Freight market update - 17 July 2024

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• US Airlines canceled about 1,500 flights and delayed over 2,200 due to Hurricane Beryl hitting Texas.

• India announced the construction of Vadhavan, a new $9.14 billion deep-water port near Mumbai, Maharashtra.

• The Asiana Pilot Union and Asiana Airline Labor Union expressed doubts about Air Incheon’s ability to manage and maintain Asiana’s cargo operations after being named the preferred bidder by Korean Air.

• Outbound Hong Kong rates are +22% year-over-year and Shanghai rates are up over 42% year-over-year.

• Attacks in the Red Sea have forced ships to take longer routes, resulting in higher costs and new fees.

• Many importers had their allocations cut by up to 80%, forcing them into the spot rate market.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• India announced the construction of Vadhavan, a new $9.14 billion deep-water port near Mumbai, Maharashtra.
• The port aims to bolster India’s global connectivity via the India-Middle East-Europe Economic Corridor (IMECC).
• By 2040, Vadhavan aims to handle up to 23 million TEUs annually.
• The new port will play a crucial role in international trade routes.
• The Asiana Pilot Union and Asiana Airline Labor Union expressed doubts about Air Incheon’s ability to manage and maintain Asiana’s cargo operations after being named the preferred bidder by Korean Air.
• The unions are concerned this could lead to Korean Air's monopoly and have demanded a third-party acquisition company.
• These issues could delay the finalization of the deal, initially expected to be completed this year.
• Air freight rates continue to rise globally as large eCommerce volume from Hong Kong, China and other Asia-Pacific hubs continue to pour out of the region.
• Outbound Hong Kong rates are +22% year-over-year and Shanghai rates are up over 42% year-over-year.
• With June demand coming in +13% from the previous year and capacity lagging behind, the expectation is for rates to continue climbing as we approach a potentially early and extended peak season.
• According to Linerlytica, freight rates may have peaked and are leveling off.
• New shipping capacity into the U.S. West Coast, North Europe, South America, and the Middle East has reduced pressures on these routes.
• Linerlytica projects freight rates will stay high until the peak season ends in September.
• Asia-Europe rates are showing signs of peaking due to forwarders getting more space on newly launched services this month.
• Rates on Asia to Middle East routes have fallen by a third in four weeks, while Asia to North-Europe rates are unchanged, an industry executive pointed out.
• Investment bank Jefferies noted that Asia-U.S. West Coast rates are high but may lower in late July and August.
• Jefferies said GRI/FAK rate increases will likely pause in the near term.
• Lars Jensen, CEO of Vespucci Maritime, suggested July could be the peak for the current rate spikes.
• He cautioned that this depends on no new troubles arising, such as additional port congestion, Canadian rail strikes, or a widening of the Red Sea crisis.
• Jensen added that a potential U.S. East Coast dock worker strike could cause another round of rate increases.
• Other industry analysts believe the high rates will continue.
• Emily Stausbøll from Xeneta suggested rates might keep rising because shippers feel they must pay more to secure space.
• Other factors like frontloading imports and potential tariffs on Chinese goods will also impact rates.
• Simon Heney from Drewry said rates depended on port congestion and equipment availability.
• If congestion and equipment availability improve, rates might level off but remain high.

Turkey → North America

• European importers are reducing shipments of low-profit, bulky goods from Asia due to high ocean shipping rates and surcharges.
• This reduction has eased some pressure on the Asia-Europe trade lane, leading to lowered prices to the Mediterranean, although prices to North Europe remain unchanged, according to Platts.
• Attacks in the Red Sea have forced ships to take longer routes, resulting in higher costs and new fees.
• Worried shippers have placed their orders early, and as demand outpaced capacity, carriers reduced capacity for cargo owners.
• Many importers had their allocations cut by up to 80%, forcing them into the spot rate market.
• Spot rates are currently almost seven times higher than last year, making shipping some products uneconomical.
• Importers dealing with seasonal items or rigid ordering timelines are unable to delay shipments, making high costs unavoidable.
• James Hookham of the Global Shippers’ Forum says the crisis highlights the ‘fragility of global maritime supply chains’ and notes that major changes are needed to address this problem.
• Independent container shipping services are gaining more market share on major East-West routes.
• Over the next three months, about a third of Trans-Pacific trade services will be outside of vessel-sharing agreements (VSAs), according to Sea-Intelligence.
• Alan Murphy, Sea-Intelligence’s CEO, said that nearly 30% of shipping capacity on the Asia-North America West Coast trade lane will come from non-alliance services in the coming months.
• For Asia-North Europe, non-alliance capacity could reach up to 12%.
• The surge in demand for goods and rising spot rates prompted a significant influx of non-alliance capacity into the market.
• Even on the Asia-North Europe route, which had been predominantly alliance-operated, several niche carriers are now offering solitary services.
• Many niche carriers exited the trade when spot rates dropped in late 2022 and early 2023, but the trend is reversing as spot rates increase sharply.
• The non-alliance share is primarily driven by spot rates; a sharp increase during the pandemic led to more non-alliance services, and vice versa when spot rates collapsed in the second half of 2022.
• A big change is coming next year as Maersk and MSC will end their 2M partnership.
• MSC, which controls 20% of global container shipping, will operate independently.
• The three big shipping alliances will no longer dominate the East-West trade routes as they have in the past.

North America → Turkey

• Hurricane Beryl disrupts US air travel.
• US Airlines canceled about 1,500 flights and delayed over 2,200 due to Hurricane Beryl hitting Texas.
• Houston and South Texas were most affected by the disruptions.
• The Port of Houston will remain closed as workers address the damage caused by Hurricane Beryl.
• The Port of Galveston has closed its offices due to power outages but plans to resume operations by July 9.
• Meanwhile, Corpus Christi has reopened, reporting no significant damage.
• Hurricane Beryl brought 80mph winds to ports along Texas' Gulf Coast, striking the center of the country's energy sector.
• Despite heavy flooding in Houston and nearly 3 million homes and businesses being without power, major oil and gas refineries suffered minimal impact.
• Ports have reported no significant damage from the storm and will reopen operations without major disruptions to scheduled trade flows.
• The Canadian labor tribunal ruled that the ILWU Canada's strike at the Port of Vancouver was illegal.
• The tribunal stated that the union did not bargain in good faith, preventing a shutdown of port operations.
• The strike was related to negotiations over the operation of new remotely operated gantry cranes, part of a 2023 expansion project.
• Disruptions are expected to last throughout the week as airlines work to recover.
• This ruling averted a port shutdown amid negotiations concerning new remotely operated gantry cranes.
• To meet growing demand in the US and Canada, Etihad Cargo is expanding its capacity.
• They intend to add 250 tons of weekly capacity to cities including New York, Chicago, Washington, Boston, and Toronto via partner airlines.
• This increase, starting from European hubs, aims to accommodate the rising eCommerce volume in the region.

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.
• A 0.5-day wait is expected at APM Terminals.
• Waiting time of up to 3 days is expected at Port Liberty Terminal Bayonne.
• Average gate turn times are 51 minutes for single transactions and 70 minutes for double transactions.

Norfolk:

• Currently, most vessels berth on arrival.
• Bigger vessels wait approximately 3 days for a berth.
• Average gate turn times are 30 minutes for single transactions and 43 minutes for double transactions.
• Berth congestion has eased.

Charleston Terminal:

• Average truck turn times are 17 minutes at Wando Welch Terminal and 22 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.
• Berths will be given on a first-come, first-serve basis during this construction period.

Savannah:

• The waiting time for a vessel berth at the terminal is up to 2 days, depending on the vessel's size.
• Average gate turn times are 38 minutes for single transactions and 56 minutes for double transactions.
• Import dwell time is 4 days.

Houston:

• There is up to a 4 days waiting time for vessel berthing at Barbours Cut Terminal and 5 days at Bayport Container Terminal.
• Average gate turn times at Barbours Cut Container Terminal are 35 minutes for single transactions and 57 minutes for double transactions.
• Average gate turn times at Bayport Container Terminal are 29 minutes for single transactions and46 minutes for double transactions.
• Loaded import dwell time is 3.6 days at Barbours Cut and 3.5 days at Bayport.

Oakland:

• The average wait time is up to 1 day at Oakland International Container Terminal (OICT).
• The average wait time is 2 days at TraPac.
• Average import deliveries can take up to 5.2 days at TraPac.
• Average import deliveries can take 3.2 days at OICT.
• Average gate turn times are 90 minutes at OICT and 79 minutes at TraPac.

Seattle-Tacoma:

• There is a 7 day waiting time at Husky Terminal and Washington United Terminal in Tacoma.
• There is a 5 day waiting time in Seattle.
• Import rail dwell times are 5.3 days at Husky Terminal.
• Import rail dwell times are 6 days at Washington United Terminal.
• Import rail dwell times are 1-3 days at Terminal 18 (T18).
• Rail car supply is in severe deficit over the next couple of weeks in Tacoma, causing higher import rail dwell times.
• Average gate turn times are 34 minutes at T18.
• Average gate turn times are 29 minutes at Washington United Terminal.
• Average gate turn times are 49 minutes at Husky Terminal.
• T18 will be closed July 12, 19, 26 and 29, 2024.
• Husky Terminal will have hoot gates on July 16, 17, and 18.

Los Angeles/Long Beach:

• Port of Los Angeles dwell time for local import cargo is 3.3 days.
• On-dock rail dwell time at Port of Los Angeles is 3.6 days.
• Import units on the street at Port of Los Angeles are averaging 3.6 days for 20 ft containers and 5.9 days for 40+ ft containers.
• Port of Long Beach dwell times for local imports are stable.
• Average terminal gate turn time at Port of Long Beach is between 23 and 58 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

• Pittsburgh – Constrained 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.

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.