Freight market update - 1 May 2024

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• Mexico's major container ports are experiencing substantial trade expansion, particularly with the U.S. and China.

• The surge in trade is primarily due to Chinese manufacturers shifting operations to Mexico to evade U.S. tariffs and maintain access to the U.S. market.

• The ILA is pushing for a share of ocean carriers' pandemic profits, estimated at $400 billion according to analyst John McCown. However, carriers argue that their profits have significantly declined since last year, with industry-wide profits plummeting by 88% and entering loss-making territory by the fourth quarter.

• DP World and Sabah Ports have formed a partnership to upgrade the capacity of Malaysia’s Sapangar Bay Container Terminal, a key regional trade hub for the Brunei Darussalam-Indonesia-Malaysia-Philippines East growth area within ASEAN.

• Over the past week, tensions in the Middle East have intensified following the seizure of the MSC Aries in the Hormuz Strait. Prospects for a swift resolution to the conflict appear dim.

• Commencing from May 8th, HMM will launch an additional Vietnam – China – Taiwan – US West Coast service.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Mexico's major container ports are experiencing substantial trade expansion, particularly with the U.S. and China.
• The surge in trade is primarily due to Chinese manufacturers shifting operations to Mexico to evade U.S. tariffs and maintain access to the U.S. market.
• Manzanillo, Mexico's largest port, observed a 7.3% increase in throughput during Q1 2024, with imports rising by 15.7% and exports by 6.4%. Manzanillo handles approximately one-third of Mexico’s exports and 40% of containerized imports.
• Lazaro Cardenas, the second-largest cargo port, also experienced a significant surge, with a 35% increase in container volumes in February.
• Containerized imports climbed by 33%, while exports surged by 53%.
• Xeneta reports that China’s containerized exports to Mexico accounted for 60% in January. In 2023, trade between China and Mexico grew by 34.8%, a significant rise from the 3.5% growth seen in 2022.
• Additionally, Mexico City opened a new cargo-only airport last year, indicating growth in airfreight volume.
• The heightened maritime traffic has resulted in port congestion. According to GoComet, delays at Manzanillo were nine days, while Lazaro Cardenas experienced two-day delays as of April 22nd.
• DP World and Sabah Ports have formed a partnership to upgrade the capacity of Malaysia’s Sapangar Bay Container Terminal, a key regional trade hub for the Brunei Darussalam-Indonesia-Malaysia-Philippines East growth area within ASEAN.
• Through this collaboration, container handling capacity at the port will be increased from 500,000 TEU to 1.25 million TEUs by 2025.
• Investments will be directed towards improving terminal workflows and operational efficiency through digitization efforts, as well as enhancing the port’s connectivity.
• Over the past week, tensions in the Middle East have intensified following the seizure of the MSC Aries in the Hormuz Strait. Prospects for a swift resolution to the conflict appear dim.
• The Hormuz Strait serves as a crucial passage for ships bound for Dubai, a pivotal port for carriers since the Red Sea Crisis. Additionally, it plays a vital role in the transportation of oil. Consequently, any escalation in the situation could have an immediate impact on oil prices.
• Geopolitical events are exerting a greater influence on shipping rates than traditional supply and demand dynamics. Carriers are anticipating an early peak season, which is expected to result in higher rates in the coming weeks.
• Vessel utilization rates are elevated, and there is robust booking activity for cargo such as white goods, solar panels, electric vehicles, and garden furniture.

Stabilizing Situation Amid Lingering Challenges

• Despite a noticeable improvement compared to the previous week, major Chinese ports such as CNDLC, CNLYG, and CNNGB are still contending with the repercussions of frequent port closures caused by dense fog.
• Although there's a general stabilization, terminals have not fully recovered yet, and significant berth congestion persists in Ningbo and the WGQ area terminals.

Progress and Anticipated Challenges

• Terminals like MYPKG and SGSIN are undergoing further stabilization, witnessing continuous enhancement in overall productivity and efficiency.
• However, at BNCT (KRPUS), while minor berth congestion is currently observed, the anticipated bunching arrival of vessels in the upcoming week is expected to exacerbate congestion, potentially leading to delays increasing to one day or more on average.

Turkey → North America

• Containers currently on the water will be discharged and Bill of Lading terminated at Port of Discharge (POD) Norfolk. Any ad hoc inland delivery required to Baltimore should be coordinated with the Import Customer Service team. Inland deliveries will be invoiced at cost. No barge solution is available until further notice.
• Containers not yet departed from Asia can be redirected to alternative PODs such as Norfolk or New York. Bookings will be rated based on existing Norfolk/New York contract rates.
• For any ad hoc inland delivery required to Baltimore, rates can be quoted as per the public tariff. No barge solution is available until further notice.
• Future bookings to POD Baltimore cannot be accepted until further notice, as visibility on access to Baltimore Seagirt terminal by water is unavailable.
• Additionally, barge solutions into Baltimore are not available until further notice.
• Rates for the second half of April have remained relatively stable, with no significant changes reported.
• A slight rate decrease has been observed for main US East Coast ports, which is surprising considering the closure of the Port of Baltimore and the increased volumes redirected to other major East Coast ports.
• Space availability has become increasingly constrained as long-term contracts are reaching their conclusion.
• Commencing from May 8th, HMM will launch an additional Vietnam – China – Taiwan – US West Coast service.
• This service will involve the acquisition of a fixed allocation of 250 TEU slots per round voyage on the AP1 loop, which is jointly operated by WHL and ONE.
• The new service will replace WHL’s standalone Asia – US West Coast AA3 service, which will undergo rebranding.
• Key differences between the current AA3 service and the new AP1 service include the addition of Hai Phong Port as an additional port of call, and the replacement of WHL’s smaller 3,010 TEU sister vessels, WHL 353 and 363, with two larger 10,010 TEU ships by ONE.
• The North America logistics market achieved a size of US$ 1.44 trillion in 2023.
• Looking ahead, the market is anticipated to reach US$ 1.75 trillion by 2032, with a growth rate (CAGR) of 2.2% during the period from 2023 to 2032.
• Major factors driving this growth include increasing international trade, the expansion of the e-commerce sector, technological advancements in logistics, and changing consumer preferences favoring quick delivery services.
• The demand for logistics services is experiencing significant growth driven by the expansion of the e-commerce sector and increasing international trade.
• Cross-border trade is particularly contributing to the surge in demand for logistics services as businesses seek efficient networks to transport goods across borders securely.
• Businesses aiming to reach international markets require efficient logistics networks, leading to increased demand for freight forwarding, customs clearance, and international shipping services.
• The expansion of the e-commerce sector is a key driver, with more consumers turning to online shopping, thereby fueling the demand for logistics services.
• E-commerce companies heavily rely on logistics for order fulfillment and timely delivery, further propelling market growth.
• The rapid growth of online retail has spurred the need for robust last-mile delivery solutions, warehousing facilities, and order fulfillment capabilities to meet customer demands effectively.

North America → Turkey

• Negotiations for local port agreements are underway among dockworkers along the U.S. East and Gulf coasts, ahead of the mid-May deadline set by ILA President Harold Daggett.
• However, uncertainty looms regarding whether a deal can be reached before the current contract expires on September 30.
• The ILA is pushing for a share of ocean carriers' pandemic profits, estimated at $400 billion according to analyst John McCown.
• However, carriers argue that their profits have significantly declined since last year, with industry-wide profits plummeting by 88% and entering loss-making territory by the fourth quarter.
• Some management sources are optimistic about reaching a deal without disruption, citing mutual interests.
• However, others express caution, fearing that wage demands might be too high for carriers in the United States Maritime Alliance (USMX) to accept. The impending U.S. presidential election further complicates the situation.
• Beneficial cargo owners remain hopeful for a peaceful resolution, noting the East Coast's long history without strikes.
• Container ports across the Western Mediterranean are nearing maximum capacity, raising concerns about heightened inventory expenses and component shortages for retailers and manufacturers in Europe. This presents a new obstacle for the region’s supply chains.
• The redirection of container ships around the Cape of Good Hope has altered port call patterns, leading to a notable increase in shipping traffic.
• Consequently, ports in the Western Mediterranean are grappling with port congestion, overcrowded warehouses, and loading delays.
• The most significant challenges are evident at key ports such as Algeciras and Barcelona in Spain, and Tangier-Med in Morocco.
• Maersk has issued warnings regarding overflowing storage yards in Barcelona due to unusually high shipping volumes, while terminals in Algeciras and Tangier are also experiencing congestion issues.

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 Maher Terminals LLC and APM Terminals.
• Up to 3 days waiting time is expected at Port Liberty Terminal Bayonne.
• Average gate turn times: 44 minutes for single transactions, and 66 minutes for double transactions.
• Terminal change to Port Liberty New York.
• An earthquake hit New York City, New Jersey with 4.8 Magnitude on April 5, 20204.
• However, no issues were reported at Maher, Port Liberty, APMT NYC or Greenwich terminal in Philadelphia.
• All other vessels on AL6 will continue to call Maher terminals.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 39 / 54 minutes for single and double transactions respectively.
• Berth congestion had relaxed overall but it is expected to worsen after severe weather delays.
• This is mainly for ships arriving from New York later this week.

Charleston Terminal:

• Waiting time for vessel berthing is 2 days at Wando Welch Terminal and 0.5 days at North Charleston Terminal.
• Average truck turn times: 18  minutes at Wando Welch Terminal, and 23 minutes at North Charleston Terminal.
• Dock construction at Wando Welch terminal started on March 11, 2024.
• It is reducing berth space from 3 to 2 berths for one year.
• Berths will be given on a first come, first serve basis.
• This project will also limit the amount of class 1.1 and 1.2 that can be handled at the terminal during this time.

Savannah:

• Waiting time for vessel berth at the terminal is up to 2 days, depending on the size of the vessel.
• Frequent river closures are expected due to fog during this week.
• Average gate turn times are 38 / 53 minutes for single and double transactions respectively.
• Import dwell time is 4 days.
• Berth 2 is back online helping to reduce waiting times.

Houston:

• Barbours Cut Terminal has up to 1 day waiting time for vessel berthing. The same goes for the Bayport Container Terminal.
• Bad weather in the Gulf of Mexico continues to cause closures at ports south of Houston and delays on arrival.
• Due to vessel bunching the yard is facing congestion impacting the discharge productivity and extending port stays.
• Average gate turn times at Barbours Cut Container Terminal are 30 / 47 minutes for single and double transactions.
• The gate turn times are 31 / 52 minutes for single and double transactions at Bayport Container Terminal.
• Loaded import dwell is at 3.5 days at Barbour's Cut and 3.3 days at Bayport.

Oakland:

• Average wait time of up to 4 days at Oakland Int’l Container Terminal (OICT) and 1 day at TraPac.
• Average import deliveries can take up to 4.5 days at TraPac and 3.8 days at OICT.
• Average gate turn times are 64 / 75 minutes for OICT and TraPac respectively.
• OICT reported two cranes are non operational.

Seattle-Tacoma:

• 1 day waiting time at Husky and Washington United terminal at Tacoma.
• 2 days waiting time in Seattle.
• Import deliveries are 3 days at Husky – due to EB/WB railcar imbalance, 2.8 days at Washington United Terminal, and 1-3 days at T18.
• The average gate turn times are 35 minutes for T18, 40 minutes for Washington United Terminal, and 91 minutes for HUSKY.
• Terminal 18 will be closed on April 26 and May 3, 2024.

Los Angeles/Long Beach:

• All terminal gates are running as published and in line with the Pier Pass program.
• Port of Los Angeles dwell time for local import cargo is 3 days, on-dock rail dwell is 3.9 days, and import units on the street are averaging at 3.4 / 4.5 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 23 / 76 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

• Chicago – Constrained on 20’ chassis
• Kansas City – Constrained on 20’ chassis

Intermodal Operations

Truck power can be secured within 1-3 days for the majority of locations, including marine terminals, rail ramps, and depots.

Port Status

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.

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.