Ocean Rates and Trends for US Market | March 2, 2023

From the Editor’s Desk

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Key takeaways for the US

• Minor mitigations to most US gateways and inland destinations.
• Blank sailings will remove 30% of capacity from the market this week.
• UNCTAD releases data on linear shipping connectivity.

Read on for more in-depth updates.

Ocean Freight Market Update

Asia → North America

U.S / CA 

Minor mitigations in TPEB rates in most US gateways

• There are some minor mitigations to most US gateways and inland destinations this week.
• The delays and congestion this week were significantly reduced.
• More blank sailings can remove almost 30% of capacity issues from the market by the end of this week.
• The capacity currently remains above projected container volumes despite the recent reductions in rate.
• Demand and supply are balanced this week owing to blank sailings after the Lunar New Year.
• The booking intake is improving steadily but it still hasn’t reached its spot before Lunar New Year.
• Rates are under pressure and might extend till the first half of March.
• It is best to allow for flexibility while planning shipments. This is due to rolls and anticipated congestion.
• The United Nations Conference on Trade and Development (UNCTAD) releases a new index every quarter.
• This helps analyze the liner shipping connectivity across global ports.
• It is measured based on the number of ships calling per week as per the regular schedules and the deployed capacity offered in the ports.
• It is also affected based on the average vessel size calling the port.
• The most recent Q4 index in 2022 indicated some Far East ports with double-digit increases in their connectivity.
• However, some ports such as Antwerp and Rotterdam have declined in their levels of connectivity by almost 2.9%.
• China has witnessed a 12% increase as compared to Q4 in 2019.
• Vietnam has faced a 29% increase over the same direction which acts as a testament to the increase in Intra-Asian trade.
• Schedule reliability from Asia to North Europe has continued to improve over the last few weeks.
• The figures released for December and January indicate schedule reliability of 52% on time.
• This shot up by 5% as compared to October and November statistics.
• The average delay time is five days at the moment and 2M has the highest levels of schedule reliability.
• This is at 62% at the moment as Maersk and MSC have reorganized their services and strategies ahead of their alliance termination.
• The US imports from Asia notably declined by almost 22.5% year on year from September to December 2022.
• The drop in rates continues as demand is not picking up at the same pace as last year till now.
• The vessel utilization is in the 65-70% range. This is down from 90% just a few months ago.
• More space is coming online in the USEC and USWC due to the congestion easing.

Conclusions

Rates: The rates will remain soft 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 vessel gets ready to depart.

Turkey → North America

• Container volumes to the US have been failing sharply since September 2022.
• This has not led to a decrease in US inventories yet.
• The ratio of inventory to sales has continued to grow. This indicates that despite the sharp drop in goods being shipped to the US, inventory levels have steadily grown over the years.
• It also implies that the inventory correction cycle may be longer than expected.
• This is because the levels of stock remain high while sales remain low.

Conclusions

Rates: Rates are dropping constantly as demand is not picking up.

Space for capacity: No capacity issues or issues with space. USEC and USWC spaces are coming online steadily.

Space for equipment: No issues with equipment. Equipment availability is also getting better consistently owing to congestion disappearing slowly.

North America → Turkey

• Capacity is available across all major services and carriers are looking for volume opportunities.
• No major services to the APAC region are noticing space or equipment constraints at the moment.
• Equipment is almost ample in most markets, leading to better than good.
• The rate pressure continues the trend slightly downwards on certain lanes from coastal ports to Asia base ports.
• All existing carriers are trying to push the cargo onto these lanes and services.
• Deals below existing market levels are available for any potential and consistent volume opportunities.

Conclusions

Rates: Downward trend with significant rate pressures.

Space for capacity: Space is very open and allocation requests can be made to carriers for high-volume projects. It is also open for upcoming weeks with a greater probability of acceptance.

Space for equipment: Equipment issues are minor with no major changes in the market. There are no major hurdles to highlight and the only pocket shippers should monitor are IPIs where the chassis availability may be low.

North America Vessel Dwell Times

Terminal Updates

• No empty shut-out situations at any New York terminals this week.
• Most vessels are expected to berth on arrival or within half a day at Norfolk’s terminal.
• However, the waiting time for vessels at Charleston is almost two days.
• At Savannah, the waiting time is up to three days based on the vessel’s size.
• Barbours Cut is expected to experience berth congestion due to high levels of yard utilization.
• In June 2022, the PHA implemented Saturday gates at Bayport and Barbours Cut container terminals.
• This was intended to provide additional hours to move cargo.
• These additional hours are not being utilized properly and hence, the final Saturday gate offered is April 29, 2023.
• There are expected vessel berthing delays due to a recent influx of imports at the Oakland terminal as well.
• All terminal gates at LA/LB are running as published. They are working in line with the recent Pier Pass program.

US Domestic Trucking Market Trends

• The FreightWaves SONAR Outbound Tender Volume Index (OTVI) typically measures contract tender volumes across all modes.
• It was down by 25% annually with 3.3% month over month.
• This is 9.6% when measuring accepted volumes after the decline in recent tender rejection rates.
• The Cass report indicated annual volumes that were down by 3.9% in December.
• This was after its drop by 3.3% month over month in November.
• The trend shows us how shipment volumes are declining compared to last year.
• The good news is how gradual the decline is. This gives time to strategize and prevent any further loss.
• The Morgan Stanley Dry Van Freight Index is one more tentative measure of relative supply.
• The higher the index, the tighter the market conditions.
• The trends closely followed this curve throughout December 2022.
• The market pressures were consistent with average historical trends.
• It might soften in the upcoming days as seasonal demand usually eases 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.

There are various congestion and increased waiting times for vessels in some ports, especially after the Lunar New Year break. We can hope to get back on track after the first half of March.

It is best to make informed decisions and choose ports that are open and without space or equipment issues. It will help you import or export without the hassle and through sufficient manpower.

We can expect a steady and consistent increase in the market owing to these trends which are bound to change in the upcoming days. With that being said, 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.