Freight market update - 13 September 2023

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• Recent months have seen a narrowing of volume declines in the airfreight industry.

• Chinese ports are experiencing robust container activity despite a decline in exports to the U.S.

• Rates to major U.S. East Coast ports have seen substantial increases.

• Container port volumes in China reached 176.2 million TEU between January and July 2023, representing a 4.5% year-on-year growth.

• U.S. President Joe Biden is planning a shift in shipping routes from India to Europe.

• U.S. West Coast ports saw an increase in their market share in August compared to the previous month.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Recent months have seen a narrowing of volume declines in the airfreight industry, according to Niall van de Wouw, Xeneta's chief airfreight officer.
• Contrary to reports of a volume spike, both July and August witnessed subdued activity, with no significant qualitative or quantitative indicators of a peak season in sight for the year, as stated by van de Wouw.
• Data from CLIVE Data Services, a Xeneta-owned company, showed a year-on-year decrease of -1% in chargeable weight demand for August, marking the fourth consecutive month of decline.
• In contrast, capacity increased by 7% in August compared to the previous year, and the dynamic load factor rose by three percentage points, reaching 56%.
• Van de Wouw drew a comparison between the air cargo industry and the traditionally slow ocean market, which usually experiences its peak season in September.
• He mentioned that there are indications that it might take several more quarters before global demand in the airfreight industry sees a significant uptick.
• Chinese ports are experiencing robust container activity despite a decline in exports to the U.S., with China finding new markets in Europe, India, the Middle East, and South America, according to Peter Sand, chief analyst at Xeneta.
• The deflation in China has become an advantage for its exports as it leads to lower prices for importers.
• Data from the Chinese Ministry of Commerce, reported by the Ningbo Shipping Exchange, indicates strong export figures and increasing container turnover rates at Chinese ports. From January to July 2023, container turnover increased by 4.5% compared to the same period the previous year.
• However, Pacific shipping rates are on the rise. The Ningbo Container Freight Index, covering 21 routes from Ningbo-Zhoushan port, recorded an over eight percent increase in August compared to July.
• Container port volumes in China reached 176.2 million TEU (Twenty-Foot Equivalent Units) between January and July 2023, representing a 4.5% year-on-year growth.
• Cargo volumes in China's ports also increased by 8% year-on-year, totaling 9,617.1 million tonnes during the same period.
• The port of Shanghai experienced a 4.1% year-on-year increase in container volumes, although there was a -2.3% decline in July compared to July 2022.
• Ningbo-Zhoushan port, ranking third in container volumes in January, saw a -3% drop in July year-on-year, but the first seven months of the year showed a 0.5% growth compared to the previous year.
• Among the 12 largest ports in China included in the statistics, Shenzhen was the only port with a turnover decline. In contrast, Yinkou, Dalian, and Lianyungang container ports performed well, with increases of 24.3%, 17.2%, and 15.9%, respectively.
• Golden Week, China's national holiday approaching in three weeks, results in factory closures and decreased production, leading to a substantial decline in container demand to and from Asia.
• In the two weeks following the last market update, an additional 47 blank sailings have been announced for the Transpacific and Asia-Europe trade routes.
• Carriers are taking steps to reduce October sailings from Asia to Europe in order to align them more closely with demand and supply, particularly in anticipation of the upcoming slow season.
• Container carriers are establishing new connections from Indian east coast ports to leverage the region's growing manufacturing development resulting from trade diversification.
• A noticeable trend is emerging where there are more calls at new private terminals operated by the Adani Group instead of the traditional choice of Chennai as the focal point of the east coast corridor.
• DP World has signed a concession agreement with the Deendayal Port Authority to develop a mega-container terminal in Kandla, Gujarat, on India's western coast.
• This project, with an estimated cost of approximately $510 million, involves constructing the container terminal at Tuna-Tekra near the existing Deendayal Port through a Public Private Partnership (PPP).
• Upon completion, expected in 2027, the terminal will have a capacity of 2.19 million TEUs per year, advanced equipment, and a 1,100-meter berth capable of handling large vessels carrying over 18,000 TEUs, with the possibility of extending the berth to 1,375 meters.
• Hapag-Lloyd, which is part of THE Alliance, has indicated the cancellation of sailings due to the expected decrease in demand.
• These cancellations will impact the FE2, FE3, and FE4 loops serving North Europe.

Conclusions

Rates - The rates will remain soft on most origin-destination combinations.

Space - Space open, no issues with equipment.

Recommendations - We recommend blank sailings to continue. Book at least two weeks before the date your vessel gets ready to depart.

Turkey → North America

• U.S. President Joe Biden is planning a significant shift in shipping routes from India to Europe, which could have long-term implications for the industry.
• The Biden administration has engaged in discussions with India, Saudi Arabia, and the United Arab Emirates to create a new intermodal route for shipping goods from South Asia to Europe.
• This plan involves substantial investments in rail and ports as an alternative to China's Belt and Road Initiative (BRI), which has faced recent challenges.
• The proposed transport corridor would entail ships traveling from India to Saudi Arabia, followed by trains passing through Saudi Arabia and the UAE, with the potential extension to Jordan.
• Subsequently, goods would be shipped to Turkey and further transported by train.
• Negotiations are ongoing, and there is speculation about Israel's involvement in this corridor.
• Jake Sullivan, the U.S. White House national security adviser, couldn't confirm whether the infrastructure deal would be announced at the G20 summit.
• But he hinted at the administration's significant efforts invested in this initiative with its partners.
• Some countries, including Italy, have started reconsidering their participation in China's Belt and Road Initiative.

Conclusions

Rates - The rates will remain soft on most origin-destination combinations.

Space for capacity - No capacity issues or issues with space.

Space for equipment - No issues with equipment.

North America → Turkey

• U.S. West Coast ports saw an increase in their market share in August compared to the previous month.
• This positive development followed the labor agreement reached between the US West Coast and the International Longshore and Warehouse Union (ILWU) during the summer.
• Over the course of labor negotiations, West Coast ports had been losing market share for over a year, as cargo was redirected to East Coast and Gulf of Mexico ports.
• In August, the largest West Coast ports experienced a 3.6% rise in market share compared to July, reaching 41.9%, while leading East and Gulf Coast ports saw a 3.3% decline, dropping to 43.1%.
• While it might be too early to definitively attribute the August results to the West Coast labor deal, there is an expectation that some of the 1 million TEUs that had previously moved away from West Coast ports may return now that uncertainty has diminished.
• Notably, the Port of Los Angeles, historically the nation's busiest, handled 12.9% more TEUs in August compared to July, while the Port of Long Beach experienced a 12.1% gain.
• In contrast, on the East Coast, the Port of New York/New Jersey processed 6.3% fewer TEUs in August compared to July, and Savannah, Georgia's port saw an 11.4% decline.

Conclusions

Rates - Stable rates over the last week.

Space for capacity - No major capacity or space issue.

Space for equipment - Equipment issues have started owing to low levels of import.

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 Global Container Terminals Bayonne and APM Terminals.

●   No more waiting time at Maher Terminals LLC.

●   Average gate turn times: 51 minutes for single transactions, and 71 minutes for double transactions.

Norfolk:

●   Berth for large vessels is congested due to previous multi-day periods of severe weather.

●   Vessels are waiting for 2 days for a berth.

●   Average gate turn times are 30 / 43 minutes for single and double transactions respectively.

●      One crane is out of service.

Charleston Terminal:

●   2.5 days waiting time for vessel berthing at Wando Welch Terminal.

●   1.5 days waiting time expected at North Charleston Terminal.

●   Average truck turn times: 21 minutes at Wando Welch Terminal, and 18 minutes at North Charleston Terminal.

Savannah:

●   Waiting time for vessel berth at the terminal is up to 4 days, depending on the size of the vessel.

●   Average gate turn times are 33 / 53 minutes for single and double transactions respectively.

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.

●   The average gate turn time is 38 minutes.

Oakland:

●   Average wait time of up to 2 days at Oakland Int’l Container Terminal (OICT) and up to 3 days at TraPac.

●   Average import deliveries can take up to 5.3 days at TraPac and 4 days at OICT.

●   Average gate turn times are 52 / 65 minutes for OICT and TraPac respectively.

Seattle-Tacoma:

●   Wait time of up to 1 day at Tacoma and 3 days at Seattle.

●   Import deliveries are 3.4 days at HUSKY – due to EB/WB railcar imbalance, 3-5 days at Washington United Terminal, and 1-3 days at T18.

●   Availability of rail cars in Union Pacific Rail and BNSF Rail continues to fluctuate weekly.

●   Average gate turn times are 27 / 33 / 42 minutes for T18, Washington United Terminal, and HUSKY respectively.

●   T18 will be closed on September 15, 2023.

●   Washington United Terminal will be closed on September 9 and 16, 2023.

●   WUT has received 2 new Post Panamax Cranes.

●   WUT has commenced commissioning both, operational by the end of August.

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 days, and import units on the street are averaging at 4.0 /5.7 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 22-70 minutes, depending on the terminal.

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

1. Minneapolis / St. Paul – Deficit on 20’, 40’ and 45’ chassis.

2. Buffalo – Constrained on 20’ 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.