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Key takeaways for the US
- Full ships, stabilizing spot rates, and bullish charter markets have emerged for some carriers.
- Container spot rates have increased in 15 out of 21 export routes tracked from Ningbo.
- Low demand on the FEWB lane due to high inflation, geopolitical instability, and inventory overages.
- Rebound is expected in early April 2023.
- Delays and disruptions are expected in rail freight movements due to the rail strikes in Germany.
Read on for more in-depth updates.
Ocean Freight Market Updates
Asia → North America
US/CA
Transpacific Trends and Market Updates
- The Far East Westbound (FEWB) lane has experienced decreased demand due to high inflation, inventory overages, and geopolitical instability, but a rebound is expected in early April.
- Asia-EU air routes are seeing soft demand, resulting in lower rates and increased capacity.
- Providers are adding flights to Asia-N. America air routes, but a full recovery is not expected until Q3 due to importers selling through existing inventory.
- It is recommended to take advantage of the soft market with widely available capacity and rates mostly in line with 2019 numbers.
- The 2023 ocean freight Request For Proposal (RFP) season is expected to lead to fixed rates settling around 30% higher than current floating rates by mid-April, putting them nearly 70% lower than last year.
- Three scenarios for rates in Q2 are likely to take shape: floating rates remaining below fixed, fixed and floating rates coming into rough alignment, or floating rates climbing steadily until they surpass fixed later in the year.
- Recommendations for those without signed contracts have shifted with the end of RFP quickly approaching.
- Fixed rates have significantly dropped from last year's historic highs and are now close to or below pre-pandemic rates in 2019.
- Importers are now reevaluating their approach towards fixed contracts and spot market options, balancing reliability and potential cost savings.
- Many importers still have a surplus of inventory from last year, which they brought in at rates that were as high as ten times the current rates.
- Carriers have experienced a few months of rate erosion and abundant capacity, resulting in a lack of optimism.
- However, this week, carriers are feeling more optimistic due to full ships, a stabilizing spot rate, and a bullish charter market.
- Container spot rates increased on 15 of the 21 export routes tracked from the Chinese port of Ningbo.
- Maersk believes that the market is “finally beginning to stabilize and find equilibrium.”
- The high inventory levels of wholesalers and retailers in the US are only one metric, and analysis of recent data reveals that inventory levels remain bloated.
- Recent data from Container Trade Statistics (CTS) shows a steep decline in imports from September to January.
- It is unclear if carriers are overly optimistic and grasping at any positive indications from the market, if inventory data is lagging behind actuality, or if capacity management is beginning to stabilize the market.
- Whatever the case may be, it will be interesting to see what happens in the coming weeks.
- Rates from Asia to the US have decreased slightly compared with last week.
- China’s PMI index figures have shown that manufacturing activity slowed in March.
- The index shows that manufacturing is still expanding but at a slower rate than in February, which reflected the fastest pace of growth in a decade.
- The March figures have raised doubts over the strength of a post-COVID factory recovery amid weaker global demand.
- A new analysis of China’s ports has revealed its infrastructure dominance over the region.
- There has been growing discourse about manufacturing shifting away from China to other hubs such as Vietnam and India, however significant port investment would be required in these areas to challenge China.
- China has 76 port terminals that have displayed their capacity to support large ships carrying more than 14,000 TEUs.
- South and Southeast Asian countries have just 31 port terminals between them.
- To navigate the market, diversify your strategy across fixed and floating contracts, choose stable corridors, and consider indexed rates if playing the spot market.
- We recommend that you build your strategy based on fixed-rate levels, seasonality, peak season expectations, and commodity type.
- Consider signing a contract if the rate hits your financial goals, and hedge your bets if it doesn't.
- Make sure to cover more than one shipping line or alliance to avoid the risk of poor reliability.
Port Closures in China and Japan Due To Dense Fog
- In China, several ports have had to suspend operations due to dense fog.
- Ports affected include Lianyungang, Shanghai (YS and WGQ), Ningbo, Fuzhou, and Xiamen.
- Lianyungang port was closed for 13 hours on 21 Mar.
- Shanghai port (YS) was closed for 24.5 hours from 21-23 Mar.
- Shanghai port (WGQ) experienced a longer closure of 45 hours from 20-23 Mar.
- Ningbo port was closed for 47.5 hours during the same period.
- Fuzhou port was also closed for 12.5 hours due to the same reason.
- Xiamen port has been closed since 22 Mar.
- The ports of Chiba, Tokyo, and Yokohama were also impacted.
- They were closed for six hours on 23 Mar due to dense fog.
Shanghai:
- WGQ port was closed for 11 hours on 22-23 Mar.
- This caused an accumulated backlog of vessels and heavy berth congestion.
- Waiting/delay of 1-1.5 days across all terminals in the WGQ area.
- YS port was closed for 4 hours on the same dates.
- Minor berth congestion in YS1 resulting in waiting/delay of 0.5-1 days.
Ningbo:
- The situation is stabilizing and improving from the frequent port closures last week.
- Currently, moderate berth congestion with waiting/delay of around 1 day among all terminals.
Port Klang:
- Currently, there is moderate berth congestion in WP.
- This is resulting in a waiting/delay of approximately 1 day.
- This is primarily due to the bunching arrival of vessels.
Busan:
- At BNCT, yard utilization has returned to a normal and healthy level.
- Laden yard density at around 83% and CMA T/S inventory sitting at 10400 TEUs as of 29 Mar.
- Berth congestion has stabilized with a waiting/delay of 0.5-1 day.
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
- Container Trade Statistics (CTS) data shows a significant drop in imports from September 2022.
- The decline is attributed to a US inventory correction.
- According to US Census Bureau data, inventory levels for manufacturers and retailers remain high, while wholesalers' inventory levels are gradually decreasing.
- The American Association of Port Authorities (AAPA) conducted a survey of more than 130 public port authorities in the US, Canada, the Caribbean, and Latin America.
- AAPA's survey revealed that US ports plan to build nearly $50 billion in green infrastructure over the next decade.
- The respondents expressed interest in initiatives such as electric cargo handling equipment, shore power for vessels at berth, electric grid infrastructure, and hydrogen energy infrastructure.
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.
- Import throughput fell by 28% to 1,454,438 TEUs, according to McCown, marking the lowest level since March 2020.
- US West Coast ports were hit the hardest, experiencing a 37% drop in import throughput.
- The Port of Houston, however, recorded an increase of 12.7% year-on-year to 131,946 TEUs.
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: Waiting times for vessel berthing are around 1 day at several terminals, and gate turn times are averaging around 50/94 minutes. Saturday gates are not planned this week.
- Norfolk: Most vessels are expected to berth upon arrival, with occasional delays of 1-1.5 days.
- Average gate turn times are around 26/37 minutes, and two cranes are currently down at Norfolk Int'l Terminal.
- Charleston: Waiting times for vessel berthing are around half a day at North Charleston Terminal and up to 1 day at Wando Welch Terminal.
- Average truck turn times are around 21-22 minutes, and there are now chassis pools available at all locations.
- Savannah: Waiting times for vessel berthing are up to 2 days, depending on the size of the vessel. Average gate turn times are around 25/29 minutes.
- Houston: Waiting times for vessel berthing are up to 1 day at Barbours Cut Terminal due to high yard utilization.
- Average gate turn times are around 47 minutes, and the final Saturday gate offered is on April 29, 2023.
- Oakland: Average wait times for vessel berthing are up to 2 days at Oakland Int'l Container Terminal and TraPac.
- Average gate turn times are around 56-69 minutes, and average import deliveries can take up to 3-4.5 days.
- Seattle-Tacoma: There are no vessel berthing delays in Tacoma, but delays of up to 2 days may occur due to delays at departure ports overseas.
- Average gate turn times vary between terminals and are around 33-42 minutes.
- Los Angeles/Long Beach: Terminal gates are running as published, and port dwell times are averaging around 3-7.8 days depending on the location.
- Terminal gate turn times are averaging around 29-79 minutes.
- Vancouver: There is currently no berth congestion, and rail productivity remains below expectations due to reduced car supply.
- Dwell times have improved to 8.1 days, and CN is implementing new measures for loading shipments in 40' containers destined for the Port of Vancouver.
- Prince Rupert: Yard utilization is declining, and rail dwell times are around 2.6 days. Berth delays are minimal, and vessels are expected to be productive once alongside.
- Similar to Vancouver, CN is implementing new measures for loading shipments in 40' containers destined for the Port of Prince Rupert.
- Montreal: Vessels are arriving on schedule, with good productivity in the yard and no expected vessel changes. Import rail dwell times are around 3.5 days.
- Chassis Pools: All pools are operating as normal at all tracked locations.
- The only location with a deficit is Buffalo with a deficit on a 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.
Unfavorable weather conditions have negatively 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.