From the Editor’s Desk
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Key takeaways for the US
- Carriers are trying to pick up their rate slack amid the low-volume market.
- Routine blank sailings on almost all trade lanes.
- This trend might continue till the end of March.
- Price wars witnessed in some areas.
- Transpacific trade rates continue to decline but at a slow pace.
- Impacts on operations and services after the recent earthquake in Turkey.
Read on for more in-depth updates.
Ocean Freight Market Update
Asia → North America
U.S / CA
Transpacific Trends and Market Updates
- TPEB carriers are trying to increase rates due to a low-volume market.
- The current TPEB market capacity and demand levels are expected to remain steady until the end of March.
- Carriers are considering General Rate Increases (GRI) for April 1st, which is more common than in previous months.
- Blank sailings will continue until the end of March.
- Vancouver has stable vessel dwell counts (1 vessel) and berthing delays of 3 days, 9 days for rail dwell.
- Demand and supply are more balanced this week compared to the immediate post-Lunar New Year (LNY) period.
- Booking intake is gradually improving but is still weaker than pre-LNY.
- Rates are still under pressure and generally reduced or extended for the first half of March.
- Capacity and equipment are still affected by blank sailings, with an average of 10-20% blank sailing in weeks 11/12/13 to adjust to the decrease in demand.
- The relationship between shippers and carriers is complex, influenced by factors such as global economic trends, geopolitical issues, routing options, and fuel sources.
- During the pandemic demand surge, carriers had immense pulling strength due to high consumer demand and could command historic prices per TEU as shippers struggled to secure space.
- The carrier's position has given way to a muddy quagmire due to capacity management through blank sailings and ship scrapping, fuel cost rise, the industry order book of new vessels entering the market, and new IMO regulations.
- Shippers are currently on solid ground to pull the power balance in their favor due to abundant capacity, high inventory levels, and low demand.
- Rates continue to fall as carriers battle for market share in an emerging rate war, reflected in a steep decline of the global rate index.
- There is no winner or loser in this tug-of-war-like competition, with only ebbs and flows in the bargaining power balance between shippers and carriers.
- Shippers are now in a favorable position to lock in at least a portion of cargo into a longer-term contract to secure a level of service and stability while utilizing diversification options to protect against the market's high level of blank sailings.
- When carriers regain their footing and begin to pull back, locking in a longer-term contract could help shippers keep their footing.
- MSC has announced the suspension of the Shogun service due to heavily blanked sailings in the preceding weeks.
- The Shogun service previously ran from China to Rotterdam and Bremerhaven.
- This suspension will allow vessels to be deployed on alternative routes.
- China has retained the title of the world's largest manufacturing sector for the 13th straight year, amidst conflicting assessments over its future as the "world's factory."
- Analysts and experts have been divided over the rate and extent of the recent manufacturing leaving China for countries such as Vietnam and India.
- Rates from SHA to Europe have increased this week, while rates to the USA have remained stable.
- Bad weather has resulted in flight cancellations or rerouting to Europe, which has driven rates higher.
- Rates from NGB to Europe have also increased this week, while rates to the USA have remained stable.
Post-earthquake updates in Turkey
- Syria operations are functioning normally.
- Turkish operations and services are still experiencing disruption due to the earthquake.
- MSC is monitoring and assessing the situation in Turkey and Syria with their colleagues.
- Both Latakia and Tartus terminals in Syria are open and functioning normally.
- Exports and imports from the key affected cities in Turkey have resumed, including Kahramanmaras, Iskenderun, Hatay, and Malatya.
- Regular service calls have resumed at the Port of Iskenderun since the beginning of March, and reservations are being taken for both import and export containers.
- Port and dock congestion persists at the Port of Mersin, with only containers carrying export cargo belonging to specific vessels allowed to enter the gates.
- Inland infrastructure has improved, with roads to and from Kayseri and Konya open and free of previous congestion.
- Railways to Kayseri and Konya have reopened, with rail connections to and from Mersin-Gaziantep progressing in a controlled manner under tonnage restrictions.
- MSC is committed to finding solutions for their customers' supply chains and keeping them moving efficiently during these challenging times.
- Customers with questions can contact their local MSC representatives in the company's global network of over 675 offices.
Conclusions
Rates: The rates remain soft and open on most origin-destination combinations.
Space: Space open, no issues with equipment.
Recommendation: We recommend blank sailings to continue. Book at least two weeks prior to the date your cargo gets ready.
Turkey → North America
- Demand for shipping remains low, leading to widely available space.
- Carriers are expected to announce General Rate Increases (GRIs) for the end of March and April, resulting in slight increases in rates across most Ports of Loading (POLs).
- Most North American container yards have cleared congestion due to lowered demand, resulting in improved operations.
- Carriers are expected to lightly reshuffle vessel capacity across trades at the end of Q1 and heading into Q2.
- Capacity from the USEC is available, while certain services from the USWC and Gulf remain tight but stable.
Conclusions
Rates: The drop continues as demand is not picking up at the same pace as last year and vessel utilization is in the 65-70% range, down from 90% a few months ago.
Space for capacity: Due to the easing of congestion, space into the U.S. East Coast (USEC) and U.S. West Coast (USWC) is coming online.
Space for equipment: Equipment availability keeps getting better as congestion disappears. Low empty stacks at inland depots are also getting better in some areas, but prioritize pick-up from the Port of Loading if possible.
Recommendations: Book 2-3 or more weeks before CRD. Request premium service for higher reliability and no-roll.
North America → Turkey
- Most USEC to N. Europe (NEU) and Mediterranean (MED) services have low capacity utilization levels with no space constraints.
- Gulf Coast to NEU and MED services continue to have medium to high utilization levels as the market has seen a reintroduction of capacity. However, some inconsistencies in the schedules from the Gulf remain.
- USWC to NEU and MED services still have limited options, leading to artificially high utilization levels.
Conclusions
Rates: Rates can be expected to remain stable despite the downward trend.
Space for capacity: No capacity issues and space is manageable.
Space for equipment: The availability of standard equipment is not an issue for a majority of ports.
North America Vessel Dwell Times
Terminal Updates
- Severe weather on the North Atlantic during this week caused delays on vessels heading to North America.
- New York: Only one day of waiting time is expected for a berth at Global Container Terminals Bayonne, Maher Terminals LLC, and APM Terminals.
- There are no Saturday gates planned this week.
- Norfolk: Most vessels are expected to berth on arrival, or within half a day.
- One crane is down at Norfolk International Terminal, but no major operational impact is expected.
- Charleston Terminal: Waiting time for vessel berthing is up to one day.
- Sunday gates have been discontinued.
- Savannah: Waiting time for vessel berth at the terminal is up to 2 days, depending on the size of the vessel.
- Houston: Barbours Cut Terminal is expected to experience berth congestion due to high yard utilization, Waiting time for vessel berthing is 0 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.
- Oakland: Vessel berthing delays are expected due to the influx of imports.
- Los Angeles/Long Beach: All terminal gates are running as published and in line with the Pier Pass program.
- Port of Los Angeles dwell times for local import cargo is 3.7 days, on-dock rail dwell is 4.9 days and import units on street are averaging at 8.6 days.
US Domestic Trucking Market Trends
- The FreightWaves SONAR Outbound Tender Volume Index (OTVI) showed a 25% year-over-year decline in contract tender volumes across all modes, with a 3.3% month-over-month decrease.
- After a significant drop in tender rejection rates, the decline in accepted volumes was measured at 9.6%.
- The Cass report also revealed a 3.9% year-over-year decline in volumes in December, with a 3.3% month-over-month decrease from November.
- These trends suggest that shipment volumes are decreasing compared to last year, but at a slower rate.
- The Morgan Stanley Dry Van Freight Index indicates market conditions; higher index values imply tighter market conditions.
- In December, the market pressures followed the trend of the index, indicating consistent average historical trends.
- It is expected that the market will soften at least through February due to the easing of seasonal demand in the first two months of the year.
Final Thoughts
With the given updates, we can safely conclude that the market is faring well with a sufficient supply of equipment and capacity.
The holiday backlog and prolonged vessel waiting times have been resolved in various places. However, congestion and delays are continuing in several other places. It is best to choose ports carefully and ship them ahead of time.
Choose the right areas and book sailings a few weeks before your shipment departure date. We can expect a steady and consistent increase in the market owing to these trends. We are grateful that you perused our newsletter till the end. Be sure to subscribe to us and stay notified about the latest weekly market updates.
Beeontrade Team
