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Key takeaways for the US
- Overall space is ample on both coasts (TAWB), as capacity has increased steadily and demand has remained lower than in 2021-2022.
- Weekly capacity from Asia is reduced through blank sailings and sliding vessels to balance low demand.
- Shippers are leveraging their own Sonar data to make informed decisions and navigate the evolving trucking landscape.
- Weak demand has also been reflected in the container import volumes to the US (21% year on year decline in April).
- China's industrial output and consumer spending have not met expectations, raising concerns about the post-COVID recovery's strength.
Read on for more in-depth updates.
Ocean Freight Market Updates
Asia → North America
US/CA
Transpacific Trends and Market Updates
- Overall space is ample on both coasts (TAWB), as capacity has increased steadily and demand has remained lower than in 2021-2022.
- More vessels and carriers have entered the market, resulting in excess supply.
- Shipping lines are actively seeking additional cargo to fill the increased capacity.
- The current situation is expected to extend beyond Q2 2023.
- Volume for Intra-Americas trade lanes (LASB/LANB) has declined due to various factors.
- These factors include inventory overstock, slack seasonality, high inflation rates in key countries like Brazil, Chile, Colombia, etc., and weaker overall demand.
- Weekly capacity from Asia is reduced through blank sailings and sliding vessels to balance low demand.
- Spot rates on the trade have decreased, resulting in a narrow margin compared to FAK rates.
- Freighter capacity, particularly on Transpacific routes, is being retired due to financial losses at low sell rates and high fuel costs.
- This trend is expected to continue unless there is an improvement in rates and fuel costs.
- Demand is anticipated to rebound in Q3 driven by product launches and an improved economy.
- Shippers are growing weary of the persistent volatility in the trucking industry in recent years and are beginning to take action.
- Instead of simply opting for the lowest bidder, shippers are becoming more assertive by prioritizing service-level metrics such as "on time, in full."
- Freightwaves examines how this shift, coupled with a transition towards a more consistent year-round request for proposal (RFP) season, is favorably changing the dynamics in favor of shippers.
- Shippers are leveraging their own Sonar data to make informed decisions and navigate the evolving trucking landscape.
- Container import volumes to the US have declined for two consecutive months, indicating weak demand.
- In April, there was a reported 21% year-on-year decrease, as reported by Loadstar.
- The ratio of volumes per booking is currently at 1.7 TEU per booking, the lowest level since 2019.
- This suggests that the US market is in a destocking cycle, with an average ratio above 2 TEU per booking signaling a potential new replenishment cycle for US importers.
- The University of Michigan conducted a survey that revealed a more than 9% decrease in consumer sentiment due to renewed concerns about the trajectory of the economy.
- China's industrial output and consumer spending have not met expectations, raising concerns about the post-COVID recovery strength.
- In April, industrial production was projected to increase by 10.6% compared to the previous year. However, the actual growth was only 5.6%.
- Retail sales in China also fell short of forecasts, indicating a recovery that is much slower than anticipated in consumer spending.
- The Mexico cross-border transportation market is experiencing increased demand, primarily attributed to the growing trend of nearshoring.
- Schneider, a logistics company, organized an event in Mexico City in August, specifically for cross-border shippers.
- During the event, Enrique Perret from the U.S.-Mexico Foundation engaged in discussions with Schneider about nearshoring and ally-shoring.
- The dialogue between Schneider and Enrique Perret continues, resulting in the development of an insights report aimed at assisting cross-border shippers in navigating the changing landscape.
- ONE line does not offer service from Iskenderun and Mersin ports to the USA.
- However, it is expected that the Iskenderun port will become operational, and they will provide service from Iskenderun to ports in the USA.
- The Transpacific rates that had increased in April have gradually started declining.
- Asia-USWC spot rates have dropped to a range of $1,150 to $1,250 per 40ft, while Asia-USEC rates have decreased to approximately $2,100 to $2,200 per 40ft, nearing the levels before the mid-April GRI (General Rate Increase).
- Despite this, the spot rates are still under downward pressure, leading carriers to release special offers, especially on specific sailings where they require volume support to improve vessel utilization.
- The container shipping market typically follows the principles of supply and demand, which suggests that further rate adjustments downwards can be expected, considering vessels are not operating at full capacity and space is available.
- However, carriers are facing losses at current spot rate levels, prompting them to refrain from offering extremely low prices. Many contract rates have been closed at levels higher than spot rates.
- Carriers appear to have limited flexibility to lower rates further and are working towards increasing rates from June 1st. The newly announced levels are $1800/2800/3000 for USWC/USEC/GULF.
- A similar fluctuation pattern as observed on April 15th may repeat in the first week of June, where carriers push rates up and maintain them for a week before they start to decline again due to insufficient market volume support.
- The critical period of July-August will be monitored to observe if trade patterns return to normal.
- US economic forecasters anticipate a recovery in the latter part of the year, with a projected annual growth of 4%-to-5% in the fourth quarter.
- While this would bring levels back to pre-pandemic levels, it may not reach the boom times of the past.
- The South East Asia-USEC (East Coast of the United States) 'EC5' loop is undergoing an upgrade.
- The 'EC5' port rotation includes Laem Chabang, Cai Mep, Singapore, Colombo, Halifax, New York, Savannah, Jacksonville, Norfolk, and Halifax.
- Carriers Hapag-Lloyd, ONE, HMM, and Yang Ming will gradually replace their 8,100 - 9,040 TEU ships (previously deployed by ONE and HMM) with 14,000 TEU vessels, all operated by ONE.
- The replacement of ships will increase weekly capacity by approximately 40%.
- As the carriers receive new 24,000 TEU Megamax vessels for the Asia-Europe trade, they are redirecting 14,000 - 15,000 TEU tonnage to the Transpacific trade, contributing to the capacity upgrade.
- The capacity upgrade enables carriers to focus on slow steaming and maximizing utilization.
- The upgrade process began in early April and is expected to be completed in the first week of June.
- It is evident that the upgraded loop specifically targets South East Asian exports.
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
- Rates from Europe to the US have experienced a decline in recent weeks.
- The decrease in rates can be attributed to the introduction of additional capacity on the trade lane and a decrease in demand from the US, as import volumes have dropped for two consecutive months.
- US West Coast ports are recovering lost volumes after facing challenges in the past few years.
- During the first quarter (Q1), West Coast ports handled 40% of US container import volumes, compared to 45% in the same period of 2019.
- Businesses shifted their volumes away from West Coast ports due to concerns about potential disruptions from ongoing ILWU labor talks and congestion issues.
- Although Q1 of 2023 reflects a decline in volume compared to pre-pandemic levels, it also demonstrates the resilience of trade to the West Coast, showing recovery following a challenging period.
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
- New data from the United Nations Conference on Trade and Development (UNCTAD) reveals the significant pressure on US port capacity during the pandemic.
- Globally, ports experienced a 15% decrease in capacity due to the surge in demand during the pandemic.
- In the US, this pressure on capacity rose even higher, reaching up to 35% due to increasing demand, inadequate port infrastructure, and congestion.
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
- Vessels heading to North America via the North Atlantic Sea are expected to have a change in schedule due to severe weather conditions.
New York:
- No waiting time is expected for a berth at Global Container Terminals Bayonne and APM Terminals.
- No more waiting time at Maher Terminals LLC.
- No empty shut-out situations at any of the terminals this week.
- Average gate turn times: 52 minutes for single transactions, and 86 minutes for double transactions.
- No Saturday gates are planned this week at other terminals.
Norfolk:
- Most vessels are expected to berth on arrival or within half a day, occasionally experiencing 1-1.5 day delays for berthing.
- Average gate turn times: 28 minutes for single transactions, and 38 minutes for double transactions.
- Two cranes down at Norfolk Int'l Terminal, no negative impact is expected this week.
Charleston Terminal:
- 2 days waiting time for vessel berthing at Wando Welch Terminal.
- No waiting time expected at North Charleston Terminal.
- Average truck turn times: 22 minutes at Wando Welch Terminal, and 20 minutes at North Charleston Terminal.
- Chassis pools are available at all SCPA locations.
- Sunday gates by appointment only.
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 27 / 41 minutes for single and double transactions respectively.
Houston:
- Barbours Cut Terminal’s waiting time for vessel berthing is up to 1 day.
- Saturday gates at Bayport and Barbours Cut Container Terminals discontinued as of May 1, 2023.
- The average gate turn time is 41 minutes.
Oakland:
- Average wait time of up to 5 days at Oakland Int’l Container Terminal (OICT) and up to 2 days at TraPac.
- Average import deliveries can take up to 4.9 / 4 days at TraPac and OICT respectively.
- As yard space becomes available, boxes from TraPac will move to accessible areas for delivering.
- Average gate turn times are 64 / 52 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 3 days are expected.
- Import deliveries are 1.5 days at HUSKY – due to EB/WB railcar imbalance, 0-3 days at Washington United Terminal, and 0-3 days at T18.
- Availability of rail cars in Union Pacific Rail and BNSF Rail continues to fluctuate weekly.
- Average gate turn times are 39 / 42 / 42 minutes for T18, Washington United Terminal, and HUSKY respectively.
- T18 Terminal will be closed on May 19, May 26, and May 29, 2023.
- Washington United Terminal will be closed on May 19, May 26, and May 29, 2023.
- Husky will be closed on May 19, May 26, and May 29, 2023.
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 3.3 days, on-dock rail dwell is 5 days, and import units on the street are averaging at 5.2 / 5.8 days for 20 ft and 40+ ft containers respectively.
- Port of Long Beach dwell times for local imports are stable, and the average terminal gate turn time is between 21-62 minutes, depending on the terminal.
Chassis Pools:
All pools are operating as normal at all tracked locations.
Intermodal Operations:
Truck power can be secured within 1-3 days for the majority of locations, including marine terminals, rail ramps, and depots.
Final Thoughts
In light of the latest updates and trends, it is evident that the market is currently in the course of demonstrating robust performance and is equipped with ample capacity and resources.
Individuals and businesses involved in import/export activities must stay well-informed about market dynamics and strategies to make informed decisions. To ensure a smooth and hassle-free experience with your import/export operations, it is recommended to seek guidance from industry experts.
Conduct thorough research on ports that offer available space and suitable equipment despite the ongoing conditions. By doing so, you can minimize complications, facilitate shipments, and maximize efficiency.
It is worth noting that these trends are expected to persist shortly, albeit with potential fluctuations. However, it is essential not to delay shipments or wait for further updates before proceeding with your plans.
Taking proactive measures and staying proactive in your approach will help you navigate the market effectively. We greatly appreciate your continued readership and encourage you to subscribe to our weekly market updates to stay abreast of the latest developments and insights.