Freight Market Update - January 11, 2023

From the Editor’s Desk

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Key takeaways for the US

• Pandemic has flared up in China causing issues for the labor force.
• ONE will commence calling Savannah i/o Charleston.
• Updates for an overweight surcharge and terminal surcharge.
• New Year and festival periods result in erratic market activity. Lunar New Year is fast approaching and may result in more changes.

 Read on for more in-depth updates.

Ocean Freight Market Update

Asia to North America

U.S / CA

Transpasific Rates Conditions

• The market has not witnessed much movement lately after the end of New Year and other festive celebrations.
• All carriers have notably extended current rates. This may extend till January 14 and the rates will not change for the whole month.
• Strikes have sprung up among workers that have impacted global port operations since 2022.
• The cost of living for supply chain workers has increased in South Korea.
• The workers staged walkouts and protests to demand higher pay. This has resulted in delayed shipments as well as mass disruptions.
• We can expect increased congestion which might last much longer after the action has ceased.
• China has witnessed an increased loss due to the pandemic, especially in terms of its labor force.
• The Chinese export container rates have dropped since November 2022 by almost 27%.
• Demand generally peaks during Chinese New Year, so this issue has sprouted during a crucial time.
• A major chunk of the Chinese workforce has been infected by COVID-19.
• This has prevented them from working to produce optimal outputs after they were forced to quarantine.
• The Chinese manufacturers have been the worst hit with issues in container pickup, drayage, loading, and more.
• This is following the zero COVID policy issued by China and it threatens port and factory efficiency.
• Rates to the U.S. East Coast and Gulf Coast are softening despite a leveling off of rates to the U.S. West Coast.
• Capacity may tighten in the upcoming weeks due to a bulk of holiday blank sailings and low TPEB demand.

Conclusions

Rates: The rates remain soft and open.

pace: Space open, no issues with equipment. There are issues with capacity and equipment only in a few specific pockets.

Recommendation: We recommend blank sailings to continue. Book at least two weeks prior to the date your cargo gets ready.

Turkey to North America 

• ONE will begin calls to Savannah i/o Charleston.
• Demand levels have dropped for air freight due to the holiday season. A slight increase was noted previously before the drop.
• Due to the easing of congestion, there is ample available space in the USEC and USWC presently.
• No major delays or disruptions are expected at ground operations as the hubs are consistently improving.
• Low empty stacks at inland depots have begun to get better in specific areas.
• However, prioritize pick up from the port of loading whenever possible.

Conclusions

Rates: Rates are continuing to drop in line with the low demand. Demand is dipping into negative territory and will keep decreasing in the upcoming months.

Space for capacity: No capacity issues and no constraints into major U.S. hubs.

Space for equipment: Equipment availability is progressively getting better as the congestions ease up.

North America to Turkey 

• The USEC to NEW and MED services have moderate capacity utilization levels and have very limited space constraints.
• Any potential delays or congestion developed during the holiday breaks are cleared up.
• However the Gulf Coast to NEU and MED services are very high with almost 100% utilization levels. 

Conclusions

Rates: The floating market rates are not fluctuating rapidly. It can be expected to remain stable despite the downward trend.

Space for capacity: No capacity issues and space is manageable.

Space for equipment: The availability of standard equipment is not an issue for a majority of ports.

 Terminal Updates

• As of January 6, no vessels are waiting at the New York terminal.
• The maximum vessel waiting time at various terminals has been reduced to just one day.
• Holiday vessel backlogs are easing at several ports.
• Berth CB#1 at Savannah terminal is undergoing major reconstruction.
• This is expected to be a two-year project which may complete in June 2023.
• There are six new Post Panamax Cranes installed on this berth as per the new project plan.
• High volume imports and vessels working at the Oakland terminal are causing berthing delays at TRAPAC.
• There are almost seven working vessels at anchor as of January 6.
• There are over 1500 imports in TRAPAC’s unavailable area.
• In terms of intermodal operations, the capacity limitation in certain specific markets has been noted.
• This is due to import volume spikes recently and an additional shortage of drivers and workers.

  US Domestic Trucking Market Trends

• OTRI has failed to rise above 6% during Christmas break.
• This is the first time this has occurred in its history of five years.
• Overstuffed inventories and eroding consumption are resulting in weakened transport markets.
• These conditions may persist during the first half of the new year (2023) at a minimum. It has equal chances of clearing up as well.
• There is minimum disruption to carrier networks and the spot market is filled with discounted freight.
• This is the slowest time of the year for domestic trucking and markets are trying their best to make the most of it.

Final Thoughts

With the given updates, we can safely conclude that the market is faring well with a sufficient supply of equipment and capacity.

The holiday backlog and prolonged vessel waiting times have been resolved in various places. However, congestion and delays are continuing in several other places. It is best to choose ports carefully and ship them ahead of time.

China is faring poorly due to the pandemic and their zero COVID policy has led to various issues. We can expect major delays and a lack of productivity from their end in the upcoming weeks.

Choose the right areas and book sailings a few weeks prior to your shipment departure date. This is because Chinese New Year and holiday breaks are causing unexpected delays and inclement weather conditions may add to it.

We can expect a steady and consistent increase in the market owing to these trends. 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.