Freight market update - 10 January 2024

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• Despite increased inquiries, forwarders note that Air and Sea-Air bookings are currently stable.

• Asia-Europe shippers may encounter challenges due to shortages in ocean space and equipment in the weeks leading up to the Chinese New Year as demand rises.

• Ocean Network Express (ONE) is set to launch a new container shipping service named WIN, connecting India’s west coast to the east coast of the United States.

• Hapag-Lloyd is set to introduce a new General Rate Increase (GRI) or General Rate Adjustment (GRA) for cargo shipments from India to the United States and Canada West Coast, starting on January 18, 2024.

• The Shanghai Containerized Freight Index (SCFI), a significant gauge for container shipping, recorded an 8% increase this week, reaching 1896.65 points, the highest level since 2022.

• As of January 1, 2024, the European Union's emissions trading system (EU ETS) has expanded to include the maritime sector.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Despite increased inquiries, forwarders note that Air and Sea-Air bookings are currently stable.
• The full impact on air freight is anticipated to become apparent when shippers recognize the extended transit times for shipping lines, particularly from Asia to Europe and the U.S.
• A Shanghai-based forwarder mentioned that during the past few weeks, with the holiday season, there were fewer actual orders moving.
• The forwarder advises keeping a close eye on the coming weeks towards Chinese New Year, expecting a surge in real orders that will reveal the crisis's impact on air freight.
• According to the TAC Index, the overall index witnessed a sudden fall in the two weeks leading up to January 1, primarily influenced by declining rates out of China.
• TAC highlighted that rates from other parts of Asia did not show a similar decline on a week-to-week basis.
• Sources suggest the sudden drop in the index likely reflects a decrease in spot market volumes, resulting in a higher proportion of business conducted at previously agreed (lower) contract levels.
• Rates from other parts of Asia, such as Vietnam, Bangkok, and India, were not declining as significantly on a week-to-week basis and, in fact, were higher on lanes to Europe.
• Asia-Europe shippers may encounter challenges due to shortages in ocean space and equipment in the weeks leading up to the Chinese New Year as demand rises.
• The redirection of container vessels around the Southern tip of Africa has added 6,000 miles and an extra two weeks to transit times.
• Carrier schedule changes are causing arrival delays, particularly affecting Southeast Asia to Europe routes.
• Delays have surged by 105%, with vessels expected to arrive eight days late on average, according to project44.
• China to Europe shipments are experiencing four-day delays, and vessels on the Southeast Asia to U.S. East Coast route are arriving 2.5 days behind schedule.
• While current data does not indicate a significant increase in transit times, project44 emphasizes that this is because rerouted containers have yet to reach their destination.
• The expectation is that these numbers will rise as carriers update their vessel schedules in the coming weeks, and impacted containers start arriving and gating out of their destination ports.
• A shipping executive highlighted that the longer transit times for Asia-Europe routes will tie up equipment on the water, causing delays in its arrival at destinations where it is needed.
• The executive noted a return to premium rate products on the Asia to North Europe and Mediterranean trades.
• The Shanghai Containerized Freight Index (SCFI), a significant gauge for container shipping, recorded an 8% increase this week, reaching 1896.65 points, the highest level since 2022.
• The surge in the SCFI is attributed to approximately 405 container vessels, with a total capacity of 5.56 million TEUs, altering their routes to avoid ongoing conflicts in the Red Sea.
• Analysts expect the Red Sea diversion to persist for several weeks, leading to the absorption of tonnage and sustaining high shipping rates.
• Drewry's initial box spot rate details for the year revealed a substantial increase, with the global composite index rising by over $1,000 to $2,669.91 per FEU.
• Linerlytica forecasts that elevated shipping rates will continue through January and February due to ongoing capacity constraints over the next six weeks.
• Approximately 12% of the global containership capacity is currently diverted to the Cape route, and Linerlytica suggests that their numbers will continue to rise.
• Ocean Network Express (ONE) is set to launch a new container shipping service named WIN, connecting India’s west coast to the east coast of the United States.
• The decision to introduce the WIN service is fueled by the significant increase in India’s export volume, and ONE aims to leverage this growth with their own vessels.
• The WIN service, scheduled to commence in May 2024, will provide a weekly route from Hazira, Norfolk, Savannah, to Charleston.
• In addition to the primary route, the service will include calls at Damietta, Algeciras, and Jeddah, facilitating further connectivity to Mediterranean destinations through collaboration with other services.
• The operational fleet for the new WIN service will consist of nine vessels, all managed by ONE.
• The strategic move aligns with ONE’s objective to capitalize on the growing demand for container shipping services, specifically targeting the trade route between India and the east coast of the United States.
• Hapag-Lloyd is set to introduce a new General Rate Increase (GRI) or General Rate Adjustment (GRA) for cargo shipments from India to the United States and Canada West Coast, starting on January 18, 2024.
• The shipping company will implement an additional charge of US$200 per container for various types, including 20' and 40' dry, reefer, and special containers, including high cube equipment.
• In addition to the GRI, Hapag-Lloyd has announced a rate increase of US$1,500 per container for specific routes:
• From the Indian Subcontinent and Middle East to the United States East Coast and Gulf Coast, effective from January 19.
• From the Indian Subcontinent and Middle East to Canada East Coast, effective from January 1.
• These adjustments are part of Hapag-Lloyd's pricing strategy and aim to address evolving market conditions and operational costs in the shipping industry.

SHANGHAI (SHA) to Europe and the US

Currently quiet market due to holidays.

Possible slight rate increase over the weekend.

NINGBO (NGB) to Europe and the US

Stable market with decreased rates.

Recommended to book space 4-5 days prior to cargo ready date.

NORTH CHINA to USA and Europe

TIANJIN (TSN):

Decreased rates for Korean Airlines to both destinations.

Asiana Airlines rates vary case by case, but space is available.

Suggested booking 3-4 days ahead.

BEIJING (PEK):

Rates decreased on most major airlines compared to the previous week.

Major services to Europe: Singapore Airlines, Cathay Pacific, Lufthansa, Air China, KLM, Air France, Japan Airlines.

Advised to book space 3-4 days ahead.

Major services to the US: Cathay Pacific, Japan Airlines, All Nippon Airways, Eva Air.

Advised to book space 5-6 days ahead.

QINGDAO (TAO):

More space available with decreased rates this week.

ETD to the US is 3-5 days after booking.

Spot rates available for dense cargo.

SOUTH CHINA to USA and Europe

GUANGZHOU (CAN):

No major updates in space.

Rates need to be checked with the carrier on a case-by-case basis.

SHENZHEN (SZX):

Less busy market this week due to holidays.

Rates need to be checked with the carrier on a case-by-case basis.

XIAMEN (XMN):

Demand has eased.

Limited space with final rates depending on a case-by-case basis.

Turkey → North America

• The Port of Houston handled nearly 3.5 million TEUs in November 2023, marking a 5% decrease from the record volumes in 2022.
• Loaded export TEUs for November showed a 2% decline compared to 2022, but the overall export performance for 2023 increased by 9% to 1,268,034 TEUs, driven by demand for the region's resins and petrochemical commodities.
• Loaded imports experienced a 16% decrease in November and an 8% decrease compared to the previous year at 137,631 TEUs.
• The Panama Canal is facing water levels 1.8 meters below normal, initially leading to a cap on the number of vessels that can cross.
• Despite some easing due to increased rainfall in November, only 24 ships per day can currently pass, significantly lower than the pre-drought capacity of approximately 38 ships per day.
• With the dry season intensifying, the bottleneck is expected to worsen in the near future.
• Surcharges in Transpacific trade have risen by over $1000 compared to the second half of December, and the disruption in the Suez Canal has extended to the Panama Canal, causing additional backlogs.
• Rerouting of shipments, such as China to New York, now forced to take alternative routes like Suez or the Cape of Good Hope, has led to increased transit times and backlogs.
• The return of empties from the EU to the US West Coast, typically via the Panama route, is likely to shift to the Cape of Good Hope route due to the disruptions in the Red Sea, further impacting transit times and creating logistical challenges.
• Dole Food Company has initiated a new weekly shipping service to the Northeast United States effective from December 31, 2023.
• The service focuses on bolstering the capacity for tropical fresh fruits, including Dole-brand bananas, pineapples, dragon fruit, mangoes, and limes.
• These fruits will be sourced from Colombia, Honduras, and Guatemala, and the shipments will be directed to the Port of Wilmington, DE.
• Two container vessels, MV Robin-2 and MV Robin-5, each with a capacity of 1,200 FEU, will be utilized for this service.
• Operating on a 14-day rotation, one of these vessels will dock at ports in Santa Marta, Colombia, Puerto Castilla, Honduras, and a new service port in Puerto Barrios, Guatemala before reaching Wilmington, DE every Saturday.
• The introduction of these additional vessels is expected to optimize fruit freshness by providing increased sourcing options, discharges, and port rationalization.
• The vessels are designed for enhanced fuel efficiency through their slow-speed operation.

North America → Turkey

• As of January 1, 2024, the European Union's emissions trading system (EU ETS) has expanded to include the maritime sector.
• Vessels visiting EU ports are now required to offset their CO2 voyage emissions by purchasing an equivalent number of EU Allowances (EUAs).
• Clarksons Research has conducted an analysis estimating the costs of EU ETS for different ship types.
• The analysis is based on this year's average EUA price of $90 per tonne of CO2 and trading patterns observed in 2022.
• Following the targeting of the Maersk Hangzhou by Houthi militants last Sunday, Maersk declared the suspension of sailings near or via the Suez Canal.
• In response to the incident, MSC and various Asian carriers had previously chosen to reroute their entire fleets through the Cape of Good Hope.
• Maersk has now taken a similar course of action.
• Notably, CMA CGM and COSCO remain the only carriers continuing to transit via the Suez Canal.
• However, the recent attack on the CMA CGM Tage on January 3 might prompt CMA CGM to reconsider its stance.
• During a 20-day voyage, a cargo sailboat transported 72,000 kilos of coffee beans solely using wind power as part of an initiative to run on clean energy.
• The decision to opt for environmentally friendly shipping is aligned with the company’s goal to reduce its carbon footprint and promote sustainability across its supply chain.
• Serge Picard, owner of Café William, emphasized the commitment to sustainable transport and setting a precedent for others in the sector.
• The company aims to eventually scale up its cargo sailboat shipping capacity to cover 100% of the volume imported for Café William.

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.
• Up to 1.5 days waiting time at APM Terminals.
• Up to 3 days waiting time is expected at Port Liberty Terminal Bayonne.
• Average gate turn times: 35 minutes for single transactions, and 62 minutes for double transactions.
• APMT gate will not have a gate open on Saturdays.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 32 / 48 minutes for single and double transactions respectively.
• Christmas Eve and Christmas day are no-work days.
• One crane down for routine maintenance.

Charleston Terminal:

• Waiting time for vessel berthing is 0-1.5 days at Wando Welch Terminal and 0 days at North Charleston Terminal.
• Average truck turn times: 20  minutes at Wando Welch Terminal, and 19 minutes at North Charleston Terminal.
• Sunday gates are 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 38 / 55 minutes for single and double transactions respectively.
• GPA no longer offers a Sunday gate.
• Monday-Saturday gate hours remain the same.
• Berth 2 is back online helping to reduce waiting times.

Houston:

• Barbours Cut Terminal has up to 1 day waiting time for vessel berthing.
• No waiting time at Bayport Container Terminal.
• Due to vessel bunching the yard is facing congestion impacting the discharge productivity and extending port stays.
• Average gate turn time at Barbours Cut Container Terminal is 37 minutes and Bayport Container Terminal is 46 minutes.
• Loaded import dwell is at 3.5 days.
• The EC6 service is changing terminal at Houston from Barbours Cut to Bayport effective MV ONE Competence 087E.

Oakland:

• Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and 3 days at TraPac.
• Average import deliveries can take up to 4.2 days at TraPac and 3.4 days at OICT.
• Average gate turn times are 61 / 67 minutes for OICT and TraPac respectively.
• TraPac has received 6 new RTG’s and are in process of commissioning.
• They are likely to be operational mid-December.
• Dredging operations at OICT berths caused some berthing delays.

Seattle-Tacoma:

• Wait time of up to 3 days at Tacoma and no waiting time at Seattle.
• Import deliveries are 4 days at HUSKY – due to EB/WB railcar imbalance, 2.4 days at Washington United Terminal, and 1-3 days at T18.
• Dwell is dropping and rail companies are mostly caught up.
• Possible delays with back-to-back vessels discharging this week.
• Several vessels reported delays due to storms in the Pacific.
• The average gate turn times are 29 minutes for T18, 28 minutes for Washington United Terminal, and 35 minutes for HUSKY.

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 3.2 days, on-dock rail dwell is 4.0 days, and import units on the street are averaging at 4.4 /5.9 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 24-88 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal.

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.