 1.5% growth in 2019.

Read on for more in-depth updates.

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Ocean Freight Market Updates

Asia → North America

US/CA

Transpacific Trends and Market Updates

  • Rates from Asia to North Europe have been decreasing among various carriers in the second half of February.
  • Long-term deal negotiations are expected to take place after Chinese New Year (CNY), as carriers reevaluate demand patterns.
  • While some carriers are open to discussions, the majority are adopting a wait-and-see approach to assess the evolving situation.
  • Towards the end of the month, space is anticipated to become available as carriers work to clear the backlog from week 3.
  • Blank sailings are prevalent this week and the next, responding to factory closures during the Chinese New Year period.
  • Steve Saxon, a McKinsey partner, highlighted the air cargo sector's resilience at the World Cargo Summit in Bangkok in January.
  • Saxon attributed the positive outlook to the sector's ability to meet demand despite global conflicts, emphasizing that disruptions from conflicts drive trade in the airfreight industry.
  • Soufiane Daher, a McKinsey expert, pointed out that approximately 50% of the trade using the Red Sea/Suez Canal route involves high-value goods and commodities suitable for air transportation.
  • Daher suggested that a small shift in modal choice could substantially boost the air cargo sector, considering there are 30 million tonnes of containerized goods globally in this category.
  • Despite the sector's favorable position, Saxon expressed concerns about regulatory demands, particularly import taxes imposed by the European Union.
  • Jaisey Yip, the vice president of the cargo business division at Changi Airport Group, noted that regulatory requirements related to security, safety, and customs are intensifying in the air cargo industry.
  • Yip mentioned that industry bodies are imposing additional requirements on how air cargo handles, stores, and transports different types of commodities.
  • BIMCO's recent Shipping Number of the Week report reveals a 0.2% year-on-year growth in the container market for 2023, contrasting with a 1.5% growth in 2019.
  • Container fleet capacity surged by 21% in 2023 compared to 2019 or 8% compared to 2022, with the order book for new ships expected to increase capacity by almost 25% over the next four and a half years.
  • The market was 3.9% larger in 2021 than in 2023, witnessing a decline of almost 7 million TEU in cargo volumes, particularly in East/West and regional trades.
  • Trades within regions contribute to 30% of global volumes, with combined volumes in the trade lanes falling by -3.7% in 2023, according to CTS estimates.
  • Europe/Mediterranean trade volumes decreased by -7.9%, attributed to reduced EU-Russia commerce.
  • Notably, North/South and South/South trades, including regions such as South and Central America, Sub-Saharan Africa, and Oceania, experienced significant growth, driven by exports from East and Southeast Asia.
  • The East/West trades, connecting Asia, Europe/Mediterranean, and North America, faced a setback in growth due to a -12% contraction in back-haul trade lanes since 2019. However, head-haul trades grew by 7.2% over the same period.
  • The International Monetary Fund (IMF) predicts less than 2% annual growth in the Europe/Mediterranean and North American regions during 2024-2025.
  • The logistics sector in China experienced consistent revenue growth in 2023, as reported by the China Federation of Logistics and Purchasing.
  • The industry generated revenue amounting to $1.86 trillion, indicating a YoY increase of 3.9%.
  • The efficiency of China's logistics sector continued to improve throughout the year.
  • Investment in logistics-related fixed assets also demonstrated growth, with a rise of over 10% YoY in the previous year.
  • These findings highlight the resilience and positive performance of China's logistics sector, contributing to the country's economic landscape.

Turkey → North America

  • US container import volumes increased by 7.9% in January 2024 compared to December 2023, the largest month-over-month growth for January in the last seven years.
  • The growth is fueled by a 14.9% rise in imports from China, with the ports of LA and Long Beach handling the majority of the volume.
  • Comparing the top five West Coast ports to the top five East and Gulf Coast ports from January 2024 to December 2023, the share of total import container volume increased to 43.0% for the top West Coast ports, a 3.3% increase.
  • Conversely, the share for the top East and Gulf Coast ports declined to 42.4%, representing a decrease of 2.5%.
  • Considering all top 10 ports collectively, their combined share increased to 85.4% in January 2024, showing a slight uptick of 0.9% compared to December 2023.
  • January port transit delays increased overall, especially at East Coast ports.
  • Water levels in the Panama Canal and the Middle East conflict have impacted transit times, but not necessarily import volumes.
  • The daily limit of ships transiting the Panama Canal will remain at 24 until the end of the dry season in April, as reported by Reuters.
  • This regulation, in effect since mid-January, is expected to persist due to anticipated stable water levels, according to Ilya Espino, the deputy administrator of the Panama Canal Authority (ACP).
  • Canal agent Leth Agencies Panama's traffic update revealed a queue of 50 to 70 vessels awaiting canal navigation over the past nine days.
  • Authorities plan to maintain the current daily limit unless May brings expected rainfall, at which point they intend to raise the limit to approximately 36 ships, a customary practice during the rainy season.
  • On January 19, 2024, a significant ceremony took place at the Sefine Shipyard, marking the commissioning of four new vessels by the Turkish Navy.
  • The commissioned vessels include the first I-class frigate, TCG Istanbul (F-515), the new-generation fleet oiler TCG DERYA, the logistics ship TCG Ütğm. Arif Ekmekçi, and the unmanned surface vessel MARLIN.
  • Turkish President Recep Tayyip Erdogan, cabinet ministers, Turkish Armed Forces leadership, and representatives from the country's defense industry companies attended the grand ceremony at the Sefine shipyard in Yalova.
  • During the ceremony, President Erdogan emphasized the significance of independence in the defense industry as a crucial factor in building strong armed forces.
  • The freight and logistics market in Turkey is expected to grow by USD 10.30 billion between 2022 and 2027, with a projected CAGR of 7.2% during the forecast period.
  • Market segments include delivery mode (road, rail, maritime, and air), service (transportation, warehousing and distribution, and value-added services), and end-user (manufacturing, automotive, consumer goods, food and beverage, and others).
  • The growth of the e-commerce industry in Turkey, with major players like Trendyol, contributes significantly to the market's expansion.
  • Trendyol, a Turkish e-commerce platform, generated USD 3.2 billion in revenue in 2021, and 40% of the Turkish population made at least one online purchase in the same year.
  • The fashion segment dominates the e-commerce revenue in the country, accounting for 42%.
  • The rising demand for freight and logistics services driven by e-commerce growth is expected to boost the overall freight and logistics market in Turkey.
  • Key players in the market include Agility Public Warehousing Co. K.S.C.P, Alfares Lojistik, ATA Freight, BATI INNOVATIVE LOGISTICS, C H Robinson Worldwide Inc., CEVA Logistics AG, DB Schenker, Deutsche Post AG, Ekol Lojistik AS, Hellmann Worldwide Logistics SE and Co KG, KARINCA Lojistik AS, KITA Logistics, Kuehne Nagel Management AG, Mars Logistics, Netlog Logistics, Nippon Express Holdings Inc., Omsan Lojistik AS, ORAS, United Parcel Service Inc., and XPO Logistics Inc.
  • The market is described as fragmented in nature, and a 6.7% year-over-year growth is anticipated in 2023.

North America → Turkey

  • CMA CGM has halted ships from using the Suez Canal and is rerouting them through the Cape of Good Hope, following the lead of other major carriers.
  • Despite the Suez Canal situation, the overall ocean market is resilient and adapting quickly to the new circumstances.
  • Production in China has paused for the Chinese New Year, leading to some carriers dealing with backlogs and others actively seeking cargo.
  • It is anticipated that the Suez Canal conflict will persist in the coming weeks, but carriers are expected to effectively manage vessel and equipment flow through the Cape of Good Hope.
  • The Trans Pacific trade is likely to experience less disruption compared to other major trades.
  • It is recommended to collaborate closely with your freight forwarder to minimize disruptions in your supply chain.
  • Sea-Intelligence conducted an evaluation on the impact of vessel diversions around South Africa's Cape of Good Hope on deployed capacity.
  • The report focused on changes in offered capacity, comparing the immediate pre-crisis period to the present, analyzing cumulative changes from mid-December to the current date for the four main East/West trades originating from Asia.
  • The Trans-Pacific trade experienced the most significant drop in capacity, with the Asia-North America East Coast trade lane declining by -7.5% and the Asia-North America West Coast trade lane falling by -6.9%.
  • Deployment capacity on the Asia-North Europe trade lane decreased by -4.9%, while on the Asia-Mediterranean trade lane, it dropped by -1.4%.
  • Despite extreme upheavals in vessel schedules, the analysis suggests that the capacity offered from Asia to Europe has only been marginally reduced due to the Red Sea crisis.
  • The capacity reduction is measured based on planned schedules in mid-December versus what has materialized until now, not on a year-over-year basis.
  • Notably, the impact on the Trans-Pacific is larger, with a particular focus on the capacity drawdown on Asia-North America West Coast, according to Alan Murphy, CEO of Sea-Intelligence.
  • Ports of LA and Long Beach currently have 7 vessels waiting to berth, with a 7-day dwell time at rail heads, and vessel bunching is expected to continue.
  • Oakland has experienced a sharp rise, with 11 vessels waiting to berth.
  • Seattle and Tacoma have 8 vessels waiting.
  • Moving to the US East Coast, New York and New Jersey have 5 vessels waiting, with a 4-day dwell time at rail heads.
  • Baltimore has 14 vessels waiting, while Norfolk has improved to 6 vessels waiting, but vessel bunching is expected to continue.
  • Savannah has 4 vessels waiting with a 3-day dwell time at rail heads.

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 77 minutes for double transactions.
  • Terminal change to Port Liberty New York.
  • MV La Traviata V019 E/W and MV Dalila V026 E/W are expected to arrive in New York on February 1, 2024, and February 17, 2024, respectively.
  • All other vessels on AL6 will continue to call Maher terminals.

 

Norfolk:

  • Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2.5 days for a berth.
  • Average gate turn times are 37 / 53 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 1 day at Wando Welch Terminal and 0.5 days at North Charleston Terminal.
  • Average truck turn times: 19  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 3 days, depending on the size of the vessel.
  • Average gate turn times are 36 / 52 minutes for single and double transactions respectively.
  • Import dwell time is 2.6 days.
  • Berth 2 is back online helping to reduce waiting times.

 

Houston:

  • Barbours Cut Terminal has up to 2 days waiting time for vessel berthing.
  • 3 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 42 minutes and Bayport Container Terminal is 48 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 4.6 days at TraPac and 3.6 days at OICT.
  • Average gate turn times are 64 / 69 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 4 days at Husky and 3 days at WUT at Tacoma.
  • 2 days waiting time in Seattle.
  • Import deliveries are 3.8 days at Husky – due to EB/WB railcar imbalance, 3.1 days at Washington United Terminal, and 1-3 days at T18.
  • The average gate turn times are 27 minutes for T18, 40 minutes for Washington United Terminal, and 42 minutes for HUSKY.
  • Terminal 18 will be closed on February 9 and February 12, 2024.
  • Washington United Terminals will be closed February 19, 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 4.4 days, and import units on the street are averaging at 3.5 /5.3 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 23 / 93 minutes, depending on the terminal.

 

Chassis Pools

All pools operating as normal except for:

  • Chicago – Constrained on 20’ chassis.
  • Cleveland – Deficit on 20’ and 40’ chassis.
  • Columbus - Constrained 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

Range

Port

Vessels at Anchor

Vs Last Week

Waiting Time

Vs Last Week

PNW

Vancouver

0

-

0

-

PNW

Seattle

0

-

0

-

PSW

Oakland

3

+1

3

+1

PSW

LA/LB

0

-

0

-

USEC

New York

0

-

0

-

USEC

Norfolk

0

-3

0

-1

USEC

Charleston

1

+1

1

+1

USEC

Savannah

3

-

2

-

USGC

Miami

0

-

0

-

USGC

Houston

4

+2

3

-

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.

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