From the Editor’s Desk
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Key takeaways for the US
- Very minor mitigation rates for TPEB rates.
- More balanced demand and supply rates.
- Manufacturing shift away from China. Moving more toward Vietnam and India.
- Labor discussions between US West Coast terminal operators and dockers.
- Might result in permanent volume loss.
Read on for more in-depth updates.
Ocean Freight Market Update
Asia → North America
U.S / CA
Transpacific Trends and Market Updates
- The TPM conference marks the start of the Transpacific contract season event.
- BCO procurement managers negotiate initial contracts with ocean carriers.
- Shipping lines aim to get contracts signed and MQC agreed to avoid exposure to the spot market.
- Differences remain on volume prospects, with BCOs less optimistic than shipping lines.
- Shorter contracts are being agreed upon for three months instead of 12 months.
- Annual fixed rate offers to NVOs are expected to be late this year.
- Negotiation will continue after TPM for year-round contracts.
- Spot rates are lower, with FAK rates slipping for Asia to the USWC route.
- Spot volume cargo offered around $1,000 per FEU.
- USEC FAK rates from China/Asia tumbling fast to average $2,100 per FEU.
- Spot rates have been below $2,000 for USEC.
- The Gulf market may have hit the bottom as the space situation tightens again.
- From March 18, 2023, CBP will require a 6-digit valid China postal code for all MIDs when China is the manufacturer's country of origin.
- Goods produced in the Xinjiang Uyghur Autonomous Region are subject to UFLPA restrictions and may be prohibited from entry into the US.
- The China postal code will be used by CBP to determine whether goods might be detained upon arrival.
- Ensure the China postal code is accurate to avoid costly delays and potential detention of merchandise by CBP.
- Suppliers must provide the China postal code at the time of booking.
- Mandatorily check the China postal code to ensure the goods are not produced in Xinjiang province.
- Check the China postal code to ensure that it is a valid postal code.
- Notify the Consignee before accepting the booking if the postal code is located in Xinjiang province or is invalid while working with the supplier to resolve the issue.
- Share the China postal code listed on commercial documents or during the process of booking/pre-alert with the client's Customs broker for entry purposes.
- TPEB rates (Taiwan - US East Coast and Gulf) have seen minor mitigations to most U.S. gateways and inland destinations this week.
- Delays and congestion have reduced, but consistent weekly blank sailings can be expected to remove 30% of capacity from the market.
- Current capacity remains above any projected container volumes.
- Recent rate reductions have been observed due to the excess capacity.
- Demand and supply are more balanced this week after the blank sailings are seen immediately following Lunar New Year (LNY).
- Booking intake is gradually improving but is still not as strong as pre-LNY.
- Rates are still under pressure.
- There is growing decoupling rhetoric between Chinese and Western economies in recent months.
- The Biden administration has vowed to create "China-Free" supply chains and blacklisted dozens of Chinese companies.
- There has been discussion of a manufacturing shift away from China to other hubs such as Vietnam and India.
- Rates from Asia to Europe and the USA continue to fall due to weak demand.
- 30% of capacity on the Transpacific trade lane has been blanked to manage the rate decline.
- Despite blank sailings, capacity from Asia to Europe is tighter, but the rate decline has not been stemmed.
- Chinese manufacturing activity accelerated in February, reaching its highest level in over 10 years.
- The acceleration has been attributed to the lifting of Covid restrictions and the returning workforce following the Chinese New Year.
- The manufacturing Purchasing Managers' Index (PMI) increased from 50.1 to 52.6.
- Yard utilization and congestion across Chinese ports remain normal, but the number of empty containers at ports is increasing.
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 before the date your vessel gets ready to depart.
Turkey → North America
- Demand for shipping remains low, and space is widely available.
- High inventories in the US are preventing demand from picking up as expected.
- Rates continue to drop, as vessel utilization has decreased to 65-70% from 90% a few months ago.
- Ongoing labor discussions between US West Coast terminal operators and dockers are causing concerns about permanent volume loss.
- The negotiations involve the International Longshoremen & Warehouse Union (ILWU) and 70 employers on the US West Coast, represented by the Pacific Maritime Association.
- While progress has been made on key issues like healthcare, outstanding issues regarding automation and work allocation remain.
- The uncertainty generated by the ongoing negotiations could result in shippers opting for East Coast ports instead, leading to a permanent loss in cargo.
- The overall US trade deficit for 2022 increased by 12.2 percent to nearly $1 trillion.
- Americans purchased significant volumes of foreign machinery, medicines, industrial supplies, and car parts.
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
- Easing congestion is allowing for space to come online on the US East Coast and West Coast.
- Equipment availability is improving as congestion disappears, and low empty stacks at inland depots are also getting better in some areas.
- Priority should be given to pick-up from the Port of Loading if possible.
Conclusions
Rates: Stable rates over the last week.
Space for capacity: Some intermodal terminals are heavily congested. However, there is no major capacity or space issue.
Space for equipment: Equipment issues have started owing to low levels of import.
North America Vessel Dwell Times
Terminal Updates
- In New York, there is a 1-day waiting time for a berth at Global Container Terminals Bayonne, Maher Terminals LLC, and APM Terminals, with no empty shut-out situations this week.
- The average gate turn times are 58 / 100 minutes for single and double transactions respectively, and there are no Saturday gates planned for the week.
- In Norfolk, most vessels will berth on arrival or within half a day, with occasional 1-1.5 day delays for berthing.
- The average gate turn times are 27 / 37 minutes for both single and double transactions respectively, and there is no operational impact expected despite one crane being down at Norfolk Int'l Terminal.
- At Charleston Terminal, waiting time for vessel berthing is up to 2.5 days, with average truck turn times of 25 / 19 minutes at Wando Welch Terminal and North Charleston Terminal respectively.
- Sunday gates have been discontinued owing to a lack of proper utilization.
- In Savannah, waiting time for vessel berth is up to 3 days, depending on vessel size, with average gate turn times of 31 / 49 minutes for single and double transactions respectively.
- Finally, in Houston, Barbours Cut Terminal may experience berth congestion due to high yard utilization, and the waiting time for vessel berthing is 0 to 1 day.
- PHA implemented Saturday gates at Bayport and Barbours Cut Container Terminals in June 2022, but the final Saturday gate offered is April 29, 2023, as the additional hours are not well-utilized.
- The average gate turn times are 46 minutes.
US Domestic Trucking Market Trends
- The FreightWaves SONAR Outbound Tender Volume Index (OTVI) shows that contract tender volumes across all modes were down 25% year-over-year.
- This includes a 3.3% month-over-month decrease, or a 9.6% drop when measuring accepted volumes after a significant decline in tender rejection rates.
- The Cass report indicates that December's year-over-year volumes fell by 3.9%, after a 3.3% month-over-month decline from November, illustrating a gradual decline in shipment volumes compared to last year.
- The Morgan Stanley Dry Van Freight Index measures relative to supply, with higher index values indicating tighter market conditions. Throughout December, trends in this index were consistent with average historical trends, indicating consistent market pressures.
- Looking forward, there is an expectation for softening at least through February, as seasonal demand 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. It is best to plan in advance and be aware of market trends to take informed decisions.
Some areas have been badly affected due to inclement weather. This has resulted in various congestion and increased waiting times for vessels. At the same time, several other ports are thriving and have cleared all their backlog.
It is best to ask experts and research thoroughly to 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.
Beeontrade Team
