Freight market update - 1 November 2023

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• The North American market remained stable in October.

• The North American cold chain market is projected to achieve a value of $104.1 billion by 2028.

• The Ocean Alliance is expected to experience significant growth in the coming years.

• The International Air Transport Association (IATA) plans to release a Net Zero Tracking Methodology report in the fourth quarter of 2024.

• Congestion on U.S. highways resulted in a cost of $94.6 billion to the trucking industry in 2021, a notable increase from $74.5 billion in 2016.

• The 2M Alliance is implementing a "winter schedule" on the Asia-North Europe trade from the end of October until mid-December.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• The Ocean Alliance, already the world's largest carrier grouping in terms of deployed capacity, is expected to experience significant growth in the coming years, as per Alphaliner's latest weekly report.
• This anticipated growth is described as "massive" and may lead regulators to reconsider and redefine the permissible size of mega-alliances.
• Up until now, regulators have not publicly specified a maximum allowable market share for carrier alliances, but a decade ago, China blocked the formation of the P3 alliance, consisting of MSC, Maersk, and CMA CGM, due to concerns about monopolistic behavior.
• According to Alphaliner data, the Ocean Alliance currently holds a market share of 34% on the Asia-Europe trade lanes and 35% on Asia-North America routes.
• Alphaliner predicts that "deep structural changes" are likely to occur in the liner market, particularly with the termination of the 2M partnership between Mediterranean Shipping Co (MSC) and Maersk in 2025.
• This partnership has been a dominant force alongside three major alliances with similar market shares.
• The Ocean Alliance, comprising members such as Evergreen, CMA CGM, COSCO, and its subsidiary Orient Overseas Container Line (OOCL), has a collaboration agreement in place until the first quarter of 2027.
• The International Air Transport Association (IATA) plans to release a Net Zero Tracking Methodology report in the fourth quarter of 2024, and this will become a regular publication in every fourth quarter thereafter.
• The primary purpose of this report is to assist industry stakeholders in monitoring their progress toward achieving Net Zero carbon emissions by 2050.
• IATA's tracking report will provide quantifiable data on sustainability advancements, enabling operators to track real-time developments in their efforts.
• Experts in the industry have emphasized that sustainable aviation fuels (SAF), derived from renewable sources and waste materials, are the most reliable means of achieving Net Zero targets.
• However, in 2022, only 300 million liters of SAF were produced, all of which was consumed by carriers, which is far below the 450 billion liters required to reach the 2022 net-zero goals.
• Sustainability remains a critical concern in the aviation sector, with 2% of global emissions attributed to aviation, as reported by IATA.
• With the introduction of the tracking report, IATA aims to establish a practical pathway toward attaining the Net Zero emissions goal.
• MSC and Maersk have initiated the process of separating their fleets in preparation for the dissolution of the 2M Alliance, set to take place at the end of the following year.
• This development has sparked speculation that the two carriers might consider terminating their east-west vessel-sharing alliance before the planned dissolution of the 2M Alliance.
• The forthcoming split of the 2M Alliance is expected to result in significant structural changes within the liner market.
• The Alliance partners, including Hapag-Lloyd, ONE, Yang Ming, and HMM, collectively possess a capacity of 3.1 million Twenty-Foot Equivalent Units (TEU), which is similar to the capacity of the 2M Alliance.
• In contrast, the Ocean Alliance, consisting of CMA CGM, COSCO, OOCL, and Evergreen, is currently the largest vessel-sharing alliance, boasting a combined capacity of 4.22 million TEU.
• The Ocean Alliance's capacity is slated to grow further due to its substantial order book of 2.8 million TEU for delivery starting in 2024.
• This includes 36 ultra-large vessels designed for service on the Asia-Europe trade routes.
• Members of THE Alliance, including Hapag-Lloyd, ONE, Yang Ming, and HMM, will temporarily suspend their FE5 Asia-North Europe and EC4 Asia-US East Coast services starting from week 46 until further notice due to the prevailing market conditions.
• To ensure service coverage, THE Alliance is making adjustments by adding port stops to its remaining shipping routes.
• The 2M Alliance is implementing a "winter schedule" on the Asia-North Europe trade, which will be in effect from the end of October until mid-December. This schedule includes blanking one loop for seven consecutive weeks.
• Following the suspension of the PN3 Asia-US West Coast route last month, THE Alliance has now also suspended a second transpacific shipping route, the EC4 Asia to US East Coast.
• Ocean carriers are employing various strategies to align capacity with demand, including canceling shipping routes, delaying sailings, and implementing slow-steaming practices.
• These measures have led to service suspensions within vessel-sharing alliances as they adapt to the evolving market conditions.

Turkey → North America

• The North American market remained stable in October.
• However, potential terminal disruptions are expected with the onset of winter.
• Israel's major terminals, particularly Ashdod and Haifa, are operating without any anticipated impact.
• Bookings for shipments to and from Israel will be accepted, and cargo handling will proceed as usual.
• The Panama Canal Authority has implemented adjustments to ensure an adequate water supply.
• Extra vessels have been deployed to maintain capacity.
• The North American cold chain market is projected to achieve a value of $104.1 billion by 2028.
• This growth is primarily fueled by the increasing demand for temperature-controlled storage and transportation.
• Maersk, a leading player in the cold chain logistics industry, has made significant investments in cold storage facilities and cutting-edge technologies.
• Maersk recently inaugurated a sustainable cold storage facility in Ridgeville, South Carolina, which is operated by Performance Team.
• This facility has earned LEED Gold certification, demonstrating its commitment to environmentally responsible practices.
• It provides rapid access to critical markets and contributes to meeting customers' objectives for a climate-neutral supply chain.
• Congestion on U.S. highways resulted in a cost of $94.6 billion to the trucking industry in 2021, a notable increase from $74.5 billion in 2016, as revealed in the "Cost of Congestion" study by the American Transportation Research Institute (ATRI).
• The ATRI explains that delays caused by congestion reduce capacity and slow down vehicle speeds, adding extra time to trips.
• In 2021, congestion costs were driven by factors such as high GDP growth, increased consumer spending, rising diesel prices, commuter traffic, and an uptick in trucking rates and volumes, according to the ATRI's report.
• These delays raise operational costs for the trucking industry, affecting areas like driver compensation, fuel expenses, and maintenance.
• They also lead to indirect or societal costs such as supply chain disruptions, inefficient fuel usage, and compromised air quality.
• The analysis shows that the most populous states, including California, Texas, Florida, and New York, had the highest congestion costs, ranging from $4.9 billion in New York to $9 billion in California.
• Compared to the 2016 baseline, the states with the highest percentage increases in congestion costs were Nevada (117.2%), Louisiana (83.3%), Georgia (81.3%), and California (77.9%).
• In contrast, Alaska, Wyoming, and Hawaii experienced the most significant decreases in congestion costs.
• When the overall congestion cost is distributed across all registered tractor-trailers in the U.S, the average annual cost of congestion per truck is $6,824.
• This represents about 3% of the average annual revenue generated per truck in the truckload sector in 2021.

North America → Turkey

• Air cargo demand has displayed encouraging growth, as indicated by a recent report from IATA, marking the first year-over-year growth in 19 months.
• Maersk is enhancing its worldwide air freight services by establishing a new 130,000 square foot air cargo hub in close proximity to the Los Angeles International Airport.
• This facility provides direct planeside recovery services and is strategically positioned in the vicinity of the Port of Long Beach.
• This expansion is a valuable addition to Maersk's expanding network of air cargo gateways in North America, which already includes key locations such as Atlanta and Chicago.
• Maersk participated in the Automotive Logistics Supply Chain (ALSC) event held in Detroit.
• At the event, Antonio Fondevilla, our Global Automotive Vertical Head, took part in a panel discussion titled "Fully Charged Value Chains."
• The panel discussion revolved around the exploration of investments and opportunities within the expanding electric vehicle and battery manufacturing and distribution value chain in North America.
• Cargo volumes at the Port of Los Angeles increased by 5.4% in September, following the trend of its neighboring Port of Long Beach.
• During the port's monthly media briefing, Port of Los Angeles Executive Director, Gene Seroka, reported that imports saw a 14% rise, while exports increased by 55%.
• Seroka attributed these positive trends to the long-term dock worker contract, which has led to more cargo being moved back to the U.S. West Coast.
• In total, the Port of Los Angeles processed 748,440 Twenty-Foot Equivalent Units (TEUs) in September.
• However, for the first nine months of 2023, the Port of Los Angeles processed a total of 6,398,126 TEUs, which represents an 18.6% decrease compared to the same period last year.
• Worldwide Flight Services (WFS) is set to inaugurate a new cargo terminal at John F. Kennedy International Airport (JFK) in early 2025.
• The terminal will encompass a total area of 346,000 square feet, significantly expanding WFS' presence at JFK to more than 700,000 square feet.
• Equipped with advanced technology and sustainable solutions, the terminal will include a dock management system, ETV system, and process automation.
• It will be the first dedicated on-airport handling facility for temperature-controlled pharmaceutical products and perishables cargoes at JFK.

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 5 days waiting time is expected at Global Container Terminals Bayonne.

●   The scheduled maintenance for Crane 6, originally set to start on October 1, 2023, has been postponed indefinitely to reduce congestion.

●   Average gate turn times: 48 minutes for single transactions, and 78 minutes for double transactions.

Norfolk:

●   Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.

●   Average gate turn times are 31 / 44 minutes for single and double transactions respectively.

●      All cranes operating as per schedule.

●      Load and discharge of explosives class 1.1, 1.2 and 1.5 suspended by USCG, until further notice.

Charleston Terminal:

●   No waiting time for vessel berthing at Wando Welch and North Charleston Terminals.

●   Average truck turn times: 22  minutes at Wando Welch Terminal, and 17 minutes at North Charleston Terminal.

Savannah:

●   Waiting time for vessel berth at the terminal is up to 4.5 days, depending on the size of the vessel.

●   Average gate turn times are 36 / 57 minutes for single and double transactions respectively.

●   Two new cranes are currently being commissioned on berth 2. Four of the oldest cranes on the same berth are being demolished. Berth 2's capacity to handle vessels will be limited for several months.

Houston:

●   Barbours Cut Terminal has up to 2 days waiting time for vessel berthing.

●   Due to vessel bunching the yard is facing congestion impacting the discharge productivity and extending port stays.

●   The average gate turn time is 44 minutes.

●   Loaded import dwell is at 3.3 days.

Oakland:

●   Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and 5 days at TraPac.

●   Average import deliveries can take up to 4 days at TraPac and OICT.

●   Average gate turn times are 59 / 66 minutes for OICT and TraPac respectively.

Seattle-Tacoma:

●   Wait time of up to 5 days at Tacoma and 4 days at Seattle.

●   Import deliveries are 8.5 days at HUSKY – due to EB/WB railcar imbalance, 6.3 days at Washington United Terminal, and 1-3 days at T18.

●   Rail car availability is a significant concern at present, primarily because there is a low volume of rail cars heading Westbound to balance the high volume going Eastbound. This issue is exacerbated by omissions in Vancouver.

●        The railroads are actively working with all stakeholders to improve the availability of rail cars. However, if more Westbound cargo or empty cars are not made available, this problem will continue.

●       As an alternative to rail transport, inland cargo transportation via truck is also an option to consider.

●   Average gate turn times are 25 / 41 / 44 minutes for T18, Washington United Terminal, and HUSKY respectively.

●   T18 will be closed on Fridays through October and on November 3, 2023.

●   WUT has received 2 new Post Panamax Cranes.

●   WUT has commenced commissioning both, operational by the mid/end of September.

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 3.4 days, on-dock rail dwell is 3.6 days, and import units on the street are averaging at 4.1 /5.5 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 22-77 minutes, depending on the terminal.

●   Chassis Pools: All pools are operating as normal except:

1. Louisville – Deficit on 40’ chassis.

2. Mobile – Deficit on 40’ 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.