Freight market update - 22 November 2023

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• Air cargo may experience increased demand in the wake of potential disruptions in ocean shipping reliability expected in 2024 when antitrust rule changes come into effect.

• Thailand is proposing a $28 billion project, the Landbridge initiative, aimed at significantly reducing shipping times between the Indian and Pacific oceans by bypassing the heavily trafficked Malacca Strait.

• The Port of Hamburg experienced a 2.4% increase in container throughput, handling over 2 million TEUs in the third quarter of 2023 compared to the previous year.

• Container shipping company Zim has relaunched its South China – California service, known as "Zim ecommerce Xpress" or "ZEX."

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Thailand is proposing a $28 billion project, the Landbridge initiative, aimed at significantly reducing shipping times between the Indian and Pacific oceans by bypassing the heavily trafficked Malacca Strait.
• Prime Minister Srettha Thavisin stated that the project could cut travel time by an average of four days and reduce shipping costs by 15%.
• The Malacca Strait, currently handling a quarter of the world's traded goods, connects the Asia-Pacific region to India and the Middle East. Traffic volumes are expected to surpass its capacity by 2030.
• The Landbridge initiative, costing around $28 billion, spans a 100-kilometer stretch and involves constructing seaports on both sides of Thailand's Southern peninsula connected by highways and rail networks.
• The Western port is designed to handle 19.4 million TEUs (twenty-foot equivalent units), while the Eastern port is intended for 13.8 million TEUs, constituting approximately 23% of the total cargo capacity of the Port of Malacca.
• Thailand aims to complete the project by 2030 and is open to foreign investors owning more than 50% in joint ventures with local companies involved in building the ports and related infrastructure.
• Container shipping company Zim has relaunched its South China – California service, known as "Zim ecommerce Xpress" or "ZEX."
• The ZEX service will follow a six-week round trip, calling at Xiamen, Yantian, Los Angeles, and Xiamen again, with a transit time of 12.5 days across the Pacific.
• Originally launched in June 2020 during the pandemic, the ZEX service was closed in March 2023 due to a slowdown in the Transpacific market.
• The revival of ZEX is attributed to two main reasons: the rapid growth of Zim's Trans Pacific fleet, necessitating employment for additional ships, and the strong increase in spot ocean freight rates on the Trans Pacific Southwest trade, particularly the profitable China-California route.
• The decision to bring back the ZEX service is aligned with Zim's strategy to capitalize on the favorable market conditions and enhance its presence in the Transpacific trade.
• Air cargo may experience increased demand in the wake of potential disruptions in ocean shipping reliability expected in 2024 when antitrust rule changes come into effect.
• Niall van de Wouw, Chief Airfreight Officer at Xeneta, emphasized at the TIACA executive summit that shippers prioritize reliability over environmental impact and price when choosing between air and ocean transport.
• Van de Wouw highlighted a correlation between rising air freight rates and decreasing schedule reliability, citing April 2022 as an example when air freight rates peaked due to low ocean reliability.
• Current market conditions, with low ocean rates, have led to ocean carriers blanking sailings to balance supply and demand, according to Van de Wouw.
• Concerns arose about the ocean freight market's supply perspective from April next year when the European Commission decided not to extend container shipping's block exemption from certain competition rules.
• Van de Wouw suggested that increased competition and less consolidation in the ocean freight market could result in certain niche markets becoming underserved and less reliable, potentially driving airfreight demand.
• Despite cost differentials between ocean and air transport, shippers generally prefer ocean transport unless there are operational reasons to choose airfreight.
• Changes in cost differentials over time are seen as unlikely to significantly impact shippers' decisions regarding airfreight, with operational considerations taking precedence.
• Van de Wouw noted that the pressure to reduce emissions is more likely to impact airfreight demand, although the overall impact is expected to be limited, as 97% of goods are already transported by ocean.
• The remaining 3% transported by air often involves goods that cannot easily switch to shipping for various reasons.
• The European Union's upcoming initiatives will have a significant impact on shipping entities operating in the EU, including the inclusion of shipping in the EU carbon market in 2024 through the Emissions Trading System (ETS) and the implementation of FuelEU Maritime regulations in 2025.
• According to Aleksander Askeland, Chief Sales Officer of Yara Marine Technologies, a subsidiary of Yara International, these initiatives will lead to increased operating costs, particularly in fuel expenses, along with the financial burden of adhering to stringent greenhouse gas emission limits.
• Askeland highlighted that, in certain cases, the cost of European Union Allowance (EUA) credits could represent up to 50% of fuel costs for shipping companies.
• Small and medium-sized companies are expected to face unique challenges in managing these rising costs and compliance obligations. As a solution, Askeland recommended that smaller companies consider partnering with third-party service providers, such as classification societies, to maintain cost-effectiveness in compliance.
• Additionally, Askeland suggested focusing on strategies to reduce exposure to variable costs related to bunkers and carbon credits as a means of addressing the challenges posed by the upcoming regulations.
• The maritime industry is anticipated to experience an increased demand for low-carbon ammonia to meet decarbonization targets. S&P Global projects that the industry's demand for low-carbon ammonia will reach 166 million metric tons by 2050.
• Shipping rates from Central China (SHA) to both Europe and the US are on the rise and are expected to persist without a foreseeable decrease in the near future.
• The market is currently experiencing heightened activity, driven by a surge in e-commerce cargo orders. Consequently, available space is limited, and tight capacity conditions are anticipated to continue into the following week.
• Similarly, from NGB (Ningbo) to Europe and the US, the market remains busy, primarily due to the ongoing peak season. High demand and increased shipping activities are contributing to the sustained busyness of this route.
• Shipping rates from North China (TSN) to both Europe and the US have seen an increase specifically for Korean Airlines serving these routes.
• Currently, available space on Korean Airlines for this route is fully booked, with reservations extending until November 28th for both destinations to Europe and the US.
• Shipping rates from Beijing (PEK) to both Europe and the US have witnessed an increase across most major airlines.
• Availability of space is currently very limited on these routes. Loading issues, exacerbated by hot weather conditions, are contributing to the space constraints, impacting shipping capacity.

Turkey → North America

• The Port of Hamburg experienced a 2.4% increase in container throughput, handling over 2 million TEUs in the third quarter of 2023 compared to the previous year.
• Axel Mattern, CEO of Port of Hamburg Marketing, anticipates that Hamburg will be the only northern range port in Europe to record growth in the third quarter, signaling a period of recovery for container throughput.
• Operational indicators for trade with the U.S., China, and Asia in Hamburg displayed positive trends, with a 13.4% increase in trade with the U.S. (170,000 TEUs), an 8.8% increase in trade with China (590,000 TEUs), and a 7.8% increase in Asia's volume (1.1 million TEUs) year-over-year (y/y).
• Calls by vessels with a capacity of 24,000 TEUs increased by almost 18% in the first nine months.
• Despite the positive third-quarter results, when combining the nine-month figures, Hamburg's total container volume is expected to record a y/y decrease of -7.4%, totaling 5.8 million TEUs. This decline is attributed to a close to -12% reduction in throughput during the first half of the year.
• Rotterdam and Antwerp, Europe's two largest ports, have yet to report their third-quarter and nine-month statistics, but in the first half, Rotterdam's throughput was down -8.2% to 6.7 million TEUs y/y, and Antwerp reported a -5.2% drop to 6.4 million TEUs.
• Mattern cautioned that the full-year outlook for Hamburg remains uncertain due to geopolitical operating conditions and reduced expectations for economic growth in Germany.

North America → Turkey

• US East and Gulf Coast ports have, for the third consecutive month, fallen behind their West Coast counterparts in import container activity.
• These East and Gulf Coast ports reported a 5.1% year-over-year decline in import containers, totaling 1,037,171 TEU (twenty-foot equivalent units).
• In contrast, West Coast ports demonstrated a significant 12.7% increase in import volumes, reaching a total of 907,466 TEU.
• The chief growth officer at Raft, Lionel van der Walt, raised concerns about the upcoming emissions-reporting regulations, the Corporate Sustainability Reporting Directive (CSRD), set to debut in January.
• Van der Walt, speaking at TIACA's conference in Brussels, anticipates significant challenges associated with the CSRD.
• The CSRD aims to establish comprehensive sustainability reporting requirements aligned with financial reporting standards, mandating companies to record greenhouse gas emissions in three categories: Scope 1, Scope 2, and Scope 3, following the European Sustainability Reporting Standards (ESRS) from 2025.
• Non-compliance with the CSRD could result in fines of up to €10 million or 5% of annual revenue, depending on the business's geographical location, according to David Picciotto, co-founder of Pledge, an emissions calculation company.

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 Global Container Terminals Bayonne.
• The scheduled maintenance for Crane 6, originally set to start on October 1, 2023, has been postponed indefinitely to reduce congestion.
• Average gate turn times: 56 minutes for single transactions, and 90 minutes for double transactions.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 33 / 48 minutes for single and double transactions respectively.
• All cranes operating as per schedule.
• Ultra Large Container Vessels (ULCV) berth 1 will be out of service from midnight November 17 to midnight November 18 due to fender repairs and paving work.

Charleston Terminal:

• No waiting time for vessel berthing at Wando Welch and North Charleston Terminals.
• Average truck turn times: 22  minutes at Wando Welch Terminal, and 18 minutes at North Charleston Terminal.

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 37 / 52 minutes for single and double transactions respectively.
• Two new cranes are currently being commissioned on berth 2. Four of the oldest cranes on the same berth are being demolished. Berth 2's capacity to handle vessels will be limited for several months.

Houston:

• Barbours Cut Terminal has up to 2 days waiting time for vessel berthing.
• Due to vessel bunching the yard is facing congestion impacting the discharge productivity and extending port stays.
• The average gate turn time is 39 minutes.
• Loaded import dwell is at 3.4 days.

Oakland:

• Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and 4 days at TraPac.
• Average import deliveries can take up to 4.1 days at TraPac and 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.

Seattle-Tacoma:

• Wait time of up to 5 days at Tacoma and 4 days at Seattle.
• Import deliveries are 9.5 days at HUSKY – due to EB/WB railcar imbalance, 6.4 days at Washington United Terminal, and 1-3 days at T18.
• Rail car availability is a significant concern at present, primarily because there is a low volume of rail cars heading Westbound to balance the high volume going Eastbound. This issue is exacerbated by omissions in Vancouver.
• The railroads are actively working with all stakeholders to improve the availability of rail cars. However, if more Westbound cargo or empty cars are not made available, this problem will continue.
• As an alternative to rail transport, inland cargo transportation via truck is also an option to consider.
• Average gate turn times are 38 / 35 / 49 minutes for T18, Washington United Terminal, and HUSKY respectively.
• T18 will be closed on November 23, 2023.
• Husky Terminal will be closed on November 23 and 24, 2023.
• WUT will be closed on November 23, 2023. Also running hoot gates on November 17, 21 and 22, 2023.

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 3.0 days, on-dock rail dwell is 3.1 days, and import units on the street are averaging at 4.7 /6.1 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 26-93 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

1. Louisville – Deficit on 20’ 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.