Freight market update - 23 August 2023

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• The expansion of TSA's Certified Cargo Screening Program allows more cargo shippers to join the secure supply chain, enhancing shipment speed and security.
• Trade at the Port of Long Beach experienced a moderate increase during the peak season.
• The port managed 578,249 twenty-foot equivalent units (TEUs) in July, marking a 26.4% drop compared to the busy July of the previous year.
• The US Federal Maritime Commission (FMC) is modifying its approach to rulemaking concerning the refusal of service by container lines to shippers.
• In July, 21.7% of capacity was blanked in the trans-Pacific trade, up from 14.7% in June, marking a significant increase compared to the previous year.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• The expansion of TSA's Certified Cargo Screening Program allows more cargo shippers to join the secure supply chain, enhancing shipment speed and security.
• John Beckius, TSA's executive director for air cargo, emphasized that the Certified Cargo Screening Program speeds up and secures air cargo movement in the supply chain.
• The TSA will collaborate with interested participants in the cargo supply chain for an expanded program, requiring a TSA-approved security plan and adherence to strict chain-of-custody rules.
• This expansion empowers certified participants to prepare and ship secure air cargo, reducing the need for additional screening later in the supply chain.
• For air cargo originating in the US and traveling beyond US borders, TSA mandates screening and securing before loading onto aircraft to meet international standards and address potential threats.
• Entities like manufacturing facilities, assembly facilities, shippers, warehouses, and distribution centers can become Certified Cargo Screening Facilities, eliminating the need for extra screening when certified by TSA.
• Certified Cargo Screening Facilities are authorized by TSA to securely assemble, pack, and tender air cargo, ensuring safe transport.
• The US Federal Maritime Commission (FMC) is modifying its approach to rulemaking concerning the refusal of service by container lines to shippers.
• The FMC's draft, which is still under consideration, proposes to prohibit container lines from refusing shipments based on economic reasons.
• This potential shift in policy is causing concern among carriers due to its potential impact on their network operations and their ability to reject less profitable bookings.
• The proposed change is a response to input from agricultural exporters and other shippers.
• The revised draft from the FMC emphasizes that profit and business considerations can be part of negotiations but should be weighed alongside other factors when deciding on service refusals.
• The aim is to align with the objectives of the Ocean Shipping Reform Act of 2022.
• The Agriculture Transportation Coalition (AgTC) supports the FMC's updated approach as it addresses concerns about potential loopholes in carrier profitability.
• The World Shipping Council (WSC), which represents major carriers, has expressed worries about the lack of clarity in the proposed measures, fearing they might lead to legal disputes and industry uncertainty.
• The FMC's approach to rulemaking will impact the balance between ensuring carriers fulfill their shipping law obligations and avoiding excessive regulatory constraints.
• The final version of these rules will demonstrate the FMC's stance in the context of the post-Ocean Shipping Reform Act of 2022 environment.
• Recent increases in trans-Pacific freight rates are attributed to ocean carriers effectively adjusting vessel supply through schedule changes and canceled sailings.
• The introduction of new vessels could disrupt this balance and pose a risk to ocean freight rates, warn industry experts.
• Blank sailings, where scheduled sailings are canceled, have contributed to the rise in freight rates recently.
• In July, 21.7% of capacity was blanked in the trans-Pacific trade, up from 14.7% in June, marking a significant increase compared to the previous year.
• Despite capacity management success, concerns arise due to the impending delivery of new vessels to ocean carriers.
• The coming months will bring a wave of new supply, potentially leading to a weakening of ocean freight rates for the remainder of 2023 and into 2024.
• Carriers face the challenge of handling this surge in capacity while maintaining favorable rates.
• Experts suggest that carriers might need to adopt a more aggressive blanking program to avert a rate crash in light of the surplus capacity.
• The next months are expected to witness substantial growth in vessel supply, requiring carriers to take strategic measures to ensure rate stability.

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.

• Trade at the Port of Long Beach experienced a moderate increase during the peak season.
• In July, the port's trade volume declined by more than 25% due to adjusted shipping routes, congested warehouses, and changing consumer travel habits.
• The port managed 578,249 twenty-foot equivalent units (TEUs) in July, marking a 26.4% drop compared to the busy July of the previous year.
• Specifically, imports saw a decrease of 27.9% with 271,086 TEUs, exports were down by 17.6% with 90,134 TEUs, and the transit of empty containers decreased by 27.7% to 217,030 TEUs.
• The overall performance for the first seven months of 2023 displayed a 25.6% decrease when compared to the same period in the previous year.
• This decline brought the port's activity closer to the levels seen in 2019, before the pandemic.
• The peak season is expected to be somewhat restrained due to decreased consumer spending on items like school supplies and holiday gifts.
• The latest data from the National Retail Federation forecasts that U.S. container imports will hit a yearly high of over 2 million TEUs in the current month, as part of winter holiday preparations.
• The Federation's projection model estimates that total U.S. container imports for 2023 will amount to 22.3 million TEUs, indicating a 12.8% decrease from the imports recorded in 2022.

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.

• Container imports into the US experienced a rise in July.
• Import numbers for July increased by over 5% compared to June, totaling just under 2.2 million TEU.
• This growth is more in line with a subdued pre-pandemic peak season increase; however, it represents a 13.6% decrease when compared to July 2022.
• Congestion issues across the US have been showing improvement, leading to smoother overall operations.
• On the West Coast, there are currently no ships in line waiting to dock.
• Conversely, on the East Coast, specifically in Norfolk, the backlog of vessels waiting to berth, which had reached as many as 19 in recent weeks due to vessel bunching, has now been reduced to zero.

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.

• 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 32 / 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 17 minutes at North Charleston Terminal.

Savannah:

• Waiting time for vessel berth at the terminal is up to 2 days, depending on the size of the vessel.
• Average gate turn times are 33 / 52 minutes for single and double transactions respectively.
• GPA no longer offers a Sunday gate.
• Monday-Saturday gate hours remain the same.

Houston:

• Barbours Cut Terminal has up to 2 days waiting time for vessel berthing.
• Due to vessel bunching, the yard is facing congestion.
• This is impacting the discharge productivity and extending port stays.
• The average gate turn time is 43 minutes.

Oakland:

• Average wait time of up to 4 days at Oakland Int’l Container Terminal (OICT) and up to 3 days at TraPac.
• Average import deliveries can take up to 4 days at TraPac and OICT.
• Average gate turn times are 61 / 62 minutes for OICT and TraPac respectively.
• Berth 25 at TRAPAC: All 3 cranes are not working.
• It is currently not known when they will be operational.

Seattle-Tacoma:

• Wait time of up to 4 days at Tacoma.
• Import deliveries are 1.5 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 29 / 37 / 54 minutes for T18, Washington United Terminal, and HUSKY respectively.
• T18 will be closed on August 18 and 25, 2023.
• Washington United Terminals will be closed on August 18 and 25, 2023.
• Husky will be closed on August 17, 18, 24, and 25 2023.
• 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 3.4 days, on-dock rail dwell is 2.6 days, and import units on the street are averaging at 4.6 /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 26-66 minutes, depending on the terminal.

  Chassis Pools: All pools are operating as normal except:

1. Chicago - Deficit 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.

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.