Freight market update - 20 December 2023

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• Top shipping companies, such as MSC and Maersk, are urging the IMO to establish a deadline for new vessels to exclusively use fossil fuels.

• The Green Shipping Challenge has witnessed over 60 agreements and statements from national governments, shipping companies, operators, and ports in support of the IMO's reduction targets.

• Multiple U.S. ports have lost direct access to South America due to a combination of pandemic-related blank sailings and carrier service consolidations.

• U.S. retailers are increasing their orders for early 2024, driven by robust holiday sales, resulting in upgraded import forecasts despite some mixed economic signals.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Top shipping companies, such as MSC and Maersk, are urging the International Maritime Organization (IMO) to establish a deadline for new vessels to exclusively use fossil fuels.
• This collaborative effort aims to drive legislation for reducing CO2 emissions, with the expectation that setting an end date will incentivize investment in large-scale, climate-friendly solutions.
• Leaders in the maritime sector, including ship owners, operators, ports, bunker companies, and equipment manufacturers, have committed to achieving a usage of 11 million tons of hydrogen fuel by 2030.
• The agreement outlines targets for fuel use, fleet development, and port infrastructure, calling on national governments to support private sector collaboration on fuel standards and green fuels.
• The World Shipping Council (WSC) has proposed an agenda for the IMO's environmental conference in 2024.
• The WSC recommends specific standards for greenhouse gas emissions up to 2050, an economic incentive mechanism for the adoption of renewable energy, grouping ships based on carbon footprint, and tools to encourage climate-friendly choices in ship fuel production and usage.
• The Green Shipping Challenge has witnessed over 60 agreements and statements from national governments, shipping companies, operators, and ports in support of the IMO's reduction targets.
• Examples include the Danish government allocating €20 million to developing countries for green initiatives, Höegh Autoliners investing $1.2 billion in green ammonia-powered car carriers, and Germany unveiling a national action plan for climate-neutral shipping, addressing international climate commitments and reduction targets for the transport sector.
• A groundbreaking design for a nuclear-powered megamax containership was unveiled at the Marintec China exhibition in Shanghai by the state-run Jiangnan Shipyard.
• The massive containership boasts a capacity of 24,000 TEU and incorporates advanced molten salt reactor technology.
• China State Shipbuilding Corporation (CSSC), the yard's parent company, highlighted in a social media post that the ultra-large nuclear container ship is designed to achieve zero emissions during its operating cycle.
• The announcement underscores a growing interest in nuclear-powered ships, with 9% of C-suite members surveyed by the International Chamber of Shipping (ICC) expecting nuclear vessels to be a reality within a decade.
• Ocean carriers are maintaining the mid-December and January 1st Asia-North Europe general rate increases (GRIs) and are experiencing success in restoring rates.
• The implementation of GRIs, blank sailings, route diversions (due to war risk in the Red Sea), and heightened demand before Chinese New Year have led shippers to secure space for the remaining export slots from China before the year-end.
• Carriers are contemplating the introduction of a peak season surcharge in January to balance demand and supply, especially given the tight bookings preceding Chinese New Year.
• There is a possibility of the re-emergence of 'premium' surcharges on the Asia-Europe route, reminiscent of the supply/demand crunch observed in 2021 and early 2022.
• For Shanghai (SHA) to Europe and the US, bookings for e-commerce cargo are on the decline, and demand for general cargo has slowed, resulting in unchanged rates from the previous week.
• In terms of Ningbo (NGB) to Europe and the USA, space is limited, and final rates are determined on a case-by-case basis. It is recommended to secure bookings 4-5 days prior to the cargo ready date.
• When you consider Tianjin (TSN) to Europe and the US, rates are steadily increasing for Korean Airlines to both destinations.
• Asiana Airlines has limited space, with rates seeing an increase; it is advisable to book a week in advance to secure space.
• Beijing (PEK) to Europe and the US: Rates have risen on most major airlines compared to the previous week, and space is very limited.
• Major services from PEK to Europe include Singapore Airlines, Cathay Pacific, Lufthansa, Air China, KLM, Air France, and Japan Airlines.
• It is recommended to book space 7-8 days ahead of the cargo ready date.
• China Cargo Airlines is expanding its reach into Latin America by planning to launch a freighter service to Miami in the upcoming year.
• The airline has enlisted Worldwide Flight Service to handle its flights, utilizing B777Fs three days a week from its Shanghai base, with Miami being the focal point of this expansion.
• The partnership is secured under a three-year contract.
• This move marks the first freighter operation by a mainland China-based airline to Miami, a significant gateway to and from Latin America.
• China Cargo Airlines currently serves Los Angeles with 18 weekly freighter flights and New York JFK with seven.
• While this is China Cargo Airlines' first foray into Miami, it's worth noting that Hong Kong-based Cathay Pacific has been operating freighters to Miami for years and recently increased its presence in Latin America with twice-weekly all-cargo charters to Mexico, bringing its total freighter frequencies in the Mexican market to eight weekly.
• Cathay Pacific has responded to growing demand, particularly from e-commerce sales, by elevating its trans pacific freighter schedule to 39 weekly services to the Americas.
• Air China Cargo has received the first of eight repurposed A330-200(P2F) aircraft, with B-6090 (msn 860) handed over on December 15.
• The 16.4-year-old twinjet, formerly in passenger service with Air China until January of the current year, underwent P2F (passenger-to-freighter) conversion at the AMECO facility at Chengdu Shuangliu.
• According to the carrier's latest listing prospectus, three more A330-200(P2F)s are scheduled for delivery in 2024, followed by four in 2025.
• In addition to the A330 fleet, Air China Cargo operates three B747-400FSCDs and nine B777-Fs.
• The carrier also has four more B777-Fs due from Boeing (msn 67834, 67835, 67836, and 67837) as part of a revised 2021 agreement, all expected by 2025.
• Air China Cargo is in the process of selling its four B757-200(PCF)s, which will be divested through the Beijing Equity Exchange.
• Cyclone Michaung caused severe disruption to the flow of containers in and out of southern Indian ports, particularly impacting Chennai and its surrounding areas.
• The three main container ports along the east coast corridor of India—Chennai, Kattupalli, and Ennore—had to suspend operations for three days due to widespread adverse weather conditions, including torrential rains and flooding in Chennai.
• Despite the resumption of vessel berthing, there were minimal export/import cargo flows, and access to inland areas remained restricted.
• Maersk, with two weekly calls at Ennore, including ME7 to Europe and Chennai Express (CHX) to the Far East, reported a 24-hour berthing delay for its ME7 call, attributed to power supply problems.
• Import release from the port gates was anticipated to be delayed.
• Other carriers providing regular calls in the region also cautioned about cargo delays and customer service shortcomings.
• CMA CGM (India) specifically highlighted significant disruptions affecting essential services like power, internet, and public transportation.

Turkey → North America

• The Biden administration has unveiled a set of measures designed to enhance supply chain resilience, addressing concerns over vulnerabilities in the global supply chain.
• The newly established White House Council on Supply Chain Resilience held its inaugural meeting on November 27th, marking a significant step in the administration's efforts to bolster supply chain stability.
• The Council is co-chaired by national security and economic advisors, with membership extending to nearly all members of the cabinet.
• This includes key figures such as the secretaries of Commerce, Defense, Transportation, Labour, and Treasury.
• The establishment of this council is part of a comprehensive strategy, encompassing nearly 30 measures, aimed at ensuring the strategic availability of critical medicines and fortifying supply chains in various sectors.
• Turkish Airlines has expanded its presence in North America by adding Detroit as its 13th gateway destination in the United States.
• Effective November 15, 2023, the airline initiated new flights to Detroit, enhancing its extensive global network.
• The flights connect Istanbul Airport with Detroit Metropolitan Wayne County Airport, operating three days a week initially.
• Starting from December 25, 2023, the frequency of flights to Detroit will increase to four days a week, demonstrating Turkish Airlines' commitment to this new route.
• With this strategic expansion, Turkish Airlines now boasts a network that spans an impressive 345 destinations, solidifying Detroit's position as the 13th gateway destination in the United States for the airline.

North America → Turkey

• Sea-Intelligence's recent analysis reveals a notable decline in total port-pair and unique port-pair connections between North America and East and West Coast South America trade.
• Multiple U.S. ports have lost direct access to South America due to a combination of pandemic-related blank sailings and carrier service consolidations.
• Baltimore experienced a loss of eight distinct port-pair connections, Houston lost seven, and Charleston lost three, resulting in both Baltimore and Houston losing direct connectivity to West Coast South America.
• Savannah also faced a setback, losing eight distinct port-pair connections and direct access to East Coast South America.
• In contrast, Mobile gained seven port-pair connections and direct access to East Coast South America, seemingly at the expense of Baltimore and Savannah.
• Sea-Intelligence suggests that carriers are shifting their focus to the Gulf Coast rather than the North Atlantic, as evidenced by the changes in port-pair connections.
• The impact of the pandemic on North America-South America trade did not fully materialize until the second half of 2021, and connectivity on North America-East Coast South America remains below pre-pandemic levels, according to Sea-Intelligence's observation.
• U.S. retailers are increasing their orders for early 2024, driven by robust holiday sales, resulting in upgraded import forecasts despite some mixed economic signals.
• The Global Port Tracker (GPT) predicts December 2023 imports to be 11.5% higher than the previous year, with January 2024 imports expected to rise by 6.6% year-over-year (y/y) to reach 1.93 million TEU.
• Despite the usual slowdown in February due to Lunar New Year shutdowns, GPT projects a 14.5% y/y increase, reaching 1.77 million TEU.
• March imports are forecasted at 1.75 million TEU, up 7.7% y/y, and April at 1.8 million TEU, up 1% y/y.
• Jonathan Gold, VP for supply chain at the NRF, highlights unexpected growth in September and October.
• The NRF forecasts holiday sales to increase between 3% and 4% over the previous year, reaching a range of $957.3 billion to $966.6 billion.
• According to PIERS, U.S. imports from Asia have been on the rise since April, with November volumes up 10.8% y/y.
• Resilient consumer spending contributes to an S&P Global upgrade of the U.S. GDP forecast from 1.4% to 1.5%.

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.
• Up to 1.5 days waiting time at APM Terminals.
• Up to 3 days waiting time is expected at Port Liberty Terminal Bayonne.
• Average gate turn times: 35 minutes for single transactions, and 62 minutes for double transactions.
• APMT gate will not have a gate open on Saturdays.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 32 / 47 minutes for single and double transactions respectively.
• All cranes are working.

Charleston Terminal:

• Waiting time for vessel berthing is 0-1.5 days at Wando Welch Terminal and 0 days at North Charleston Terminal.
• Average truck turn times: 20  minutes at Wando Welch Terminal, and 18 minutes at North Charleston Terminal.
• Sunday gates are by appointment only.

Savannah:

• Waiting time for vessel berth at the terminal is up to 1 day, depending on the size of the vessel.
• Average gate turn times are 32 / 49 minutes for single and double transactions respectively.
• GPA no longer offers a Sunday gate.
• Monday-Saturday gate hours remain the same.
• Berth 2 is back online helping to reduce waiting times.

Houston:

• Barbours Cut Terminal has up to 1 day waiting time for vessel berthing.
• Due to vessel bunching the yard is facing congestion impacting the discharge productivity and extending port stays.
• Average gate turn time at Barbours Cut Container Terminal and Bayport Container Terminal is 43 minutes.
• Loaded import dwell is at 3.5 days.
• The EC6 service is changing terminal at Houston from Barbours Cut to Bayport effective MV ONE Competence 087E.

Oakland:

• Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and 3 days at TraPac.
• Average import deliveries can take up to 5.3 days at TraPac and 4 days at OICT.
• Average gate turn times are 60 / 67 minutes for OICT and TraPac respectively.
• TraPac has received 6 new RTG’s and are in process of commissioning.
• They are likely to be operational mid-December.
• Trapac will be closed on December 25, 2023 and January 1, 2024.
• Dredging operations at OICT berths caused some berthing delays.
• OICT will be closed on December 24, 25, 31, 2023 and January 1, 2024.

Seattle-Tacoma:

• Wait time of up to 3 days at Tacoma and no waiting time at Seattle.
• Import deliveries are 3.5 days at HUSKY – due to EB/WB railcar imbalance, 5.7 days at Washington United Terminal, and 1-3 days at T18.
• Dwell is dropping and rail companies are mostly caught up.
• Possible delays with back-to-back vessels discharging this week.
• Several vessels reported delays due to storms in the Pacific.
• The average gate turn times are 44 minutes for T18, 35 minutes for Washington United Terminal, and 46 minutes for HUSKY.
• Terminal 18 and Husky will be closed on December 15, 22, 25, 2023, and January 1, 2024.
• WUT will be closed on December 25, 2023 and January 1, 2024.

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 3.3 days, on-dock rail dwell is 3.8 days, and import units on the street are averaging at 4.3 /5.8 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 20-62 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal.

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.