Freight market update - 15 November 2023

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• The U.S. Department of Transportation’s Maritime Administration (MARAD) has allocated over $653 million for infrastructure enhancement at 41 ports across the country through the PIDP.

• In October, the U.S. witnessed the import of 2,307,918 twenty-foot equivalent units (TEUs) of containerized goods, reflecting a 3.9% year-on-year increase and a 4.7% rise from September.

• A recent report by Alphaliner reveals that slightly over 20% of the global container fleet is aged 20 years or older, constituting a total capacity of 2.9 million twenty-foot equivalent units (TEU).

• The ILA has reiterated its commitment to a potential strike if a new labor contract is not reached by September 30, 2024.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Logistics depots in Europe are facing challenges due to an accumulation of empty shipping containers, a situation exacerbated by the Euro Zone's economic crisis and declining trade.
• Container xChange, an industry analyst, reports that repositioning costs for these surplus containers now exceed their asset value, providing little incentive for lessors to transport them back to Asia.
• The issue, evolving over the past year, is attributed to disruptions such as the aftermath of COVID-19 and Russia's war in Ukraine, impacting trade with major partners like China, the U.S., and the U.K.
• Air cargo demand in 2024 is anticipated to either remain steady or experience a slight increase compared to the current year, as discussed by speakers at the Tiaca Executive Summit event.
• Rogier Blocq, the director of product development and customer support at WorldACD, provided an optimistic outlook, citing historical data that indicates first and second-quarter increases typically outpace the final quarter of the year.
• WorldACD's projections for the final quarter of 2024 suggest a 1% increase in demand (-1% in October, +1% in November, and +2% in December). The expectation is for a 2% year-on-year increase in demand in the first quarter and a 3% increase in the second quarter. However, ongoing market uncertainties make predicting demand for 2024 challenging.
• Turkish Airlines' chief cargo officer, Turhan Özen, expressed optimism, expecting demand to pick up by the fourth quarter of 2024. He noted that geopolitical risks and conflicts could impact market performance.
• Yossi Shoukroun of Challenge Group held a more pessimistic view, foreseeing ongoing global economic and geopolitical challenges in 2024, potentially affecting cargo capacity due to reduced passenger services and higher fuel prices.
• Marco Tafuro, airfreight director at UPS Europe Region, predicted growth in the latter part of the year, while Geert Aerts of Brussels Airport Company believed recent geopolitical events might delay air cargo's recovery by a year.
• The International Longshoremen’s Association (ILA), representing 45,000 dockworkers on the US East and Gulf Coasts, has reiterated its commitment to a potential strike if a new labor contract is not reached by September 30, 2024.
• ILA President Harold Daggett conveyed this message to union members, urging them to prepare for potential strike action in October 2024.
• Key demands of the ILA include higher wages, assurances that its members will receive work at new terminals, and a prohibition on terminal automation.
• An update on wage negotiations with ocean carriers and waterfront employers is expected to be presented at an ILA meeting in Nashville.
• The press release indicates that the ILA leader will caution members about challenging wage scale negotiations and the union's commitment not to extend the contract beyond its expiration date of September 30, 2024.
• The negotiations between the ILA and the United States Maritime Alliance (USMX), the management counterpart, will be influenced by the recent West Coast dockworkers' agreement, which includes a substantial 32% salary increase over six years and a one-time $70 million bonus for their efforts during the COVID-19 pandemic.
• The impact of supply chain disruptions during the pandemic and the notable freight rates and carrier profits in recent years are expected to play a significant role in the ILA negotiations.
• The union has filed a lawsuit against employers over a hybrid labor model at a terminal in Charleston, South Carolina, and the case is now before the US Supreme Court.
• The ILA encourages local branches to initiate negotiations early to prevent delays in the master contract talks.
• A recent report by Alphaliner reveals that slightly over 20% of the global container fleet is aged 20 years or older, constituting a total capacity of 2.9 million twenty-foot equivalent units (TEU).
• The majority of these older ships are relatively small by contemporary standards, with only one-third possessing capacities of 3,000 TEU or more.
• Although these older vessels may be in good condition, they face potential retirement or reassignment to less profitable markets due to competition from newer, more energy-efficient ships, especially those without exhaust gas cleaning systems (scrubbers).
• The anticipated increase in new ship deliveries is projected to be 2.4 million TEU in 2023, 2.0 million TEU in 2024, and another 2.0 million TEU in 2025. This influx of new ships is expected to necessitate the scrapping of older vessels to offset the growing surplus in the market.
• Rates from SHA to Europe and the US have seen a slight increase this week, and there is an expectation that rates will remain elevated due to a busy market driven by increased orders of e-commerce cargo.
• The blizzard in Anchorage, USA, has contributed to an increase in rates to the US from SHA.
• NGB to Europe and the US continues to experience high demand during the peak season, and final rates are provided on a case-by-case basis.
• From TSN to Europe and the US, rates have risen for Korean Airlines, and space is fully booked until November 19th for both destinations.
• Asiana Airlines has limited space but may consider bookings on a case-by-case basis.
• From PEK to Europe and the US, rates have increased on most major airlines, and space is constrained. Major services to Europe include Singapore Airlines, Cathay Pacific, Lufthansa, Air China, KLM, Air France, and Japan Airlines. In the US, major services include Cathay Pacific, Japan Airlines, All Nippon Airways, and Eva Air.

Turkey → North America

Suez Canal Fee Increases

• The U.S. Department of Transportation’s Maritime Administration (MARAD) has allocated over $653 million for infrastructure enhancement at 41 ports across the country through the Port Infrastructure Development Program (PIDP).
• The port improvement projects, funded by PIDP, aim to strengthen supply chain reliability, create workforce development opportunities, accelerate the movement of goods, and enhance the safety, reliability, and resilience of ports, according to MARAD.
• The Port of Long Beach has received more than $52 million to upgrade on-dock rail capabilities and enhance key roadways, improving cargo movements to and from the port.
• The Husky Terminal at the Port of Tacoma secured the largest award, totaling $54 million, to enhance its reefer handling capacity.
• PIDP awards include over $172.8 million specifically earmarked for 26 small ports, aimed at enhancing their freight-moving capacity reliably and efficiently. These projects also contribute to the growth of local and regional economies while safeguarding surrounding communities from air pollution.
• Maritime Administrator Ann Phillips emphasized the importance of modernizing the nation's port infrastructure, highlighting its crucial role in reinforcing America's multimodal system for transporting goods, with benefits extending beyond the maritime domain.
• Containerized imports into the U.S. are on a steady rise, driven by ongoing consumer spending, with Descartes Systems Group reporting robust import numbers in October.
• In October, the U.S. witnessed the import of 2,307,918 twenty-foot equivalent units (TEUs) of containerized goods, reflecting a 3.9% year-on-year increase and a 4.7% rise from September.
• Following a low point in February, imports have surged by 33%, making October's inbound volumes the highest since the surge induced by the pandemic in August 2022.
• China remains a key contributor to inbound volumes, as 886,842 TEUs of containerized goods were imported from China in October, constituting 38.4% of total imports. This marks the highest volume from China since August 2022, and the year's import numbers continue to surpass pre-pandemic levels.
• Descartes' data indicates that October imports were 11.5% higher than those in October 2019, 2.5% higher than in October 2018, and 15% higher than in October 2017.
• In 2018, there was a surge in import volumes as importers sought to bring in shipments early to avoid Trump administration tariffs, resulting in higher numbers in 2018 compared to 2019.
• Total imports for the first ten months of 2023 have increased by 3.4% compared to the same period in 2019, 4.4% higher than in 2018, and 11.8% higher than in 2017.

North America → Turkey

• Amsterdam’s Schiphol airport faces complaints after excluding JetBlue from its operations for the 2024 summer season, a move contested by JetBlue and the A4A airline lobbyist group.
• The US Department of Transportation has approved the complaints, citing potential violations of the US-EU Air Transport Agreement.
• Sustainable Aviation Fuel (SAF) gains momentum as Southwest Airlines announces a 20-year deal to purchase 680 million gallons of SAF from USA BioEnergy.
• North America is expected to lead in SAF production by 2030, surpassing other regions.
• Hong Kong International Airport advances in a joint venture with China’s Dongguan Port Group to establish a unique sea-air transshipment facility. This groundbreaking project could serve as a model for similar facilities globally.
• Asiana Airlines and Korean Air, the two largest carriers in South Korea, agree to a merger deal. As part of the arrangement, Asiana will divest its cargo business to address concerns raised by European regulators.

Sea Intelligence Findings

• North America East Coast ports have exhibited notable growth in laden import volumes, in contrast to the North America West Coast where laden volumes are still contracting.
• Annualized growth of laden imports on the North America East Coast, compared to pre-pandemic 2019 levels, increased by 3.2% in June and 4.0% in July.
• The average growth over the first eight months of the year is 2.4%.
• The ratio of import volumes between the West and East coasts is currently favoring the East Coast ports, as per Sea Intelligence's observations.

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 5 days waiting time is expected at Global Container Terminals Bayonne.
• The scheduled maintenance for Crane 6, originally set to start on October 1, 2023, has been postponed indefinitely to reduce congestion.
• Average gate turn times: 47 minutes for single transactions, and 80 minutes for double transactions.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 33 / 45 minutes for single and double transactions respectively.
• All cranes operating as per schedule.
• Load and discharge of explosives class 1.1, 1.2 and 1.5 suspended by USCG, until further notice.

Charleston Terminal:

• No waiting time for vessel berthing at Wando Welch and North Charleston Terminals.
• Average truck turn times: 22  minutes at Wando Welch Terminal, and 18 minutes at North Charleston Terminal.

Savannah:

• Waiting time for vessel berth at the terminal is up to 5.5 days, depending on the size of the vessel.
• Average gate turn times are 36 / 52 minutes for single and double transactions respectively.
• Two new cranes are currently being commissioned on berth 2. Four of the oldest cranes on the same berth are being demolished. Berth 2's capacity to handle vessels will be limited for several months.

Houston:

• Barbours Cut Terminal has up to 2 days 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 61 minutes.
• Loaded import dwell is at 3.4 days.

Oakland:

• Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and 5 days at TraPac.
• Average import deliveries can take up to 4 days at TraPac and OICT.
• Average gate turn times are 59 / 66 minutes for OICT and TraPac respectively.

Seattle-Tacoma:

• Wait time of up to 5 days at Tacoma and 4 days at Seattle.
• Import deliveries are 8.5 days at HUSKY – due to EB/WB railcar imbalance, 6.3 days at Washington United Terminal, and 1-3 days at T18.
• Rail car availability is a significant concern at present, primarily because there is a low volume of rail cars heading Westbound to balance the high volume going Eastbound. This issue is exacerbated by omissions in Vancouver.
• The railroads are actively working with all stakeholders to improve the availability of rail cars. However, if more Westbound cargo or empty cars are not made available, this problem will continue.
• As an alternative to rail transport, inland cargo transportation via truck is also an option to consider.
• Average gate turn times are 25 / 41 / 44 minutes for T18, Washington United Terminal, and HUSKY respectively.
• Terminal 18 will be closed on November 10 ,13 and 23, 2023.
• Husky Terminal will be closed on November 13, 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 3.4 days, on-dock rail dwell is 3.8 days, and import units on the street are averaging at 4.1 /5.9 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 20-95 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

1. Louisville – Deficit 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.