Freight market update - 22 May 2024

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• Containers currently on the water will be discharged and BL terminated at POD Norfolk. For any ad hoc inland delivery required to Baltimore, please contact the Import Customer Service team. Inlands will be invoiced at cost. No barge solution can be provided until further notice.

• The European Union's customs pre-arrival safety and security program, known as the Import Control System 2 (ICS2), goes live on June 3.

• Eight trade bodies representing shippers, forwarders, and carriers have urged businesses moving goods into or through Europe to prepare for the new import security rules.

• In April, U.S. truckload and less-than-truckload (LTL) transportation costs for shippers both increased by 0.6% from March.

• Supply and demand issues are causing these changes, affecting shipping costs and choices through 2024 and into 2025.

• The International Longshoremen's Association (ILA) and its maritime employers, the United States Maritime Alliance (USMX), issued a joint statement announcing progress in local contract talks.

• Container freight spot rates are experiencing significant increases, as indicated by Drewry’s latest composite global index for spot box rates, which rose by 16% week-over-week and 81% year-over-year.

• Tight shipping capacity in North Europe is associated with restocking efforts by European importers, while the Trans-Pacific trade faces rail congestion for imports at the Los Angeles and Long Beach ports.

• CMA CGM is set to launch a new intra-America service linking Brazil to Argentina. The port rotation includes Santos – Buenos Aires – Mar del Plata – Imbituba – Santo.

• The Maersk Q1 2024 Interim Report, released on May 2nd, highlights the global economy's resilience despite increasing confrontational geopolitics and high interest rates.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Container freight spot rates are experiencing significant increases, as indicated by Drewry’s latest composite global index for spot box rates, which rose by 16% week-over-week and 81% year-over-year.
• The recent surge in freight rates was particularly notable from Shanghai to Rotterdam, with a 20% increase, and from Shanghai to Los Angeles, with an 18% increase.
• Drewry anticipates continued rises in freight rates from China due to high demand and constrained capacity.
• Analysts at investment bank Jeffries predict that peak season demand will sustain higher rates for the next two to three months.
• The escalation in rates is also attributed to heightened global port congestion, exacerbated by vessel diversions around the southern tip of Africa due to the Red Sea crisis. BIMCO estimates a 10% increase in required capacity due to vessel rerouting.
• Tight shipping capacity in North Europe is associated with restocking efforts by European importers, while the Trans-Pacific trade faces rail congestion for imports at the Los Angeles and Long Beach ports.
• Shippers are also concerned about a potential rail strike in Canada later this month, and the possibility of labor action at the U.S. East and Gulf Coast ports may prompt some shippers to move their peak season shipments earlier than usual.
• The competition for capacity has begun, as shippers display strong demand, driven by efforts to move significant cargo in the first four months of 2024 to avoid potential constraints in Q3.
• Coupled with an average of 5% ongoing blanked sailings, there is a looming prospect of tighter capacity, higher rates, and swings in favor of sellers in the market.
• With General Rate Increases (GRIs) already successfully implemented for the second half of May, further rate hikes are expected in June.
• Overall, this trend indicates a significant upturn compared to recent performance, with capacity dwindling amidst resurgent port congestion fueled by equipment shortages in China and longer routes around the Cape of Good Hope.
• Capacity is extremely limited across all Asia-USA routes, and significant constraints are anticipated to persist.
• Strong demand has resulted in substantial rate hikes and congestion at major ports.
• Rates have seen a sharp increase for the second half of May, with further rises anticipated in June.
• The imposition of new tariffs on Chinese imports by the Biden administration is contributing to the upward pressure on rates.
• CMA CGM is set to launch a new intra-America service linking Brazil to Argentina. The port rotation includes Santos – Buenos Aires – Mar del Plata – Imbituba – Santo.
• The Maersk Q1 2024 Interim Report, released on May 2nd, highlights the global economy's resilience despite increasing confrontational geopolitics and high interest rates.
• Economic growth for 2024 is forecasted to be around 2.5%, as per Oxford Economics, marking an upward revision from earlier forecasts.
• The U.S. consumer stands out as a bright spot in the global economy, with robust labor market conditions and real wage gains leading to a 2% increase in US goods consumption in Q1 year-over-year.
• In contrast, the European economy experienced stagnation in Q1. Despite a strong labor market and wages growing above inflation, European consumers remain cautious, reflected in a 0.6% decline in retail sales (excluding food and fuel) in the Euro Area over the year in January-February.
• China's growth outlook has slightly improved, propelled by stronger-than-expected industrial production and exports. Improved cost competitiveness has supported exports, although consumer demand remains subdued due to household concerns over property market deleveraging.

Turkey → North America

• In April, U.S. truckload and less-than-truckload (LTL) transportation costs for shippers both increased by 0.6% from March.
• However, two sectors are performing differently with a widening pricing gap.
• LTL rates are rising, while truckload rates remain low.
• According to the US Bureau of Labor Statistics' long-distance LTL and truckload producer price indexes (PPIs), LTL prices were 8.2% higher than last year while truckload costs fell by 4.4%.
• Supply and demand issues are causing these changes, affecting shipping costs and choices through 2024 and into 2025.
• Carriers and analysts suggest shippers are likely to try consolidating more LTL freight to take advantage of favorable truckload rates.
• LTL capacity shrank last year after Yellow, a large LTL provider, collapsed.
• Set against this backdrop, LTL carriers have been able to negotiate higher annual contract rates.
• In contrast, truckload capacity remains high and this has kept rates low despite losing nearly 36,000 carriers since December 2022.
• Truckload prices have been stable since June 2023 but are still 24.9% below the 2022 peak.
• This is leading some shippers to move some of their freight from the higher-priced LTL over to truckload carriers and their own private fleets.
• The trend is likely to reverse when truckload rates increase again.
• The International Longshoremen's Association (ILA) and its maritime employers, the United States Maritime Alliance (USMX), issued a joint statement announcing progress in local contract talks.
• Local contract talks are scheduled to be completed by May 17, after which the two sides will address broader contract terms like pay and benefits.
• ILA President Harold Daggett and USMX Chief Executive David Adam expressed confidence in reaching an agreement before the current contract expires on September 30, 2024.
• Local contracts have been settled in New York/New Jersey and Baltimore, while 13 other ports still need to resolve issues such as work schedules, worker group sizes, pensions, and health care.
• Last year, the ILA attempted to complete local negotiations before the overall contract, but some ports faced obstacles, leading to a pause in March 2023.
• Both ILA and USMX have pledged to collaborate to prevent disruptions in port operations.
• Several carriers have announced General Rate Increases (GRIs) for May. Despite capacity issues, rates are increasing due to heightened demand and equipment imbalances.
• Demand on the Transatlantic trade lane is strengthening as the traditional high season approaches. However, capacity remains a challenge, particularly with significant overcapacity on the U.S. East Coast (USEC) route.
• Schedule reliability on the Transatlantic Eastbound route has declined, with a 6.9 percentage point drop, resulting in a reliability rate of 53.7%.
• While space from the US West Coast (USWC) to Europe has improved, it remains limited, and key west Mediterranean ports are experiencing congestion due to increased transshipment volumes.
• Schedule reliability on the Transatlantic Westbound route has also decreased, with an 8.1 percentage point drop to 50.7%.

North America → Turkey

• Containers currently on the water will be discharged and BL terminated at POD Norfolk.
• For any ad hoc inland delivery required to Baltimore, please contact the Import Customer Service team.
• Inlands will be invoiced at cost. No barge solution can be provided until further notice.
• Containers still at quay or yet to be ingated in Asia can load to alternative POD Norfolk or New York.
• Bookings would be rated as per existing Norfolk/New York contract rate. For any ad hoc inland delivery required to Baltimore, we can quote rates as per public tariff. No barge solution can be provided until further notice.
• Unfortunately, as we do not have visibility on when we will have access to Baltimore Seagirt terminal by water, we cannot accept any booking request to POD Baltimore until further notice. No barge solutions into Baltimore until further notice.
• The European Union's customs pre-arrival safety and security program, known as the Import Control System 2 (ICS2), goes live on June 3.
• Eight trade bodies representing shippers, forwarders, and carriers have urged businesses moving goods into or through Europe to prepare for the new import security rules.
• There are concerns that businesses may be unprepared for the scale of the advance cargo information required by ICS2, such as HS codes and detailed buyer and seller information.
• The ICS2 will roll out in three phases: beginning with ocean and inland waterway carriers in June, extending to forwarders filing house bills of lading in December, and then to road and rail shipments by April 2025.
• ICS2 will cover the European Union, Norway, Finland, Switzerland, and Northern Ireland.
• Failure to provide the required information will result in delays and disruptions to exports to the EU from the rest of the world and to goods imported into the EU.
• It could also potentially result in fines and penalties for persons liable for submitting the Safety and Security data to ICS2, according to the trade associations' joint statement.

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 2 days waiting time is expected at Port Liberty Terminal Bayonne.
• Average gate turn times: 45 minutes for single transactions, and 71 minutes for double transactions.
• Terminal change to Port Liberty New York.
• An earthquake hit New York City, New Jersey with 4.8 Magnitude on April 5, 20204.
• However, no issues were reported at Maher, Port Liberty, APMT NYC or Greenwich terminal in Philadelphia.
• 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 days for a berth.
• Average gate turn times are 30 / 43 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 5 days at Wando Welch Terminal and 0.5 days at North Charleston Terminal.
• Average truck turn times: 17  minutes at Wando Welch Terminal, and 19 minutes at North Charleston Terminal.
• Dock construction at Wando Welch terminal started on March 11, 2024.
• It is reducing berth space from 3 to 2 berths for one year.
• Berths will be given on a first come, first serve basis.
• This project will also limit the amount of class 1.1 and 1.2 that can be handled at the terminal during this time.

Savannah:

• Waiting time for vessel berth at the terminal is up to 1 day, depending on the size of the vessel.
• Frequent river closures are expected due to fog during this week.
• Average gate turn times are 36 / 55 minutes for single and double transactions respectively.
• Import dwell time is 3.6 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. The same goes for the 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 times at Barbours Cut Container Terminal are 35 / 54 minutes for single and double transactions.
• The gate turn times are 33 / 51 minutes for single and double transactions at Bayport Container Terminal.
• Loaded import dwell is at 3.4 days at Barbour's Cut and 3.3 days at Bayport.

Oakland:

• Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and 1 day at TraPac.
• Average import deliveries can take up to 7.7 days at TraPac and 3.3 days at OICT.
• Average gate turn times are 90 / 74 minutes for OICT and TraPac respectively.
• OICT reported two cranes are non operational.
• Port of Oakland has started the bollard and fender replacement project at OICT, starting with Berth 55 through Berth 59.
• The project is expected to last into Q1 of 2025.

Seattle-Tacoma:

• 2 days waiting time at Husky, Washington United terminal at Tacoma, and Seattle.
• Import deliveries are 2.2 days at Husky – due to EB/WB railcar imbalance, 1 day at Washington United Terminal, and 1-3 days at T18.
• The average gate turn times are 30 minutes for T18, 32 minutes for Washington United Terminal, and 67 minutes for HUSKY.
• Terminal 18 will be closed on May 17, 24 and 27, 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 2.8 days, on-dock rail dwell is 5.4 days, and import units on the street are averaging at 3.2 / 4.7 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 / 66 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

• Chicago – Constrained on 20’ and 40’ chassis.
• Pittsburg – Constrained on 40’ chassis.
• Tampa – Constrained on 20’ chassis.
• Kansas City – Constrained on 20’ 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.