Freight market update - 13 December 2023

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.

Moreover, we are open to adjusting the style of our updates to better align with your preferences. If there are any ports or regions that we haven't addressed yet but you're interested in, please let us know.

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.

• U.S. ports recorded a 9% decrease in handling 2,099,408 twenty-foot equivalent units of imports in November compared to October, as reported by Descartes.

• Confidence in the Panama Canal's ability to handle container vessel transits has recently declined, prompting a notable change in shipping routes.

• The International Air Transport Association (IATA) predicts a 4.5% increase in air cargo demand for the next year, despite an expected decline in sector revenues due to rate pressure.

• Ocean carriers are maintaining their stance on the mid-December and January 1st Asia-North Europe general rate increases (GRIs), indicating success in restoring rates.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• The International Air Transport Association (IATA) predicts a 4.5% increase in air cargo demand for the next year, despite an expected decline in sector revenues due to rate pressure.
• The projection contrasts with the International Monetary Fund's forecast of a 3.5% rise in global trade and a -3.8% decrease in air freight demand for the current year.
• Regional projections for 2023 indicate cargo growth demand at 1.5% for African carriers, Asia Pacific at 3.6%, Europe at 4.1%, Latin America at 7.7%, Middle East at 12.3%, and North America at 2.1%.
• Rachel Yuting Fan, a senior macroeconomist at IATA, attributes the faster growth in air cargo demand to a low base caused by a two-year decline in air cargo.
• Factors influencing this growth include various economic indicators, the strength of the U.S. dollar, and geopolitical factors.
• Despite the anticipated demand increase, IATA foresees a -17.3% year-on-year decline in cargo revenues in 2024, totaling $111.4 billion.
• This is attributed to a -20.9% fall in yields driven by the growth of belly capacity and trade stagnation.
• While yields are expected to remain historically high, cargo revenues in 2023 are projected to be around 11% higher than pre-pandemic levels in 2019.
• However, this year's cargo revenues are expected to be -34.8% lower than in 2022, totaling $134.7 billion.
• Fan notes that the 2023 revenue decline is driven by weaker demand, lower yields, improved ocean shipping reliability, and the return of belly capacity.
• Cargo's share of total airline revenues is expected to reach 13% in 2023, comparable to the 12% recorded in 2019.
• Shippers engaged in containerized trades to and from Europe are expected to face additional costs as the emissions trading system (ETS) becomes effective on January 1.
• The European Commission is advancing its cap-and-trade ETS for shipping, while the International Maritime Organization (IMO) is working on its own market-based emissions-cutting measure, scheduled to launch in 2027.
• The IMO's two proposed carbon pricing methods, a bunker levy and cap-and-trade, have encountered opposition from member states, potentially resulting in surcharges for carriers and cargo owners.
• The regulations are expected to overlap at least into the early 2030s, creating challenges for harmonization.
• Panos Koutsourakis, vice president of global sustainability at ABS, believes that the IMO measure will not mirror Europe's ETS model.
• The IMO has revised its greenhouse gas (GHG) strategy for international shipping, targeting a 20-30% reduction by 2030 and 70-80% by 2040 compared to 2008 levels.
• A transition from fossil to green fuels is urgently needed in the shipping industry, which contributes 2-3% of global emissions.
• Executives from major ocean carriers have called for a greenhouse gas (GHG) pricing mechanism to make green fuel competitive during the transition phase when both fuels are in use.
• The current significant price gap between fossil fuel and sustainable alternatives hinders investment in green fuel production and infrastructure.
• There is a growing need for a unified global approach, possibly a technical market-based measure, by March 2024, according to the IMO's revised strategy.
• Eirik Nyhus suggests a potential consensus involving a market pressure mechanism where non-compliant ships pay into a greenhouse gas fund.
• The European Commission plans to assess the coherence between the IMO's measure and its ETS, allowing adjustments if needed.
• Nyhus emphasizes the importance of evaluating the IMO's effectiveness before considering amendments to the ETS, possibly delaying changes until 2027/2028.
• Ocean carriers are maintaining their stance on the mid-December and January 1st Asia-North Europe general rate increases (GRIs), indicating success in restoring rates.
• The implementation of GRIs, coupled with blank sailings, route diversions due to war risk in the Red Sea, and heightened demand ahead of Chinese New Year, has prompted shippers to secure space for the remaining export slots from China before the year-end.
• In response to the tight bookings before Chinese New Year, carriers are contemplating the introduction of a peak season surcharge in January.
• This move aims to balance demand and supply, potentially leading to the resurgence of 'premium' surcharges on the Asia-Europe route, reminiscent of the supply/demand crunch observed in 2021 and early 2022.
• Southern Indian ports, including Chennai, Kattupalli, and Ennore, experienced significant disruption in container flow due to Cyclone Michaung, causing chaos in and around Chennai.
• Operations at the three key container ports along the east coast corridor of India had to be halted for three days due to adverse weather conditions, including heavy rains and flooding in Chennai.
• While the ports have resumed vessel berthing, there are reports of minimal export/import cargo flows and restricted access to inland areas.
• Maersk, which has two weekly calls at Ennore, including the ME7 to Europe and the Chennai Express (CHX) to the Far East, reported a 24-hour berthing delay for its ME7 call due to power supply issues.
• Import release from the port gates was expected to take some time.
• Other carriers providing regular calls in the region also warned of cargo delays and shortcomings in customer service.
• CMA CGM (India) highlighted significant disruptions affecting essential services such as power, internet, and public transportation.

Turkey → North America

• U.S. ports recorded a 9% decrease in handling 2,099,408 twenty-foot equivalent units of imports in November compared to October, as reported by Descartes. The decline is attributed to seasonality and deteriorating conditions at the Panama Canal.
• China played a pivotal role in driving volumes, with U.S. imports from China dropping by 11.7% in November, contributing significantly to half of the overall monthly decrease nationwide. However, Chinese cargo still represented 37.3% of total import volumes.
• Despite the month-on-month decrease, import volumes continue to exceed pre-COVID levels. From January to November, imports increased by 4% compared to 2019, 4.4% compared to 2018, and 11.4% compared to 2017, according to Descartes’ data.
• November’s imports were up 10.4% from the same month in 2019, 4.7% above November 2018, and 8.4% above November 2017.
• West Coast ports have regained market share lost earlier in the year, with the top five ports representing 43.1% of total imports. This surpasses the top five East and Gulf Coast ports, which accounted for 42%.
• Descartes' executive vice president, Chris Jones, highlighted that the Panama Canal Authority’s plans to reduce daily transit slots further could worsen the impact on U.S. container import volume at East and Gulf Coast ports due to the Panama drought.
• Confidence in the Panama Canal's ability to handle container vessel transits has recently declined, prompting a notable change in shipping routes.
• Many Asia-North America East Coast sailings are choosing to bypass the Panama Canal, opting for longer routes through the Suez Canal and Indian Ocean.
• Despite expectations that this shift would increase traffic through the Suez Canal, recent attacks on commercial shipping by Houthi rebels in Yemen have raised safety concerns, potentially reducing traffic through both canals.
• Concerns about the safety of crew and vessels in the Suez Canal area have led to vessels originally planning to use this route now avoiding it, according to Destine Ozuygur, eeSea operations and forecasting analyst.
• Diversions are occurring on both head haul and backhaul vessel voyages, with an uptick in traffic expected for the Cape of Good Hope from vessels traversing both Trans-Pacific and Asia-Europe tradelanes in either direction.
• Indications suggest that vessels from THE Alliance's EC1 service are diverting from established routes towards the Cape, with more expected to follow suit, potentially causing delays and congestion.
• This shift in routes could benefit ocean carriers as the longer journey absorbs excess capacity, presenting an opportunity to apply surcharges.

North America → Turkey

• The Biden administration has introduced a set of measures to enhance supply chain resilience, with a focus on securing strategic supplies of critical medicines.
• The inaugural meeting of the White House Council on Supply Chain Resilience took place on November 27th, marking a significant step in addressing supply chain challenges.
• The Council is co-chaired by national security and economic advisors, and its members include key cabinet officials, such as the secretaries of Commerce, Defense, Transportation, Labor, and Treasury.
• This initiative is part of a broader strategy, with nearly 30 measures aimed at ensuring a stable and robust supply chain for critical medicines and other strategic resources.
• Container spot rates falling below ocean carrier unit operating costs on some routes have led shipping lines to implement various surcharges to increase revenue and offset losses.
• In addition to the upcoming European Union (EU) Emission Trading System (ETS) surcharges effective from January 1, 2024, carriers are introducing additional fees related to the Panama Canal, war risk, and potential increases in toll fees in the Suez Canal by 15%.
• Some carriers may also propose "green fees" for shippers to pay, aiming to reduce emissions.
• Apart from traditional fees like terminal handling, security, fuel, and low-sulfur fuel charges, carriers are increasing ancillary charges where regulatory authorities permit.
• This includes significant hikes in documentation and bill of lading release fees at specific Indian ports.
• Major carriers, including Maersk, are announcing "container shifting" charges at various ports in North Europe and the Mediterranean to cover additional operational expenses.
• For example, Maersk plans to charge €55 per container from Ireland, €150 for France, and £60 for the UK. This charge is intended to address extra container moves, such as re-stacking due to changes in destination or vessel, and moving containers from load stack to gate.
• There are concerns about the practicality of monitoring and enforcing these charges, particularly when re-stows at a port are typically included in the final stevedoring charge from the terminal operator.

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 Global Container Terminals Bayonne.
• Average gate turn times: 42 minutes for single transactions, and 67 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 / 45 minutes for single and double transactions respectively.
• All cranes are working.

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: 21  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 1 day, depending on the size of the vessel.
• Average gate turn times are 35 / 52 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.
• 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 35 minutes and 39 minutes at Bayport Container Terminal.
• Loaded import dwell is at 3.4 days.
• The EC6 service is changing terminal at Houston from Barbours Cut to Bayport effective MV ONE Competence 087E.
• It is expected to arrive on December 9, 2023.

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 3.7 days at TraPac and 4 days at OICT.
• Average gate turn times are 57 / 68 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.

Seattle-Tacoma:

• Wait time of up to 5 days at Tacoma and 4 days at Seattle.
• Import deliveries are 8 days at HUSKY – due to EB/WB railcar imbalance, 7.5 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 28 minutes for T18, 39 minutes for Washington United Terminal, and 36 minutes for HUSKY.
• Terminal 18 will be closed on December 8 and December 15, 2023.
• HUSKY will be closed on December 15, 2023.

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 3.3 days, on-dock rail dwell is 3.3 days, and import units on the street are averaging at 3.9 /6.1 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 20-62 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.