Freight Market Update - August 16 2023

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• Rising imports and rates are suggesting positive developments for US supply chains.
• In July, US imports surged by 5% compared to June, totaling just under 2.2 million TEU.
• Rates to the US East Coast have risen by 22.5%, while West Coast rates have seen a 44.7% increase.
• China's July import and export data have yielded worse-than-expected outcomes, underscoring a slow post-COVID recovery for the country.
• In Canada, congestion on the West Coast is progressively improving thanks to a labor agreement between ILWU Canada and BCMEA.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Rising imports and rates are suggesting positive developments for US supply chains.
• Import levels in the US have been climbing, along with rates from the Far East to the US.
• This upward trend is also evident in global spot rate averages for shipments from China/East Asia to the US East and West Coast.
• The Freightos FBX index data reveals a consistent weekly rise in average spot rates since July.
• China's July import and export data have yielded worse-than-expected outcomes, underscoring a slow post-COVID recovery for the country.
• Exports experienced a decline of 14.5%, and imports saw a reduction of 12.4%.
• This follows a June scenario where exports fell by 12.4%, aligned with a fourth consecutive month of contracting factory activity.
• A Reuters poll of 28 economists predicted a 12.5% decrease in outbound shipments for July.
• Rates for shipments from central China to the USA and Europe are expected to increase this week due to higher e-commerce bookings from SHA to these destinations.
• Rates from NGB to Europe have remained steady, while rates to the US have risen. Final rates are determined on a case-by-case basis.
• Initially, the August 15 General Rate Increase (GRI) was announced at $400 per FEU (forty-foot equivalent unit).
• Carriers, however, eventually adjusted the GRI to approximately $100/40’HC for US West Coast (USWC) and $200/40’HC for US East Coast (USEC).
• Carriers might view this GRI campaign as a foundation for launching another GRI in September.
• A series of rate hikes have surprised shippers due to a lack of clear indicators for a significant import surge during the peak shipping season.
• Some shippers are holding off on bookings, seeking more clarity on potential rate improvements.
• Current shipping space remains tight, leaving little room to negotiate lower rates with carriers until the situation improves.
• Despite this, specialized rates for specific regions like Pacific Northwest (PNW) or USEC (from Seattle origins) can be attempted based on volume commitment, case by case.
• Maersk is facing a challenge with overbooking, holding 5000 FEUs over capacity for US West Coast shipments.
• The USWC space situation is difficult, as Maersk accepted too many bookings at low prices without upgrading capacity from MSC.
• Maersk had to cancel bookings with empty containers not yet picked up, leading to an overflow of over 2000 FEUs into the market.
• The remaining 2000+ FEUs of bookings might face rolling or even double rolling due to capacity constraints.
• All Pacific Southwest (PSW) services are experiencing high demand, and the space situation may not improve significantly in August.
• The Panama Canal Authority has decreased the daily transits through the canal to 32, with 10 through the neo-panamax locks and 22 through the panamax locks.
• Shipowners must reserve slots for crossings, and the vessel 'Ever Max' on the OA-USEC service (AWE3/AUE/TWS with Cosco/EMC/CMA) had to offload 1,400 containers before entering the canal's lock.
• Tracking data indicates that the worst of the congestion at the Panama Canal has temporarily eased, yet weeks will be needed to clear the backlog of waiting vessels on both ends.
• The draft restriction has led to increased waiting times and delays, although most eastbound container shipments remain unaffected.
• Due to the lack of significant rainfall during the rainy season, the weight restriction and capacity reduction through the canal are expected to persist for several more months.
• The US East Coast (USEC) space from China will continue to experience an impact, while shipments from Southeast Asia (SEA) have more route options via the Suez Canal, reducing their exposure.

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.

• Container imports to the US saw an increase in July.
• July's import numbers grew by more than 5% compared to June, totaling just under 2.2 million TEU.
• This rise is reminiscent of a modest pre-pandemic peak season uptick, but it falls short by 13.6% when compared to July 2022 import figures.
• Rates to the US East Coast have risen by 22.5%, while West Coast rates have seen a 44.7% increase.
• Operations on the ground are experiencing improved efficiency, with reduced congestion and the resolution of West Coast labor disputes.

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.

• US operations have been experiencing improved efficiency, leading to reduced congestion.
• Currently, there are no ships waiting to berth on the West Coast.
• On the East Coast, Norfolk, which previously had up to 19 vessels waiting due to bunching, has successfully eliminated this backlog.
• In Canada, congestion on the West Coast is progressively improving thanks to a labor agreement between ILWU Canada and BCMEA.
• Vancouver has 6 vessels waiting to berth, while Prince Rupert has 1, and railhead delays stand at 8 and 10 days respectively.
• The backlog resulting from strike action is anticipated to be resolved in the upcoming weeks.

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.

• 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.
• No empty shut-out situations at any of the terminals this week.
• Average gate turn times: 51 minutes for single transactions, and 83 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 32 / 44 minutes for single and double transactions respectively.
• All cranes are up and running again.

Charleston Terminal:

• 1 day waiting time for vessel berthing at Wando Welch Terminal.
• No waiting time expected at North Charleston Terminal.
• Average truck turn times: 22 minutes at Wando Welch Terminal, and 17 minutes at North Charleston Terminal.

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 / 58 minutes for single and double transactions respectively.
• GPA no longer offers a Sunday gate.
• Monday-Saturday gate hours remain the same.

Houston:

• Barbours Cut Terminal has up to 1 day waiting time for vessel berthing.
• The average gate turn time is 43 minutes.

Oakland:

• Average wait time of up to 4 days at Oakland Int’l Container Terminal (OICT) and up to 3 days at TraPac.
• Average import deliveries can take up to 4 days at TraPac and OICT.
• Average gate turn times are 56 / 62 minutes for OICT and TraPac respectively.
• Berth 25 at TRAPAC: All 3 cranes are not working.
• It is currently not known when they will be operational.

Seattle-Tacoma:

• Wait time of up to 3 days at Tacoma.
• Import deliveries are 1.7 days at HUSKY – due to EB/WB railcar imbalance, 0-3 days at Washington United Terminal, and 0-3 days at T18.
• Availability of rail cars in Union Pacific Rail and BNSF Rail continues to fluctuate weekly.
• Average gate turn times are 26 / 37 / 49 minutes for T18, Washington United Terminal, and HUSKY respectively.
• T18 will be closed on August 11 and 18, 2023.
• Washington United Terminals will be closed on August 18, 2023.
• Husky will be closed on August 17 and 18, 2023.
• Starting June, SSA Terminals T18 (Seattle), will offer a fee-based weekend gate.
• WUT has received 2 new Post Panamax Cranes.
• WUT will commence commissioning both at same time in the next 2 weeks, operational by 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 3.4 days, on-dock rail dwell is 2.7 days, and import units on the street are averaging at 4.8 /6.7 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 23-77 minutes, depending on the terminal.

Chassis Pools: All pools are operating as normal except:

1. Columbus - Deficit on 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.

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.