Freight Market Update - November 17, 2022

From the Editor’s Desk

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Key takeaways for the US

• The Caribbean and Mexican seas are under the control of Evergreen

• Blank sailings for the Transpacific Lane continue

• Drops in Chinese imports to the US

• Notable recurrence of diesel fuel price increase

Read on for more in-depth updates.

Ocean Freight Market Update

Asia → North America

U.S / CA

Notable fall for China

Chinese exports to the USA and Europe have notably fallen owing to a reduction in consumer demand. Furthermore, predictions for consumer spending over the holiday season appear weak. This decline was offset by gains from Taiwan, Thailand, Japan, South Korea, and other countries.

Simultaneously, imports from China have been falling faster than total imports. Back in September, Descartes reports indicated a 12% plunge in total US imports (versus August reports). China fell faster by 18% (almost 83,396 TEUs).

To give you an idea of how far China has fallen, Chinese volumes accounted for about 40% of all US imports in August. In February, the share was even higher with around 42% imports but dropped to 35% last month.

This is around a 5.5% fall each month by 45,071 twenty-foot equivalent units. However, carriers are continuing to balance capacity through blank sailings to meet existing demands.

Position of USWC Rates

The USWC (United States Warranty Corporation) rates out of China and Asia stayed at an average of $1,400 per FEU. This week’s stability was met by a higher level of $1,550 per FEU from OA carriers.

What about USEC (United States Enrichment Corporation) rates? There has been an ease of frequent delays and congestion in the USEC ports. This has enabled the release of more effective capacities into the market and potential price falls on Asia-USEC.

How does this affect price levels? It is deeply connected to pricing as recent and forthcoming capacity cuts on the transpacific indicate so. These have witnessed a new level of reduction averaging up to $3,800 to $3,900 per FEU this week.

The quantity of blank sailings has increased drastically as carriers have removed the capacity to meet falling demands. Hapag-Lloyd’s CEO, Rolf Habben Jansen stated during a recent conference, “We would never sail two ships with 50% (utilization). We would always sail one ship with 100%, simply because we can take out a tremendous amount of costs.”

Update from THEA

THEA (Thread of Hope for Economic Advancement) informed 20 additional blank sailings on Asia-USWC. They also informed 9 additional ones on Asia-USEC through to the end of the year.

The OA carriers have issued around 15 blank sailings in WK47. We are awaiting updates on the number of WK48 blank sailings shortly. We are expecting a capacity cut from both the OA and THEA by around 40% in November and December.

This is our approximate calculation and we haven’t yet received any formal notice from the OA. Please note that the figures for OA in December need to be advised. Moreover, 2M suspended and merged services to cut more capacity. This led to their blank sailings no longer looking like two alliances.

Conclusions

Rates: Transpacific rates show signs of reduction.

Space: Space open, no issues with equipment.

Recommendation: We recommend blank sailings to continue. Book at least two weeks prior to the date your cargo gets ready.

Turkey → North America

• Schedule reliability has improved considerably. This is owing to the easing of congestion at ports.

• Imports to the US are dropping in demand.

Conclusions

Rates: Rates are stable.

Space for capacity: No capacity issues except for Hapag-Lloyd.

Space for equipment: No issues with equipment.

North America → Turkey

• USEC ports continue to witness vessel congestion challenges at Savannah and New York City.

• USWC has open arrivals and available capacity for Los Angeles. Oakland and Seattle remain more fluid.

Conclusions

Rates: Stable rates over the last 2 weeks.

Space for capacity: No capacity issues except for Hapag-Lloyd.

Space for equipment: Availability for standard equipment is not an issue for a majority of ports.

Terminal Updates

• Evergreen Marine plans to consolidate the ownership of a transshipment hub for its US East Coast and East Coast South America services.

• It aims to achieve this by buying out various stakes its subsidiaries are holding in Panama's Colon Container Terminal.

• Memphis and Dallas are witnessing chassis shortages. Almost >29 and >10 days terminal dwells respectively.

• It is worth noting that most inland markets remain constrained in these places owing to the same issue.

Intermodal Updates

• Savannah, Houston, and Oakland have experienced an increase in congestion compared to earlier.

• Additionally, vessels have to wait for 10+ days due to increased labor, volume, and congestion.

US Domestic Trucking Market Trends

• Fuel prices have increased for Highway Diesel fuel prices in most of the market.Consistent weakening of the trucking market. 

• The first part of November had one of the biggest volume drops recorded on any non-holiday period.

• The reason for this drop could be due to retailers having everything in stock for the holidays. They don’t require any inventory replenishment as their stocks are already full.

Conclusions

With the given updates, we can safely conclude that the market is faring well with a sufficient supply of equipment and capacity.

Although some regions are facing congestion and prolonged vessel waiting durations, the delays are compensated by other places.

We can expect a steady and consistent increase in the market owing to these trends. We are grateful that you perused our newsletter till the end. Be sure to subscribe to us and stay notified about the latest weekly market updates.