Freight market update - 21 February 2024

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• Vessel delays are a result of reroutes around Africa, severe North Sea weather, and disruptions near Benelux ports and Hamburg.

• Hapag-Lloyd's update reveals yard utilization levels at Rotterdam, Hamburg, and Southampton increased from 55% to 85%-90% due to delayed vessel arrivals.

• North American container ports, especially on the U.S. East and Gulf coasts, are experiencing congestion from diversions through Panama and Suez canals.

• U.S. container import volumes in January 2024 showed the most significant month-over-month increase in the last seven years, as reported by Descartes Systems Group based on U.S. customs filings.

• Westports Holdings, Malaysia's largest port operator, is contemplating external investors to finance an $8.3 billion expansion, with the goal of nearly doubling its capacity by 2082.

• The freight and logistics market in Turkey is projected to grow by USD 10.30 billion between 2022 and 2027, with a forecasted Compound Annual Growth Rate (CAGR) of 7.2% during the period.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Westports Holdings, Malaysia's largest port operator, is contemplating external investors to finance an $8.3 billion expansion, with the goal of nearly doubling its capacity by 2082, as reported by Bloomberg.
• The expansion initiative encompasses the development of eight new container terminals, with the first expected to be operational in 2027.
• Currently Southeast Asia's second-largest port, Westports aims to boost its capacity from 14 million to 27 million TEUs.
• Competitors for Westports include Malaysia's Tanjung Pelepas and the Port of Singapore, which is in the process of constructing the Tuas Port. The new Tuas Port is envisioned to be the world's largest automated container terminal, with a massive 65 million TEU capacity, and is slated for operational readiness in the 2040s.
• Rates from Asia to North Europe have been on a decline in the second half of February across various carriers.
• Long-term deal negotiations are expected to be initiated after the conclusion of the Chinese New Year (CNY), allowing carriers to reevaluate demand patterns.
• While some carriers have shown openness to discussions, the majority are adopting a wait-and-see approach to assess the evolving situation.
• Anticipated space availability towards the end of the month, as carriers work on clearing backlogs from week 3.
• Blank sailings are notably high during the current week and the next, attributed to factory closures during the Chinese New Year.
• Westwell, a Chinese AI-based logistics company, has officially opened its international headquarters in Hong Kong as part of its strategic move for global expansion.
• Headquartered in Shanghai, Westwell specializes in the design and development of AI chips and autopilot control systems tailored for AI-powered autonomous vehicles within the logistics sector.
• In addition to the international headquarters, Westwell plans to establish a research center in Hong Kong, further emphasizing its commitment to innovation and development.
• US consumer spending and retail sales have surpassed expectations, and inflation remains under control.
• Prices on the China-US East Coast trade route are notably higher than those on the China-US West Coast trade route.
• Container leasing rates from Ningbo to New York have surged by 223%, rising from $535 in November 2023 to $1730 in February 2024.
• The global shipping industry has witnessed a significant rate increase in the aftermath of the Red Sea crisis, with container leasing rates on the China-US trade route tripling compared to pre-incident levels.
• The US economy shows resilience, with a 3.3% annual GDP growth in Q4 2023, driven by consumer spending, investment, exports, and government spending.
• December's personal income and spending reports reflect lower inflation and robust household spending, contributing to a positive economic outlook.
• Despite economic concerns, China experiences a surge in demand for ocean container freight to the United States.

Turkey → North America

• CMA CGM has halted vessels from transiting the Suez Canal, redirecting them via the Cape of Good Hope, aligning with the approach adopted by other major carriers.
• Despite this shift, the overall ocean market has displayed resilience and adaptability to the new situation. Production in China has temporarily ceased due to the Chinese New Year, leading to varied scenarios for carriers—some dealing with backlogs, while others actively seek cargo.
• The ongoing conflict near the Suez Canal is anticipated to persist in the coming weeks. However, carriers are expected to efficiently manage and stabilize vessel and equipment flow through the Cape of Good Hope.
• Projections suggest that the Transpacific trade may encounter comparatively fewer disruptions than other major trades amid these developments.
• The advice is given to collaborate closely with freight forwarders to minimize any potential disruptions in the supply chain.
• In January 2024, U.S. container import volumes surged by 7.9% compared to December 2023, marking the most substantial January month-over-month growth in seven years.
• The growth was notably driven by a 14.9% increase in imports from China, with the ports of Los Angeles and Long Beach handling a significant portion of the added volume.
• Comparing the top five West Coast ports to the top five East and Gulf Coast ports, the share of total import container volume for the former rose to 43.0%, representing a 3.3% increase. Conversely, the share for the latter declined to 42.4%, indicating a 2.5% decrease.
• Considering all top 10 ports collectively, their combined share increased to 85.4% in January 2024, showing a slight uptick of 0.9% compared to December 2023.
• January experienced an overall increase in port transit delays, particularly noticeable at East Coast ports. The rise in delays is attributed to factors like water levels in the Panama Canal and the conflict in the Middle East, impacting transit times but not necessarily import volumes.
• The use of electric trucks for short, repetitive trips to assembly plants is growing, driven by the need to reduce noise and eliminate diesel exhaust associated with delivering incoming parts and components.
• In the automotive industry, stakeholders, including sustainability-conscious shippers, regulators, and OEMs, see inbound logistics as a favorable use case for electric trucks.
• The proximity of trucks to their base and the potential for significant mileage, especially for short return-to-base heavy-duty day cab tractors, make inbound logistics an ideal early adopter for electric trucks.
• According to Mike Roeth, Executive Director of the North American Council for Freight Efficiency (NACFE), the nature of these trips aligns well with the capabilities of electric trucks.
• Volvo Trucks North America (VTNA) has accumulated 95,000 miles of electric driving on short routes bringing parts and supplies to its New River Valley Operations site in Dublin, Virginia, showcasing the practical application of electric trucks in inbound logistics.
• The freight and logistics market in Turkey is projected to grow by USD 10.30 billion between 2022 and 2027, with a forecasted Compound Annual Growth Rate (CAGR) of 7.2% during the period.
• Market segmentation includes delivery mode (road, rail, maritime, and air), service (transportation, warehousing and distribution, and value-added services), and end-user (manufacturing, automotive, consumer goods, food and beverage, and others).
• The e-commerce industry's growth in Turkey is identified as a key driver for the market, with significant players like Trendyol contributing to the sector. Trendyol, an e-commerce platform in Turkey, generated a revenue of USD 3.2 billion in 2021.
• Approximately 40% of the Turkish population made at least one online purchase in 2021, with the fashion segment being the largest, accounting for 42% of e-commerce revenue.
• The surge in e-commerce activities is expected to increase the demand for freight and logistics services, consequently fostering the growth of the freight and logistics market in Turkey during the forecast period.

North America → Turkey

• North Europe's container hub ports are handling delayed vessels from Asia, easing concerns about port and landside congestion.
• Vessel delays are a result of reroutes around Africa, severe North Sea weather, and disruptions near Benelux ports and Hamburg.
• Hapag-Lloyd's update reveals yard utilization levels at Rotterdam, Hamburg, and Southampton increased from 55% to 85%-90% due to delayed vessel arrivals.
• The carrier expects yard utilization to return to 65%-70% after the pre-Chinese New Year export surge subsides.
• Carriers have successfully returned a significant number of containers to Asia, preventing an export booking equipment crunch.
• Hapag-Lloyd notes empty container stacks at North European hubs are at 60-65%.
• North American container ports, especially on the U.S. East and Gulf coasts, are experiencing congestion from diversions through Panama and Suez canals.
• Varying waiting times are reported at different terminals, while the U.S. West Coast sees increased import throughput due to the Red Sea crisis, Panama Canal restrictions, and strong consumer demand.
• With established Red Sea diversion routes by ocean carriers, Sea-Intelligence conducted an analysis focusing on the impact of longer transits on global demand, measured through TEU*Miles.
• In 2023, global demand was assessed at 860 billion, and Sea-Intelligence calculated that moving the same cargo globally in 2024 with a diversion around the Cape of Good Hope would result in demand of 994 billion TEU*Miles, indicating a 16% increase in capacity needs.
• The Europe-Indian Subcontinent trade experiences the most significant impact, while trade between the Far East and North America is relatively less affected overall, attributed to volume-weighted factors.
• Alan Murphy, CEO of Sea-Intelligence, suggested that carriers could meet increased capacity demands through two mechanisms: absorbing current overcapacity and speeding up vessels to deliver more TEU*Miles per year, both of which are currently in play.
• Murphy anticipates that in 2024, the injection of more capacity might be used to offset the existing vessels' slowdown, considering the ongoing delivery of additional capacity during the year.
• U.S. container import volumes in January 2024 showed the most significant month-over-month increase in the last seven years, as reported by Descartes Systems Group based on U.S. customs filings.
• Overall, U.S. container imports for January witnessed a 7.9% month-over-month and a 9.9% year-over-year growth.
• Chinese imports played a pivotal role in this surge, rising by 14.9% month-over-month, driven partly by cargo owners hastening shipments before the Lunar New Year holiday.
• Southern California ports, especially Long Beach (15.1% m/m) and the Port of Los Angeles (21.1% m/m), captured the majority of the Chinese import surge.
• U.S. East and Gulf Coast ports experienced mixed results, with the Port of New York and New Jersey showing a 6.8% month-over-month increase, while others like the Port of Savannah (decline of -0.2% m/m) and Port of Houston (decline of -3.6% m/m) saw varying degrees of slowdown.
• Descartes cautioned about potential supply chain disruptions in 2024, citing factors like the Red Sea conflict, Panama Canal drought, upcoming labor negotiations at U.S. East and Gulf Coast ports, the health of the U.S. economy, increased port transit times, and the potential impact of new coronavirus variants on global supply chains.

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 and APM Terminals.
• Up to 3 days waiting time is expected at Port Liberty Terminal Bayonne.
• Average gate turn times: 46 minutes for single transactions, and 72 minutes for double transactions.
• Terminal change to Port Liberty New York.
• MV La Traviata V019 E/W and MV Dalila V026 E/W are expected to arrive in New York on February 1, 2024, and February 17, 2024, respectively.
• All other vessels on AL6 will continue to call Maher terminals.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 33 / 47 minutes for single and double transactions respectively.
• Berth congestion had relaxed overall but it is expected to worsen after severe weather delays.
• This is mainly for ships arriving from New York later this week.

Charleston Terminal:

• Waiting time for vessel berthing is 1 day at Wando Welch Terminal and 0.5 days at North Charleston Terminal.
• Average truck turn times: 19  minutes at Wando Welch Terminal, and 22 minutes at North Charleston Terminal.
• Dock construction at Wando Welch terminal is starting in March 2024.
• It is reduced from 3 to 2 berths for one year.
• Berths will be given on a first come, first serve basis.
• Sunday gates are by appointment only.

Savannah:

• Waiting time for vessel berth at the terminal is up to 3 days, depending on the size of the vessel.
• Average gate turn times are 36 / 53 minutes for single and double transactions respectively.
• Import dwell time is 4.2 days.
• Berth 2 is back online helping to reduce waiting times.

Houston:

• Barbours Cut Terminal has up to 2 days waiting time for vessel berthing.
• 2 days waiting time at Bayport Container Terminal.
• Bad weather in the Gulf of Mexico continues to cause closures at ports south of Houston and delays on arrival.
• 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 is 36 minutes and Bayport Container Terminal is 55 minutes.
• Loaded import dwell is at 3.7 days.

Oakland:

• Average wait time of up to 6 days at Oakland Int’l Container Terminal (OICT) and 3 days at TraPac.
• Average import deliveries can take up to 4.6 days at TraPac and 3.6 days at OICT.
• Average gate turn times are 64 / 69 minutes for OICT and TraPac respectively.
• TraPac has received 6 new RTG’s and are in process of commissioning.
• Temporary repairs were made to crane 14.
• More tests will be performed before passing back off for operation.
• Berth 55 is expected to be fully operational this weekend.

Seattle-Tacoma:

• Wait time of up to 4 days at Husky and 4 days at WUT at Tacoma.
• 2 days waiting time in Seattle.
• Import deliveries are 3.2 days at Husky – due to EB/WB railcar imbalance, 3.8 days at Washington United Terminal, and 1-3 days at T18.
• The average gate turn times are 31 minutes for T18, 30 minutes for Washington United Terminal, and 22 minutes for HUSKY.
• Terminal 18 will be closed on February 19, 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 days, on-dock rail dwell is 4.6 days, and import units on the street are averaging at 4 /5.6 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 24 / 82 minutes, depending on the terminal.

Chassis Pools

All pools operating as normal except for:

• Cleveland – Constrained on 20’ and 40’ chassis.
• Memphis - Constrained on 20’ and 40’ chassis.
• Nashville – Deficit on 20’ and 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.

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.