Freight market update - 17 October 2024

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• Tim Power, MD of Drewry Shipping Consultants, addressed delegates at the World Ports Conference in Hamburg about the potential severe impact of new decarbonization regulations on deep-sea shipping sectors.

• Global shipping experienced a 17.2% increase in TEU-mile demand in 2024 due to vessel diversions around the Cape of Good Hope, according to Xeneta.

• To mitigate longer transit times, the global fleet is expected to expand by 4.5% in 2025, although this is a slower growth rate than in 2024.

• Ocean freight costs have surged by 241% from the Far East to the U.S. West Coast, 148% to Europe, and 112% to the Mediterranean compared to pre-Red Sea rates.

• Xeneta’s Senior Shipping Analyst, Emily Stausbøll, expects vessel diversions around Africa to persist into 2025 due to the lack of a political resolution, creating market volatility.

• A three-day strike at U.S. East and Gulf Coast ports is expected to worsen existing European port congestion and significantly reduce Trans-Atlantic shipping capacity in October, according to Sea-Intelligence.

• Capacity on the Mediterranean-U.S. East Coast routes could decrease by -10% in the week of October 21, with potential for a -24% drop if congestion worsens further.

• The ILA has suspended strikes, providing temporary relief to shippers.

• A tentative agreement on wages has been reached, extending the current contract until January 15, 2025, allowing the ILA and the US Maritime Alliance to address unresolved issues, particularly concerning port automation.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• A three-day strike at U.S. East and Gulf Coast ports is expected to worsen existing European port congestion and significantly reduce Trans-Atlantic shipping capacity in October, according to Sea-Intelligence.
• Prior forecasts suggested a drop of -10% to -14% in capacity on Mediterranean and North European routes by the end of October, but the strike's aftermath may exacerbate the situation.
• North European shippers could see capacity cuts of up to -30% if delays in clearing the U.S. East Coast congestion continue.
• Capacity on the Mediterranean-U.S. East Coast route could decrease by -10% in the week of October 21, with potential for a -24% drop if congestion worsens further.
• U.S. port operators expect to manage the backlog of 60 ships efficiently, returning to normal within a few days, as many ports have sufficient spare capacity to handle the ships.
• Despite this, cascading effects are anticipated due to ongoing port congestion in North Europe, with major bottlenecks in ports like Hamburg, where yard utilization has reached 112% and rail waiting times average 14 hours.
• Other ports affected include Southampton and London Gateway in the UK, as well as Mediterranean ports such as Barcelona and Algeciras in Spain.
• Inland transport in Europe has been disrupted by recent floods, impacting transportation networks and container terminal depots in central Europe.
• Additionally, seasonal low water levels on the Rhine River are hampering container movement.
• S&P Global’s Platts reports that Trans-Atlantic shipping rates have surged, with rates from North Europe to the U.S. East Coast increased by 157% to $2,700 per FEU.
• MSC’s CEO, Soren Toft, anticipates that global supply chains will become increasingly fragmented, prompting shippers to prioritize direct port calls over speed.
• Speaking at the International Association of Ports and Harbors (IAPH) World Port Conference, Toft noted that supply chains are no longer concentrated in just a few countries or reliant on one or two major markets.
• Instead, they are becoming more dispersed, necessitating broader port coverage within the network.
• He clarified that this shift is not solely due to near-shoring.
• Toft introduced MSC’s new 2025 service network, which features 1,900 direct port combinations aimed at clients who value the certainty of direct destination calls, stating that direct connections are now more important than speed.
• He described this network as reflective of the future of a more dispersed supply chain.
• He also highlighted MSC’s substantial investments in ports and terminals to enhance efficiency throughout the entire network.
• Additionally, Toft urged the International Maritime Organization (IMO) to accelerate global decarbonization regulations, emphasizing the necessity for consistency across different regions.

Turkey → North America

• Global shipping experienced a 17.2% increase in TEU-mile demand in 2024 due to vessel diversions around the Cape of Good Hope, according to Xeneta.
• To mitigate longer transit times, the global fleet is expected to expand by 4.5% in 2025, although this is a slower growth rate than in 2024.
• Despite lower consumer demand, the longer shipping routes have kept freight rates high.
• Ocean freight costs have surged by 241% from the Far East to the U.S. West Coast, 148% to Europe, and 112% to the Mediterranean compared to pre-Red Sea rates.
• This price increase, combined with surcharges, suggests that ocean freight costs are likely to remain elevated.
• Maersk and Hapag-Lloyd's Gemini Alliance, starting in February 2025, will continue to avoid the Red Sea until the region is deemed secure.
• Xeneta’s Senior Shipping Analyst, Emily Stausbøll, expects vessel diversions around Africa to persist into 2025 due to the lack of a political resolution, creating market volatility.
• Stausbøll noted that some China-affiliated carriers may choose to sail through the Red Sea, presenting shippers with a choice between a shorter transit time via the Suez Canal with Asian carriers or a longer route around Africa with European carriers.
• These shipping diversions could expand logistics services and create new opportunities for alternative ports and near-shoring solutions.
• In the U.S., most goods from Asia are now routed through West Coast ports, with increased reliance on rail networks for distribution to the East Coast.
• The International Longshoremen’s Association (ILA) has suspended strikes, providing temporary relief to shippers.
• However, the effects of the three-day walkout on capacity and scheduling will continue to impact the supply chain for weeks.
• A tentative agreement on wages has been reached, extending the current contract until January 15, 2025, allowing the ILA and the US Maritime Alliance to address unresolved issues, particularly concerning port automation.
• Delays are anticipated as port operations resume and ships begin to berth, with backlogs and resulting congestion likely persisting for several weeks.
• During the three-day strike, 60 vessels, with a total capacity of 400,000 TEUs, were scheduled to berth at US East and Gulf Coast ports.
• Additional ships arriving from Asia, Europe, and South America in the coming days will contribute to the existing queue.
• Shippers should prepare for a short-term capacity crunch, with Asia-Europe routes projected to see a 17% decline in capacity for week 46, while Transatlantic routes are expected to experience a 14% decline for week 44.

North America → Turkey

• Tim Power, MD of Drewry Shipping Consultants, addressed delegates at the World Ports Conference in Hamburg about the potential severe impact of new decarbonization regulations on deep-sea shipping sectors.
• He mentioned a prediction by class society DNV that container shipping operating costs could double due to the costs associated with decarbonization.
• Power suggested that, in some cases, this could lead to the reshaping of long-distance supply chains.
• He explained that if shipping costs remain elevated, intercontinental shipping could become prohibitively expensive for certain key commodities.
• Power pointed out that a combination of higher shipping costs and geopolitical tensions, such as the situation in the Red Sea, could further disrupt global trade.
• He emphasized that while the trading environment is currently relatively open, the global economy could face serious challenges if critical shipping routes like the Strait of Hormuz, through which 30% of the world’s crude oil passes, were to close for an extended period.
• Power highlighted that the biggest challenge with alternative fuels is their limited availability.
• While ammonia, methanol, and hydrogen are being considered, he stated that only LNG currently has sufficient supply to be feasible.
• However, LNG’s contribution to decarbonization only works if methane emissions are properly controlled.
• He also noted that regulations could have unforeseen consequences.
• Power gave the example of how the EU ETS has unintentionally undermined transshipment services in EU Mediterranean ports.
• He added that while green shipping corridors are viable for shorter trade routes, such as China's coastal trade and intra-Europe routes, they are not feasible for deep-sea shipping.

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 expected for APMT, 1 day at Maher Terminals, and up to 4 days at Port Liberty Terminal Bayonne.
• Average gate turn times are 49 / 82 minutes for single and double transactions respectively.

Norfolk:

• Currently, most vessels berth on arrival.
• Bigger vessels wait approximately 2 days for a berth.
• Average gate turn times are 35 minutes for single transactions and 46 minutes for double transactions.

Charleston Terminal:

• 2 days waiting time for Wando Welch Terminal and 1 day for North Charleston Terminal.
• Average truck turn times are 20 minutes at Wando Welch Terminal and 17 minutes at North Charleston Terminal.

Savannah:

• The waiting time for a vessel berth at the terminal is up to 3.5 days, depending on the vessel's size.
• Average gate turn times are 32 minutes for single transactions and 54 minutes for double transactions.
• Import dwell time is 4.3 days.

Houston:

• There is 1 day waiting time for vessel berthing at Barbours Cut Terminal and at Bayport Container Terminal.
• Average gate turn times at Barbours Cut Container Terminal are 31 minutes for single transactions and 47 minutes for double transactions.
• Average gate turn times at Bayport Container Terminal are 29 minutes for single transactions and 45 minutes for double transactions.
• Loaded import dwell is 3.6 days at Barbours Cut and 3.3 days at Bayport.

Oakland:

• 3 days waiting time at Oakland Int’l Container Terminal (OICT) and no waiting time at TraPac.
• Average import deliveries can take up to 5.4 days at TraPac and 3.5 days at OICT.
• Average gate turn times are 80 minutes at OICT and 76 minutes at TraPac.

Seattle-Tacoma:

• Up to 3 days waiting time at Husky and 1 day at Washington United terminal at Tacoma.
• 1 day waiting time in Seattle.
• Import rail dwell are 4.2 days at Husky, 5.2 days at Washington United Terminal.
• 3-5 days at T18.
• The average gate turn times are as follows: 32 minutes for T18, 33 minutes for Washington United Terminal, and 89 minutes for Husky.
• T18 will be closed on October 18, 2024.

Los Angeles/Long Beach:

• Port of Los Angeles dwell time for local import cargo is 3.5 days.
• On-dock rail dwell time at Port of Los Angeles is 8.6 days.
• Import units on the street at Port of Los Angeles are averaging 3.9 days for 20 ft containers and 6.1 days for 40+ ft containers.
• Port of Long Beach dwell times for local imports are starting to go up to 5-9 days.
• The average terminal gate turn time is around 22-66 minutes, based on the terminal.

Chassis Pools

All pools are operating as normal except:

• Minneapolis / St. Paul – Constrained on a 40' chassis.
• Chicago – Deficit on 20’ chassis, 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, the market is currently in the course of showing 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.