Freight market update - 27 September 2023

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• Maersk and CMA CGM have joined forces to advance sustainable shipping practices.

• Container spot rates from China and Asia to North Europe have plummeted by half their value within a span of three weeks.

• Recent data reveals a positive shift in the global air cargo market during the second full week of September, with a 4% increase in global air cargo.

• Members of THE Alliance have suspended their PN3 Asia to North America loop due to unfavorable market conditions.

• Carriers have defied Panama Canal transit restrictions and boosted capacity on the Far East to US East Coast route by a remarkable 20% since the conclusion of August.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Maersk and CMA CGM have joined forces to advance sustainable shipping practices.
• These two major companies, ranked second and third globally in terms of fleet size, share a common objective of achieving net-zero emissions in their shipping operations.
• Maersk is actively pursuing decarbonization efforts, including the construction of numerous methanol dual-fuel ships. Notably, on September 14th, the LAURA MAERSK, the world's first methanol dual-fuel container ship with a capacity of 2,100 TEU, was officially named in a ceremony presided over by Ursula von der Leyen, President of the EU Commission.
• In contrast, CMA CGM initially concentrated on LNG-powered vessels as part of its decarbonization strategy. However, the company has diversified its approach by placing new orders for methanol dual-fuel ships alongside its existing LNG fleet. This shift underscores their evolving commitment to emissions reduction and the adoption of alternative fuels in pursuit of a more environmentally friendly shipping industry.
• Container spot rates from China and Asia to North Europe have plummeted by half their value within a span of three weeks.
• The rapid decline in rates on the Asia-North Europe route is reminiscent of the price wars experienced in 2015/2016.
• The last instance of spot rates reaching such lows for North Europe was observed in early 2018.
• Members of THE Alliance have suspended their PN3 Asia to North America loop due to unfavorable market conditions.
• Oversized cargo shipments are affected by security closures in CGO, WUH, EHU, and PVG due to the Asia Games.
• Shippers are advised to secure bookings earlier to ensure space availability.
• Recent data from WorldACD Market Data reveals a positive shift in the global air cargo market during the second full week of September, with a 4% increase in global air cargo tonnes compared to the previous week.
• Additionally, rates saw a slight 1% increase compared to the prior week.
• While the overall market sentiment remains relatively cautious, 2 major carriers have reported encouraging developments.
• Cathay Pacific's GM Cargo Commercial, James Evans, highlighted that the traditional peak period is underway, and they are witnessing robust demand.
• This is particularly from Hong Kong and the Greater Bay Area to North America, driven primarily by e-commerce. As a response, Cathay Pacific has expanded its weekly services.
• Lufthansa Cargo has announced plans for increased capacity in its 2023/2024 winter flight schedule, including higher frequencies to destinations with strong demand and the introduction of new destinations.
• When comparing the current global market to the same period last year, WorldACD noted a 2% decrease in chargeable weight during weeks 36 and 37. However, a significant 10% rise ex-Asia Pacific partially offset this global decline.
• Global average rates are currently 33% lower than they were at this time last year, averaging $2.31 per kilo in week 37.
• Despite this, they remain notably higher than pre-Covid levels, showing a 34% increase compared to September 2019, according to WorldACD.
• Singapore has been recognized as the world's top maritime center for the 10th consecutive year, according to the Xinhua-Baltic International Shipping Center Development Index (ISCDI) Report.
• Singapore has maintained its position at the top due to a winning combination of factors, including its strategic location, international perspective, a well-established global maritime services network, and effective governance.
• London and Shanghai have consistently ranked second and third for the past four years, with little change observed in the top ten positions.
• Two major shipping carriers are issuing warnings to shippers about forthcoming surcharges related to compliance with the European Union's emissions trading system (EU ETS).
• Starting from January 1, ship operators will be required to monitor and report their emissions, and they will need to surrender allowances for each ton of CO2 emitted for voyages within the European Economic Area and 50% of voyages starting or ending in European ports.
• Maersk has advised its customers that these costs will be substantial and are expected to increase with the phased implementation of the EU ETS.
• Hapag-Lloyd has also informed its customers that shipping companies will incur additional costs due to the ETS.
• This will be implemented as a separate surcharge for cost recovery purposes on applicable shipments.
• The surcharge will be imposed quarterly on cargo owners starting from the first quarter of the next year. Shipping companies will be required to cover allowances for 40% of greenhouse gas (GHG) emissions in 2024, with the percentage rising to 70% in 2025 and reaching 100% in 2026.

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

• Carriers have defied Panama Canal transit restrictions and boosted capacity on the Far East to US East Coast route by a remarkable 20% since the conclusion of August.
• The average capacity deployed over the past 5 weeks has surged to 246,000 TEU, a significant rise from the 204,000 TEU recorded in the preceding 5 weeks.
• Despite the capacity increase, utilization rates have fallen to 85% during this period.
• In week 41, carriers canceled a substantial 40% of sailings, coinciding with vessel departures following the Golden Week holidays.
• Nonetheless, carriers continue to grapple with the challenge of an oversupply in the market.

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

• Recent reports from Sea-Intelligence indicate a significant decline in spot rates over the past two weeks, suggesting that the anticipated peak season in shipping has not materialized as expected.
• Particularly concerning signs are emerging, especially in the Trans-Pacific trade, where U.S. consumer behavior is having an impact.
• There is a shift back in consumer purchase behavior as the pandemic-induced trend is reversing. Alan Murphy, CEO of Sea-Intelligence, points out that the change from services to goods observed during the pandemic is likely to revert, negatively affecting import volumes.
• Data from the U.S. Bureau of Economic Analysis (USBEA) reveals that the largest product group for consumption primarily consists of goods that are not primarily transported in containers.
• Spending on recreational goods and services has increased by 5%, rising from 12% of consumption in 2019 to 17.2% by July 2023. Notably, 'Video, Audio, Photographic, Information Processing Equipment, and Media' within this category has shown substantial growth.
• In the 'Information Processing Equipment' category, the primary driver of growth has been Computer Software and Accessories, which are typically not transported in containers. This means that the robust increase in consumer spending in this area does not benefit container shipping lines.
• Another significant component of increased spending on goods is in the 'Vehicles' category, which is predominantly not containerized.

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 2 days waiting time is expected at Global Container Terminals Bayonne.

●   Average gate turn times: 49 minutes for single transactions, and 80 minutes for double transactions.

Norfolk:

●   Norfolk is expecting gale force winds commencing Friday evening, September 22, 2023. It is currently under a gale force watch.

●   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.

●      One crane is out of service.

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 4 days, depending on the size of the vessel.

●   Average gate turn times are 34 / 50 minutes for single and double transactions respectively.

Houston:

●   Barbours Cut Terminal has up to 1 day 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 43 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 3.2 days at TraPac and 4 days at OICT.

●   Average gate turn times are 51 / 65 minutes for OICT and TraPac respectively.

Seattle-Tacoma:

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

●   Import deliveries are 6.7 days at HUSKY – due to EB/WB railcar imbalance, 3-5 days at Washington United Terminal, and 1-3 days at T18.

●   Availability of rail cars in Union Pacific Rail and BNSF Rail continues to fluctuate weekly.

●   Average gate turn times are 34 / 41 / 46 minutes for T18, Washington United Terminal, and HUSKY respectively.

●   T18 will be closed on September 22 and 29, 2023.

●       Husky will have Saturday gates on September 23, 2023.

●   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 3.5 days, on-dock rail dwell is 5 days, and import units on the street are averaging at 3.7 /5.5 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 22-72 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. Chicago – Constrained on 20’ chassis.

3. 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.