Freight market update - 12 June 2024

Greetings!

Our objective is to make your shipping experience easier by offering you the latest and most informative details and insights regarding the freight market. We aim to provide accurate and relevant content that brings benefits to your business.

We highly value your feedback as we continuously strive to improve the quality of our weekly market updates. We value your thoughts on our current content and encourage you to suggest specific topics that you would like us to cover in more depth.

We wish to create the most informative newsletter possible. We appreciate your continued readership and subscription, and we thank you for taking the time to provide us with your valuable feedback, which will help us enhance our future performance.

• Disruptions in global container shipping triggered by the Red Sea crisis and an early peak season have caused ocean spot rates to rise sharply in May and June in many key trades.

• Opinions are divided on the duration of high demand for Asia-Europe ocean trade, with forecasts ranging from the end of peak season to the Lunar New Year in 2025.

• A global forwarder warned that volatility would be a mainstay, extending beyond the Lunar New Year, with reshuffling in alliances causing capacity limitations.

• Performance in the fourth quarter is contingent on the resumption of Red Sea transits.

• Port congestion in Asia and the Mediterranean is causing delays and equipment shortages while freight rates continue to climb.

• Xenta's recent analysis predicts a significant increase in air cargo growth this year, but there are concerns over China's e-commerce restrictions.

• The Middle East & Central Asia to Europe corridor has experienced a 110% rate increase in the air cargo spot rate due to ongoing disruptions in the Red Sea.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Opinions are divided on the duration of high demand for Asia-Europe ocean trade, with forecasts ranging from the end of peak season to the Lunar New Year in 2025.
• Hapag-Lloyd said the demand spike is likely temporary and predicts normalization later this year.
• Some forwarders believe it will stretch until the Lunar New Year, beginning at the end of January 2025.
• A global forwarder warned that volatility would be a mainstay, extending beyond the Lunar New Year, with reshuffling in alliances causing capacity limitations.
• Performance in the fourth quarter is contingent on the resumption of Red Sea transits.
• Alphaliner noted that over 2 million TEUs of new slots are due to be delivered before the end of this year.
• The analyst warned that resolving the Gaza conflict and resuming Red Sea voyages will result in immediate overcapacity and a rate plunge.
• Port congestion in Asia and the Mediterranean is causing delays and equipment shortages while freight rates continue to climb.
• Average spot market rates are almost three times higher year-on-year, although they are still below the pandemic peak.
• Alphaliner said importers were refilling their stocks early, and rates are expected to remain firm until the end of the peak season.
• Hapag-Lloyd's CEO, Rolf Habben Jansen, said Hapag-Lloyd was “structurally overbooked” on Asia services.
• He attributes the overbooking to factors like restocking, an early peak season, increased U.S. tariffs on China, and anxiety over potential future events.
• Shippers are booking the same cargo with multiple carriers to ensure their cargo gets on board, creating artificial demand.
• China's ports continue to lead in performance ranking according to the 2023 Container Port Performance Index (CPPI).
• East and Southeast Asian ports took 13 of the top 20 spots.
• China's Yangshan port ranked first for the second year in a row, with six other Chinese ports also making the top 20.
• India's Visakhapatnam port moved to No. 20 from No. 115 in 2022, while Mundra port moved up to No. 27 from No. 48.
• Middle Eastern ports have fallen in rankings, with Abu Dhabi’s Port of Khalifa dropping from No. 3 to No. 29.

BNCT Status

• Both T/S inventory and yard utilization level are maintained at a healthy level.
• As of today (29 May), laden yard density is around 68%, and CMA T/S inventory is around 8.6k TEUs.
• Overall, the situation has been good in the last few days without congestion.
• However, with the expected bunching arrival of incoming vessels (late from SHA/TAO), heavy berth congestion is anticipated again with an average waiting/delay of around 1-1.5 days starting next week.

ARMG Blocks Maintenance

• Periodic maintenance of ARMG blocks started on 07 May.
• All work is expected to be completed by the end of September.
• There will be a minor impact on yard utilization in the coming days, as overall yard capacity will be reduced by 1800-2000 TEUs during this period.

Turkey → North America

• Xenta's recent analysis predicts a significant increase in air cargo growth this year, but there are concerns over China's e-commerce restrictions.
• While forecasts initially predicted modest growth, exceptional regional demand has changed expectations.
• May saw a 9% year-on-year rise in global air cargo spot rates, alongside a 12% increase in demand.
• This trend suggests a potential for double-digit growth for the year, according to Niall van de Wouw, Xenta's chief airfreight officer.
• The Middle East & Central Asia to Europe corridor has experienced a 110% rate increase in the air cargo spot rate due to ongoing disruptions in the Red Sea.
• Xeneta pointed out that ocean shipping spot rates from Asia to Europe and the U.S. have increased threefold, making air cargo more attractive to shippers.
• Cathay Cargo's regional head of cargo Europe, Jansen Stafford, expects the market to maintain its current levels through summer and suggests a buildup to "a stronger back half of the year," although the outlook could change quickly.
• Despite the optimism, uncertainties linger over geopolitical tensions and the impact of U.S. actions on Chinese e-commerce.
• Reduced B2C e-commerce volumes would mean a return of capacity to the market, which would lower rates.

North America → Turkey

• Containers currently on the water in Baltimore will be discharged and BL terminated at POD Norfolk.
• The port has returned to a 50ft draft and MV DALI has been removed from the channel.
• Awaiting confirmation from Evergreen (TWS) and Maersk (AMERICAS) on the 1st date of service restoration to Baltimore.
• Disruptions in global container shipping triggered by the Red Sea crisis and an early peak season have caused ocean spot rates to rise sharply in May and June in many key trades.
• Consequently, this rise is affecting long-term rates, particularly for freight forwarders.
• Xeneta analyst Emily Stausboll noted a shift in which carriers have prioritized direct contracts with major BCOs over forwarders.
• Looking at the Far East Exports index for long-term contracts signed in the past three months, Stausboll said forwarders have seen higher long-term rates, while shippers have seen lower rates.
• Some forwarders have reported that their named account allocations were reduced as carriers prioritized higher-paying cargo.
• This has pressured forwarders to secure capacity through higher rates of pay for premium services to guarantee space.
• While the largest BCOs will likely maintain allocations, smaller shippers relying on forwarders will be negatively impacted.
• Stausboll mentioned that "the spread between the long- and short-term markets presents a more clear and present threat to their [the smaller shipper's] supply chains".

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 1 day waiting time is expected at Port Liberty Terminal Bayonne.
• Average gate turn times: 50 minutes for single transactions, and 80 minutes for double transactions.
• Turn times for Port Liberty Terminal Bayonne are running higher due to 1 RMG stack being out of service until June 7, 2024.
• Currently 52 / 91 minutes for single and double transactions, respectively.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 32 / 42 minutes for single and double transactions respectively.
• Berth congestion has relaxed.

Charleston Terminal:

• Continuing delays are experienced due to toe wall construction.
• A cargo spill on June 6, 2024, was not as severe as the last one and mostly contained onboard, causing additional delays.
• Cleanup is in process, with a 14-hour delay expected at the berth.
• Estimated wait times are based on the initial ETA and do not consider Change of rotation offset.
• Overall port omissions from all Carriers are starting to reduce the extent of the delays.
• Expect 6-9 days delay in week 24 for vessels calling Wando Welch Terminal and 2 days for North Charleston.
• Average truck turn times are 17 / 19 minutes at Wando Welch Terminal and North Charleston Terminal, respectively.
• Dock construction at Wando Welch terminal started on March 11, 2024, reducing berth space from 3 to 2 berths for one year.

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.
• Import dwell time is 4 days.

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 45 / 62 minutes for single and double transactions.
• The gate turn times are 48 / 70 minutes for single and double transactions at Bayport Container Terminal.
• Loaded import dwell is at 3.5 days at Barbour's Cut and 3.4 days at Bayport.

Oakland:

• Average wait time of up to 1 day at Oakland Int’l Container Terminal (OICT) and 2 days at TraPac.
• Average import deliveries can take up to 5 days at TraPac and 3.2 days at OICT.
• Average gate turn times are 90 / 75 minutes for OICT and TraPac respectively.
• OICT reported two cranes are non operational.
• Port of Oakland has started the bollard and fender replacement project at OICT, starting with Berth 55 through Berth 59.
• The project is expected to last into Q1 of 2025.

Seattle-Tacoma:

• 2 days waiting time at Husky, and 4 days at Washington United terminal at Tacoma. No waiting time in Seattle.
• Import deliveries are 2.9 days at Husky – due to EB/WB railcar imbalance, 3.2 days at Washington United Terminal, and 1-3 days at T18.
• Railcar supply is in severe deficit over the next couple of weeks in Tacoma.
• The average gate turn times are 26 minutes for T18, 34 minutes for Washington United Terminal, and 98 minutes for HUSKY.
• Terminal 18 will be closed on June 7, 14, 19 and 24, 2024.
• Husky will have a Saturday gate on June 8, 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 2.9 days, on-dock rail dwell is 4.7 days, and import units on the street are averaging at 3.7 / 5.4 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 / 71 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

• Minneapolis / St. Paul – Constrained on 20’ and Deficit on 40’ chassis.
• Chicago – Constrained on 20’ and 40’ chassis.
• Cleveland – Deficit on 20’ and 40’ chassis.
• Louisville - Deficit on 20’ and 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.

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.