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April 12, 2023
19 min read time

Ocean Rates and Trends for US Market | April 12, 2023

Weekly ocean and air freight rates and trends, along with trucking and customs, warehousing, fulfillment and e-commerce news for the U.S, China and Turkey markets.
Beeontrade Team
  • Ocean,
  • Air,
  • Intermodal,
  • Trucking,
  • Warehousing,
  • Fulfillment

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    From the Editor’s Desk

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    Key takeaways for the US

    • Carrier profits endure.
    • Secured savings for shippers.
    • Carriers continue blank sailings to reign in further rate drops.
    • A portion of Beijing Airport is shut down for maintenance in April.
    • A majority of US rail ramps and ports are fluid right now.
    • Equipment is now widely available in a majority of major ports.

    Read on for more in-depth updates.

     

    Ocean Freight Market Updates 

    Asia → North America

    US/CA

    Transpacific Trends and Market Updates

    • On Transpacific Eastbound (TPEB), carriers are announcing more blank sailings to control the oversupply of effective capacity and prevent further rate drops.
    • YoY volume data shows a trend of shifting imports from the US West Coast (USWC) to the US East Coast (USEC), as well as Canada and the Gulf.
    • On Transatlantic Westbound (TAWB), rates continue to decline due to increased capacity and low demand.
    • This trend is expected to continue throughout Q2 2023 and beyond.
    • Additionally, equipment is widely available in major European ports. 
    • A portion of Beijing Airport which happens to be the 3rd busiest in China, is shut down for maintenance throughout April. 
    • This is expected to decrease the facility's air cargo volume by approximately ⅓ or around 2.6% of China's overall air cargo volume.
    • Increasing numbers of passenger flights scheduled on Transatlantic routes are boosting belly capacity from Europe to North America, bringing capacity back to pre-COVID levels. 
    • However, high fuel prices are keeping rates high. 
    • The majority of ports and rail ramps in the US and Canada are running smoothly with no significant delays. 
    • Gulf ports are slightly congested, but truck power is available nationwide and highway diesel rates remain stable. 
    • It's important to be cautious about reading too much into small monthly changes in key economic statistics. 
    • Personal consumption expenditures (PCE) fell by 0.1% in February and real disposable personal income (DPI) rose by just 0.2%.
    • These monthly changes require context and are subject to revision.
    • Real PCE had risen by 1.1% in January but was revised to 1.5% in this month's release, making the newly-reported February drop insignificant.
    • A chart over the last five years provides a longer-term perspective, with PCE and DPI broken down into goods and services sub-components. 
    • There are three distinct eras: pre-Covid, Covid Mayhem, and Stability Restored.
    • The PCE line is relatively smooth in Era 1, takes a sharp dip in Era 2, and seems to pick up where it left off in Era 3.
    • DPI spikes upward during the Covid Mayhem but is relatively stable in Era 3, with a notable dip and recovery.
    • The personal savings rate has been steadily rising across Era 3.
    • The relative stability of Era 3 does not mean everything is back to pre-Covid norms.
    • Goods consumption emerged from Covid Mayhem at a notably elevated level, while services consumption does not appear to be back on its pre-Covid trend.
    • Real goods consumption rose at an 11.9% rate from March 2020 to July 2021, but only 1.3% since August 2021.
    • Inflation has remained above the Fed's 2% target level in Era 3, despite the economy's strong consumption and growth.
    • Working that inflation out of the economy may require yet a fourth era in which the economy slows notably. 
    • The Consumer Price Index rose 0.3% in February, lower than expected, indicating that inflation may be stabilizing.
    • Core inflation, which excludes food and energy prices, decreased to 5.5% from 5.6%, the lowest since late 2021.
    • 17 European shippers, led by Samskip, have joined the "Switch to Zero" campaign by the Port of Rotterdam Authority and GoodShipping.
    • The campaign aims to meet the Renewable Energy Directive (RED II), which mandates that 32% of all energy usage in the EU must come from renewable sources, including at least 14% in the road and rail transport fuels, such as biofuels. 
    • Conflicting articles have surfaced this week regarding carrier profits and shipper savings in the shipping market over the past few years.
    • Q1 financials for carriers show a dramatic drop from Q4 figures, but a more forgiving result when compared with pre-Covid levels.
    • Hong Kong-based OOCL, a subsidiary of China's Cosco, experienced a 56% decrease in revenue per FEU in Q1, but still saw a 40% increase in the average price between 2018 and 2019. 
    • Contract rates for shippers this year are expected to fall by at least 50% year-on-year, with Drewry revising the fall to 60%, representing the largest year-on-year reduction in shipping costs for at least 7 years.
    • The meteoric drop in rates over the past year has eaten into carrier profits, but annual contracts signed in 2022 have shielded them, as well as the resilience of the spot rates on the trans-Atlantic westbound market. 
    • The 60% reduction in spot rates for shippers is largely a result of the historically high levels reached during the pandemic era. 
    • Indices are beginning to show that the rate erosion is slowing down, with the Xeneta XSI Global index showing only a 0.5% contraction in March versus February, and the Drewry World Container Index global composite remaining unchanged last week on the spot market. 
    • A new direct shipping route has opened between Tianjin and major European ports. 
    • Twelve 24,000 TEU container ships will operate on this route.
    • The primary objective of this shipping route is to provide an efficient mode of transportation for the export of China-made goods.
    • Tianjin Port was the 8th largest port in terms of container throughput last year.
    • The Alataw Pass, a land port in northwest China's Xinjiang Uygur Autonomous Region, has seen a 10.35% increase year-on-year in freight train journeys between China and Europe. 
    • China Railway Urumqi Group attributes this increase to an improvement in customs clearance efficiency.
    • China-Europe freight trains that pass through the Alataw Pass account for over 30% of such trains in China.

     

    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

    • The Ports of Los Angeles and Long Beach had to shut down last Thursday due to a worker shortage caused by protracted contract negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union.
    • Operations resumed on Saturday.
    • The Port of Virginia is investing $18 million to expand the capacity at the Virginia Inland Port and the Richmond Marine Terminal.
    • This is done as part of a larger $1.4 billion investment program aimed at driving efficiency and providing room to grow with a smaller carbon footprint. 
    • US lawmakers have introduced a bill aimed at cracking down on Chinese influence over America's supply chains. 
    • If passed, the bill will prohibit US ports from using Chinese state-sponsored software such as LOGINK due to concerns about Chinese access to data collected and stored on the platform. 
    • At least 24 ports globally have cooperation agreements with LOGINK, including nine in Europe.
    • ONE(Ocean Network Express) line released 20 DC equipment with their approval in Istanbul port.
    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

    • Due to severe weather conditions, vessels heading to North America via the North Atlantic Sea are expected to have a schedule change. 
    • US container imports in February saw a significant decline in volumes compared to the previous year.
    • US West Coast ports were hit the hardest, experiencing a 37% drop in import throughput.
     
    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

    New York:

    • 1 day waiting time is expected for a berth at Global Container Terminals Bayonne, Maher Terminals LLC, and APM Terminals.
    • No empty shut out situations at any of the terminals this week. 
    • Average gate turn times are 50 / 94 minutes for single and double transactions respectively.
    • All terminal gates are closed in observance of Good Friday, April 7, 2023. There are no Saturday gates planned this week.

     

    Norfolk:

    • Most vessels are expected to berth on arrival, or within half a day.
    • Occasionally vessels may experience a 1-1.5 day (s) delay for berthing.
    • Average gate turn times are 29 / 38 minutes for single and double transactions respectively.
    • One crane down at Norfolk Int’l Terminal, however, no operational impact expected.

     

    Charleston Terminal:

    • Waiting time for vessel berthing is up to 2 days at Wando Welch Terminal and half day at North Charleston Terminal. 
    • Average truck turn times are 22 / 21 minutes at Wando Welch Terminal and North Charleston Terminal respectively.
    • The SCPA now has chassis pools at all their locations: Wando Welch Terminal, North Charleston Terminal, Hugh Leatherman Terminal, Inland Port Greer and Inland Port Dillon.
    • Sunday gates are discontinued.

     

    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 25 / 29 minutes for single and double transactions respectively. 
    • Slight delays caused by fog on April 5, 2023.

     

    Houston:

    • Barbours Cut Terminal - is expected to experience berth congestion due to high yard utilization. Waiting time for vessel berthing is up to 1 day.
    • In June 2022, PHA implemented Saturday gates at Bayport and Barbours Cut Container Terminals to provide additional hours to move cargo. 
    • Since these additional hours are not being well-utilized, the final Saturday gate offered is April 29, 2023.
    • Average gate turn time is 41 minutes.

     

    Oakland:

    • Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and 2 days at TraPac.
    • The average import deliveries can take up to 5 / 3 days at TraPac and OICT respectively.
    • As yard space becomes available, boxes from TraPac will move to accessible areas for delivery.
    • Average gate turn times are 52 / 56 minutes for OICT and TraPac respectively.

     

    Seattle-Tacoma:

    • There are no vessel berthing delays in Tacoma. 
    • However, in case of delays at departure ports overseas, delays of up to 2 days are expected.
    • Import deliveries are 9 days at HUSKY – due to EB/WB rail car imbalance, 0-3 days at Washington United Terminal, and 0-3 days at T18.
    • The availability of rail cars in Union Pacific Rail and BNSF Rail continues to fluctuate weekly. 
    • This week has seen a significant lack of cars for the Union Pacific and Burlington Northern Santa Fe Railways.
    • Average gate turn times are 30 / 35 / 40 minutes for T18, Washington United Terminal, and HUSKY respectively.
    • T18 and Washington United Terminal will be closed on April 7, 14, 21, and 28, 2023.
    • Husky will be closed on April 14 and 24, 2023.

     

    Los Angeles/Long Beach:

    • All terminal gates are running as published and in line with the recent Pier Pass program.
    • Port of Los Angeles dwell times for local import cargo is 3 days, on-dock rail dwell is 3.1 days and import units on the street are averaging at 5.2 days.
    • Port of Long Beach has dwell times for local imports that are stable and the average terminal gate turn time is between 27-62 minutes, depending on the terminal. 
    • Chassis Pools: All pools are operating as normal at all tracked locations. 
    • The only locations with deficits are Chicago with a constrained 40’ chassis, Louisville with a deficit on 40’ chassis, and Buffalo with a constrained 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.

    US Domestic Trucking Market Trends

    • The FreightWaves SONAR Outbound Tender Volume Index (OTVI) indicates a 25% YoY decline in contract tender volumes across all modes.
    • There was a 3.3% MoM decrease in tender volumes, which resulted in a 9.6% drop in accepted volumes after a significant reduction in tender rejection rates.
    • According to the Cass report, December's YoY volumes fell by 3.9%, with a 3.3% MoM decline from November, indicating a gradual decrease in shipment volumes compared to last year.
    • The Morgan Stanley Dry Van Freight Index measures relative to supply and shows that in December, the index indicated consistent market pressures in line with historical trends. 
    • Looking ahead, it is expected that there will be a softening in the market, at least until February, as seasonal demand eases in the first two months of the year.

     

    Final Thoughts

    Based on the most recent developments, it can be confidently asserted that the market is exhibiting a strong performance and possesses adequate equipment and capacity. To make well-informed decisions, it is advisable to remain apprised of market trends and strategies.

    Recent special days such as Good Friday and Easter have impacted some regions, leading to vessel congestion and extended waiting times. However, certain ports have successfully alleviated their backlogs and are thriving.

    To avoid complications and ensure seamless import/export operations for your needs, it is recommended to seek the advice of experts and meticulously investigate ports that possess available space and equipment.

    These trends are projected to persist, with potential fluctuations shortly. However, this is no reason to hold shipments or await updates before proceeding. We appreciate your readership and encourage you to subscribe for weekly market updates.