Freight market update - 14 August 2024

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• In June 2024, ocean container shipping demand from China to North America and North Europe reached record levels.

• Oslo-based Xeneta reported that 1.36 million TEU were shipped to North America and 800,000 TEU to North Europe.

• Peter Sand, Xeneta's Chief Analyst, noted that shippers have been willing to pay premium prices to ensure the safety of their supply chains.

• Ocean carriers on the trans-Atlantic route have announced peak season surcharges (PSSs) set to take effect on September 1, 2024.

• Mediterranean Shipping Co. is imposing a $1,000 per FEU surcharge, while Hapag-Lloyd is setting theirs at $800 per FEU.

• Negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) have stalled.

• Indian freight forwarders handling shipments to North America are increasingly frustrated as carriers deny gate openings for containers, even with confirmed bookings.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• In June 2024, ocean container shipping demand from China to North America and North Europe reached record levels.
• This surge was driven by disruptions in the Red Sea, prompting importers to secure their supply chains early.
• Oslo-based Xeneta reported that 1.36 million TEU were shipped to North America and 800,000 TEU to North Europe.
• These numbers marked the eighth highest month on record for global shipping volumes.
• The increase in demand was linked to concerns over potential supply chain chaos similar to the COVID-19 pandemic.
• This led to a sharp rise in spot rates, with rates to the US West and East Coasts increasing by 144% and 139%, respectively.
• Rates to North Europe surged by 166%.
• Peter Sand, Xeneta's Chief Analyst, noted that shippers have been willing to pay premium prices to ensure the safety of their supply chains.
• Many shippers started importing Christmas goods as early as May, despite the high costs.
• This massive influx in volume led to significant congestion at Asian ports and a spike in rates.
• However, Sand suggested that the peak in demand may have passed.
• Spot rates have since softened, indicating a potential decline in volumes for July and August, which are traditionally the peak season for shipping.
• Indian freight forwarders handling shipments to North America are increasingly frustrated as carriers deny gate openings for containers, even with confirmed bookings.
• This problem has become more widespread as major shipping lines report fully booked vessels, leading to frequent instances of cargo being left behind.
• A recent example occurred at Nhava Sheva Port, where hundreds of containers meant for the APL Qingdao were not loaded due to limited allocation.
• Forwarders claim that carriers are overbooking vessels, with buffer bookings extending up to 30% of weekly allocations.
• These overbookings are intended to maximize export lifts and compensate for potential no-shows.
• The Container Shipping Lines Association (India) and some carriers argue that the higher acceptance of cargo is an effort to meet heavy demand and manage scheduling challenges.
• These challenges are exacerbated by disruptions like the Red Sea crisis.
• Forwarders are concerned about losing customers due to these "cargo rollings."
• While some carriers assert that they are working to minimize disruptions, they acknowledge that occasional cargo rollovers are sometimes unavoidable due to circumstances beyond their control.
• For air cargo carriers, forwarders, and those involved in automotive logistics, the automotive segment presents significant business potential within the airfreight industry.
• However, this specialized segment also comes with challenges that need to be addressed.
• Lufthansa Cargo, part of Germany's national airline group, is heavily involved in transporting automotive spare parts and vehicles worldwide.
• The company's well-trained teams manage daily shipments using their own fleet of freighters and cargo space on various airline aircraft.
• Due to space requirements, Lufthansa Cargo prioritizes using their freighters for transporting whole vehicles.
• The company's global network and flexible operations are designed to meet customer demands and handle unforeseen challenges.
• Automotive shipments constitute a substantial part of Lufthansa Cargo's business and are less affected by seasonal trends.
• Approximately 80% of these shipments pass through Frankfurt, with Stuttgart and Hannover serving as additional origin airports for special cargo.
• Lufthansa Cargo offers both scheduled and one-time charters for automotive cargo, providing flexibility and reliability.
• The company transports automotive parts using various aircraft, with high volumes of automotive loads moving through Milan, and key stations in Frankfurt and London Heathrow.
• The automotive logistics market is currently booming, with a 50% increase in cargo carried compared to last year.
• Changes in transportation flows and geopolitical issues have led to a rise in air transport of auto parts.
• Lufthansa Cargo's strategic location in Abu Dhabi allows them to meet specific needs for luxury and sports cars, including recent transport of a unique new car model from the US to the UAE.
• The demand for worldwide air cargo services in the automotive market remains strong, particularly in regions like the US, Mexico, China, and India.
• The shift towards electric vehicles is driving increased demand for airfreight shipping of automotive parts.
• Lufthansa Cargo aims to provide on-demand and reliable services to ensure uninterrupted supply chains.
• Geopolitical events and crises continue to impact global supply chains, making airfreight a volatile business.
• Despite these challenges, the market for automotive shipments by air remains very strong due to disruptions in sea transport.

Turkey → North America

• Ocean carriers on the trans-Atlantic route have announced peak season surcharges (PSSs) set to take effect on September 1, 2024.
• These surcharges are an attempt to reverse the ongoing decline in westbound rate levels.
• This announcement comes despite a 7% increase in US import volume from North Europe during the first half of the year.
• The September surcharges mark the first rate increase attempt since February 2024.
• Mediterranean Shipping Co. is imposing a $1,000 per FEU surcharge, while Hapag-Lloyd is setting theirs at $800 per FEU.
• Other carriers are following suit with varying increases.
• Market response to these rate hikes has been mixed.
• Some carriers are offering long-term deals despite the planned rate increases.
• There are concerns over the sustainability of these increases due to continued overcapacity and minimal blank sailings.
• The trans-Atlantic trade lane also faces potential disruptions from looming labor disputes at US East and Gulf coast ports.
• Negotiations between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) have stalled.
• There are fears of a strike if an agreement isn't reached by September 30, when the ILA’s master contract expires.
• A strike could severely impact supply chains, with few alternatives available for shippers.
• Market analysts suggest that unless significant disruptions or port closures occur, carriers may struggle to enforce the proposed rate increases.
• As the September deadline approaches, shippers are preparing for potential turmoil.
• This turmoil could drive a surge in cargo movement, further complicating the rate dynamics on the trans-Atlantic route.

North America → Turkey

• US ports are bracing for potential disruptions due to industrial action by the International Longshoremen’s Association (ILA).
• The ILA represents dockworkers along the U.S. East and Gulf Coasts and is preparing for what could be a major interruption to port operations.
• The potential disruption is a result of ongoing negotiations with the United States Maritime Alliance (USMX) over a new labor contract.
• Key issues in the negotiations include wage increases, job security, and automation.
• Automation is a contentious topic as ports and shipping companies aim to implement more automated systems to enhance efficiency and reduce costs.
• If industrial action occurs, it would impact major ports such as New York/New Jersey, Savannah, Charleston, and Houston.
• This action would affect a significant portion of the country’s containerized cargo and worsen existing congestion and delays.

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:

• 2 days waiting time is expected for a berth at Maher Terminals LLC and 1 day at APM Terminals.
• Waiting time of up to 4 days is expected at Port Liberty Terminal Bayonne.
• Average gate turn times are 56 minutes for single transactions and 79 minutes for double transactions.

Norfolk:

• Currently, most vessels berth on arrival.
• Bigger vessels wait approximately 2 days for a berth.
• Average gate turn times are 30 minutes for single transactions and 42 minutes for double transactions.

Charleston Terminal:

• Port closed for 2 days to inbound traffic due to Storm Debbie.
• 4 days waiting time for Wando Welch Terminal and 0.5 days for North Charleston Terminal.
• Average truck turn times are 18 minutes at Wando Welch Terminal and 23 minutes at North Charleston Terminal.
• Dock construction at Wando Welch Terminal started on March 11, 2024, reducing berth space from 3 to 2 berths for one year.

Savannah:

• The waiting time for a vessel berth at the terminal is up to 3 days, depending on the vessel's size.
• Average gate turn times are 33 minutes for single transactions and 53 minutes for double transactions.
• Import dwell time is 1.6 days.

Houston:

• There is up to a 4 days waiting time for vessel berthing at Barbours Cut Terminal and 1 day at Bayport Container Terminal.
• Average gate turn times at Barbours Cut Container Terminal are 33 minutes for single transactions and 53 minutes for double transactions.
• Average gate turn times at Bayport Container Terminal are 33 minutes for single transactions and 54 minutes for double transactions.
• Loaded import dwell is 4.0 days at Barbours Cut and 3.7 days at Bayport.

Oakland:

• No waiting time at Oakland Int’l Container Terminal (OICT) and at TraPac.
• Average import deliveries can take up to 5.6 days at TraPac.
• Average import deliveries can take 3.2 days at OICT.
• Average gate turn times are 90 minutes at OICT and 92 minutes at TraPac.

Seattle-Tacoma:

• There is a 19 day waiting time at Husky Terminal and 10 days at Washington United Terminal in Tacoma.
• There is a 5 day waiting time in Seattle.
• Import rail dwell times are 5.8 days at Husky Terminal.
• Import rail dwell times are 8.6 days at Washington United Terminal but some places see up to 14 days.
• Import rail dwell times are 1-3 days at Terminal 18 (T18).
• Average gate turn times are 38 minutes at T18.
• Average gate turn times are 24 minutes at Washington United Terminal.
• Average gate turn times are 53 minutes at Husky Terminal.
• T18 will be closed August 9, 16, 23 and 30, 2024.
• Husky Terminal will have hoot gates on August 12,13,14 and 15, 2024.

Los Angeles/Long Beach:

• Port of Los Angeles dwell time for local import cargo is 3.2 days.
• On-dock rail dwell time at Port of Los Angeles is 6 days.
• Import units on the street at Port of Los Angeles are averaging 3.6 days for 20 ft containers and 5.8 days for 40+ ft containers.
• The number of arrivals during July is expected to be 29 arrivals above normal.
• Average terminal gate turn time at Port of Long Beach is between 24 and 68 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

• Cincinnati – Constrained on 40’ chassis
• 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.

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.