Freight market update - 24 January 2024

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• Asian shippers are currently dealing with high freight rates and a shortage of capacity on intra-Asia trades, primarily caused by vessel diversions around the Cape of Good Hope.

• According to MDS Transmodal data, deep-sea services represented approximately 64% of total quarterly capacity between China and Vietnam in Q4 2023, marking an increase from nearly 58% the previous year.

• Vietnam has experienced a noteworthy surge in liner connectivity, marking a 13.7% year-on-year increase in Q4, propelling it five places to ninth in Sea-Intelligence's index.

• The North American market for returnable transport packaging is expected to undergo substantial growth, with sales projected to reach US$ 28.53 billion in 2023 and surge to US$ 42.11 billion by 2033.

• The Ministry of Industry and Trade in Hanoi has set a target of achieving a 6% export growth in 2024.

• FMCSA data and FTR Intel's State of Freight report indicate a tightening of capacity in the U.S. trucking industry, despite a prolonged period of reduced freight volumes.

• The overall growth in the trucking industry has been modest, with a 2.5% growth last year and an expected 2% growth in the current year.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Asian shippers are currently dealing with high freight rates and a shortage of capacity on intra-Asia trades, primarily caused by vessel diversions around the Cape of Good Hope.
• Exporters are facing challenges related to equipment shortages, particularly impacting key trade routes such as China-Vietnam and China-Thailand, where deep-sea services constitute a growing proportion of intra-Asia volumes.
• According to MDS Transmodal data, deep-sea services represented approximately 64% of total quarterly capacity between China and Vietnam in Q4 2023, marking an increase from nearly 58% the previous year.
• The data further reveals that blue water services contribute about 50% of the capacity between China and Thailand and a substantial 90% between China and Singapore.
• The issues are anticipated to peak just before the Lunar New Year, starting on February 10, affecting intra-Asia shippers significantly as mainline carriers prioritize deep-sea trades during the rush of factory orders before the two-week closure.
• Linerlytica, a research firm, predicts that the capacity shortfall will occur towards the end of the month when vessels on Trans-Pacific and Asia-Europe services divert via Southern Africa to avoid delays at the Panama Canal and the Red Sea attacks.
• The impact of these diversions is expected to reduce the available capacity for departures from Asia, particularly affecting Asia-Europe and U.S. East Coast capacity, with drops of up to 30% on certain weeks.
• Linerlytica also notes that delays have led to an equipment shortage due to the late return of containers to Asia, and container manufacturers have significantly increased production since December to address the issue.
• Shippers are currently encountering unforeseen challenges in their containerized supply chains due to recent attacks on shipping in the Red Sea.
• The unfolding of the year hinges on when these attacks cease and safe navigation is restored in the waterways connected to the Suez Canal.
• The disruption has already altered the supply-demand balance, and its full resolution is expected to take months.
• In the near term, shippers are likely to experience disruptions characterized by space and equipment shortages, coupled with increased rates out of Asia.
• The subsequent phase involves a gradual "new normalization" over the first half of the year as shipping networks adapt to new routing patterns, whether around the Cape of Good Hope or back through the Suez Canal.
• Signs of space and equipment shortages are already evident in the current market, with reports of dwindling empty container inventories in Asia and surging container lease rates.
• The extended transit around the Cape of Good Hope is causing delays in equipment return turnaround times.
• Soft market conditions from the previous year have made carriers more flexible, allowing additional free time for containers at destinations and complicating the return process.
• The five weeks leading up to the Chinese New Year are anticipated to be challenging, but the market is expected to stabilize, as the disruption is driven by supply issues rather than demand.
• Vietnam has experienced a noteworthy surge in liner connectivity, marking a 13.7% year-on-year increase in Q4, propelling it five places to ninth in Sea-Intelligence's index.
• The country's exports saw a substantial 12% rise from January to November 2023, surpassing 2019 levels, as reported in MB Brokers' container market report.
• The growth is attributed significantly to Vietnam's emergence as a manufacturing powerhouse and an alternative factory hub to China.
• Containerized exports from Vietnam to the North American region notably increased by 44% during the same period, contributing to the overall export boost.
• According to the United Nations Conference on Trade and Development (UNCTAD) 2023 report, Vietnam increased its share of U.S. container imports from 4% in 2017 to 8% in 2022.
• The Ministry of Industry and Trade in Hanoi has set a target of achieving a 6% export growth in 2024.
• Presently, 354 vessels, constituting 80% of those involved in the Asia-Europe Trade, have opted for diversion via the Cape of Good Hope.
• The key factors influencing the market remain supply and demand, shaping carriers' pricing strategies. Shippers, especially those dealing with long-term rates, are constrained by committed allocations based on historical performance.
• A substantial 25% reduction in capacity is currently observed, with vessels rerouting via the Cape of Good Hope, leading to an increase in transit times by 10-20 days, depending on vessel size.
• Equipment shortages are notable in Asia, particularly in Northern China.
• A recommendation is made to collaborate closely with freight forwarders to minimize disruptions in the supply chain.

Turkey → North America

• Concerns have been raised by the National Retail Federation (NRF) regarding a possible strike at U.S. East and Gulf Coast terminals in October, as the current labor contract is set to expire on September 30, 2024.
• Negotiations on worker remuneration between the International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX), representing employers at 36 ports on the East and Gulf coasts, have reached a stalemate.
• ILA president Harold Daggett has indicated the union's readiness to initiate a strike, emphasizing that there will be no extension of the current agreement beyond September 30.
• Cargo owners, however, seem to be prioritizing issues around the Panama and Suez canals over the East Coast labor situation.
• A forwarder noted that, since supply chains are not facing severe congestion, there is less urgency compared to the West Coast contract negotiations.
• There is a potential for significant disruption if strikes occur at East Coast ports, particularly given that the contract expiration coincides with the peak season.
• Cargo owners may need to explore alternative routings through Canadian and Mexican ports to mitigate potential supply chain disruptions.
• Federal Motor Carrier Safety Administration (FMCSA) data and FTR Intel's State of Freight report indicate a tightening of capacity in the U.S. trucking industry, despite a prolonged period of reduced freight volumes.
• The overall growth in the trucking industry has been modest, with a 2.5% growth last year and an expected 2% growth in the current year, according to Avery Vise, FTR’s vice president for trucking.
• The goods transport sector presents a less optimistic outlook, with flat GDP last year and an anticipated 1.2% growth this year and slightly over 2% in 2025.
• Recent FMCSA data reveals consolidation in the trucking industry during Q4 2023, with 2,574 trucking firms exiting the market.
• However, with over 100,000 more registered carriers compared to 2019 and 2020, there is still potential for further tightening of capacity.
• Significant increases or decreases in freight volumes are not expected, with a short-term increase anticipated as businesses restock after the holiday season. However, this benefit is considered temporary.
• The industry is projected to experience a slow recovery in truck utilization throughout the year, with a very incremental increase as the year progresses.
• By the end of the year, it is not expected to reach the 92% 10-year average based on current trends.

North America → Turkey

• The National Retail Federation (NRF) has expressed concerns regarding a potential strike at US East Coast terminals.
• The NRF has called on the International Longshore Association (ILA) and the United States Maritime Alliance (USMX) to resume contract negotiations promptly.
• The existing labor contract between USMX and the ILA is scheduled to expire on September 30, with negotiations initiated in February of the previous year, yielding no agreement thus far.
• The key points of contention in the negotiations revolve around worker compensation, work allocation, and the implementation of automation at ports.
• Presently, vessels are idling at the Panama Canal due to historically low water levels, leading to restrictions on the number of vessels allowed to transit.
• The canal, which typically handles 36 vessels daily, is now constrained to 22 vessels per day, with an anticipated further reduction to 16 vessels per day in February.
• Unfortunately, there is no optimistic outlook for an improvement in the situation in the coming months.
• Rates on the TransPacific route are expected to remain elevated due to reduced capacity, and this situation is likely to persist through the first and second quarters.
• The North American market for returnable transport packaging is expected to undergo substantial growth, with sales projected to reach US$ 28.53 billion in 2023 and surge to US$ 42.11 billion by 2033.
• The demand for returnable transport packaging in the region is foreseen to have a Compound Annual Growth Rate (CAGR) of 4.0% over the forecast period, indicating a consistent upward trajectory.
• As of the end of 2022, the North America returnable transport packaging sector was valued at US$ 27.69 billion, with an anticipated year-on-year growth of 2.9% in 2023, showcasing continuous expansion and resilience within the industry.
• The significant growth in the returnable transport packaging business in North America is attributed to the robust expansion of the food & beverage and pharmaceutical sectors, along with the strong presence of key manufacturers like Grief Inc., Berry Global, and SCHÜTZ Container Systems, Inc.
• The increasing demand for sustainable packaging is expected to contribute to the growth, as returnable transport packaging solutions can be reused multiple times, aligning with the trend towards sustainability in packaging.

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: 43 minutes for single transactions, and 70 minutes for double transactions.
• APMT will not have a gate open on Saturday January 20, 2024.

Norfolk:

• Currently, most vessels berth on arrival, however, the bigger vessels wait approx. 2 days for a berth.
• Average gate turn times are 34 / 48 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.
• 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 37 / 58 minutes for single and double transactions respectively.
• Import dwell time is 3.5 days.
• 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.
• 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 39 minutes and Bayport Container Terminal is 40 minutes.
• Loaded import dwell is at 3.6 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 6 days at Oakland Int’l Container Terminal (OICT) and 3 days at TraPac.
• Average import deliveries can take up to 5.8 days at TraPac and 3.8 days at OICT.
• Average gate turn times are 69 / 68 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 very soon.
• Dredging operations at OICT berths caused some berthing delays.

Seattle-Tacoma:

• Wait time of up to 3 days at Husky and 8 days at WUT at Tacoma.
• 2 days waiting time in Seattle.
• Import deliveries are 3.8 days at Husky – due to EB/WB railcar imbalance, 4.8 days at Washington United Terminal, and 1-3 days at T18.
• The average gate turn times are 29 minutes for T18, 34 minutes for Washington United Terminal, and 37 minutes for HUSKY.
• Terminal 18 will be closed on January 26, 2024.
• Husky will be closed on January 22, 2024.
• Washington United Terminal has not confirmed closures for January, 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 3.2 days, on-dock rail dwell is 4.2 days, and import units on the street are averaging at 4.1 /6.3 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 / 70 minutes, depending on the terminal.

Chassis Pools

All pools operating as normal except for:

• Columbus – Deficit 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.