Freight Market Update - 2 August 2023

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Key takeaways for the US

• NS is introducing a new feature called "partial storage guarantee" on their website.
• Yellow, the third-largest U.S. less-than-truckload (LTL) provider, is reportedly preparing to file for bankruptcy.
• In an effort to improve its financial situation, Yellow is exploring the sale of its 3PL subsidiary, Yellow Logistics.
• Between Asia and North Europe, ocean carriers have announced GRIs (General Rate Increases) which come into effect this week.
• Spot container shipping rates between Asia and the U.S. have been steadily increasing in July.
• They are experiencing double-digit growth for three consecutive weeks.

Read on for more in-depth updates.

Ocean Freight Market Updates

Asia → North America
US/CA

Transpacific Trends and Market Updates

• NS is introducing a new feature called "partial storage guarantee". Previously, the only option available was a full storage guarantee.
• With the new feature, shippers can now choose the number of days of storage they want to guarantee.
• The partial guarantee will apply to the initial number of chargeable days chosen by the shipper.
• If there are additional chargeable days beyond the guaranteed number, the shipper must pay via credit card before the shipment can out-gate.
• NS shippers have the option to cancel both partial or full guarantees and can also adjust the number of days covered by the partial storage guarantee before the shipment out-gates.
• Yellow, the third-largest U.S. less-than-truckload (LTL) provider, is reportedly preparing to file for bankruptcy.
• The company has been facing financial difficulties, with debts amounting to $1.3 billion and experiencing declining revenues and reserves.
• In an effort to improve its financial situation, Yellow is exploring the sale of its 3PL subsidiary, Yellow Logistics, and is in active negotiations with potential buyers.
• The Teamsters union threatened a strike after Yellow failed to make employee benefit contributions.
• The strike was called off when the insurer agreed to continue providing health care benefits and gave the company 30 days to reimburse it.
• Industry experts warn that if Yellow exits the market, freight rates are likely to increase significantly for other LTL carriers.
• Spot container shipping rates between Asia and the U.S. have been steadily increasing in July, experiencing double-digit growth for three consecutive weeks.
• Asia-West Coast capacity has decreased by -15% this month compared to June, while Asia-East Coast capacity is down -8% to -10%, including the impact of Panama Canal restrictions.
• Factors contributing to the rising Trans-Pacific spot rates include canceled sailings, labor disruptions in British Columbia, and a positive outlook for cargo demand in North America.
• On the other hand, the Asia-Europe trade is experiencing falling rates due to the influx of newbuildings with larger capacity, whereas the Asia-U.S. market has less capacity added, resulting in increasing rates.
• The International Longshore and Warehouse Union (ILWU) Canada caucus has approved a tentative contract agreement.
• The ILWU Canada members are expected to vote on the proposed terms this week.
• The president of ILWU Canada, Rob Ashton, informed five union locals about a "stop work" meeting to discuss and recommend the settlement terms to the membership.
• The British Columbia Maritime Employers Association (BCMEA) hopes the union members will approve the deal.
• Initially, the BCMEA ratified the tentative agreement on July 13, but the ILWU Canada caucus rejected it, leading to a brief illegal strike that was later ruled illegal by the federal labor board.
• The strike caused vessel backlogs and supply chain disruptions in British Columbia ports, which were already facing challenges due to declining trade volumes. Container volumes in Vancouver were down -13.8% through May, and Prince Rupert experienced a decrease of -27%.
• Air cargo demand for Asia Pacific airlines declined in June, with a decrease of -8.1% in freight tonne kilometers (FTK) compared to the previous year.
• Airlines increased their capacity by 0.7%, but the average international freight load factor dropped by 5.9 percentage points, reaching 60.7% for the month.
• Additionally, lower container shipping rates relative to air freight rates made sea shipping a more attractive option for transporting goods, affecting the demand for air shipments.

Conclusions

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.

Turkey → North America

• The Panama Canal Authority (ACP) has announced they will lower daily vessel transits due to an ongoing drought.
• They delayed further draft restrictions due to go into effect on June 25.
• From 30 July 2023, the daily transit capacity of the Panama Canal will be adjusted to an average of 32 ocean-going vessels per day.
• This includes 10 vessels in the neo-panamax locks and 22 vessels in the Panamax locks.

Conclusions

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.

North America → Turkey

• Rates between Asia and the USA have increased for August due to General Rate Increases (GRIs).
• Spot rates, particularly to the US West Coast, have experienced significant spikes as many ships were diverted from Canada due to ongoing labor issues there.
• Congestion at US ports has improved in the past week.
• At the port of LA and Long Beach, the number of vessels waiting to berth has reduced to two.
• The delay at the railhead has also decreased and is now at 6 days.
• On the East Coast, Norfolk is still facing challenges with a backlog of vessels waiting to berth, which is attributed to vessel bunching and adverse weather conditions.
• However, the backlog has decreased from 19 vessels to 17.

Conclusions

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.

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 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: 48 minutes for single transactions, and 80 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 31 / 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 16 minutes at North Charleston Terminal.

Savannah:

• Waiting time for vessel berth at the terminal is up to 4 days, depending on the size of the vessel.
• Average gate turn times are 38 / 54 minutes for single and double transactions respectively.
• Starting Sunday, July 9, 2023 GPA no longer offers a Sunday gate.
• Monday-Saturday gate hours remain the same.

Houston:

• Barbours Cut Terminal has no waiting time for vessel berthing.
• The average gate turn time is 44 minutes.

Oakland:

• Average wait time of up to 6 days at Oakland Int’l Container Terminal (OICT) and up to 7 days at TraPac.
• Average import deliveries can take up to 4.5 days at TraPac and OICT.
• Average gate turn times are 51 / 54 minutes for OICT and TraPac respectively.

Seattle-Tacoma:

• Wait time of up to 7 days at Tacoma.
• Import deliveries are 2.8 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 49 / 35 / 53 minutes for T18, Washington United Terminal, and HUSKY respectively.
• T18 and WUT will be closed on July 28, 2023. However, HUSKY will be open on this day.
• 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 3.9 days, on-dock rail dwell is 3.6 days, and import units on the street are averaging at 4.8 /6.6 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 22-90 minutes, depending on the terminal.
• Chassis Pools: All pools are operating as normal except:
  • Columbus - Deficit on 40’ chassis
  • Seattle - Constrained on 20’ and 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.

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.