Freight Market Update - 26 July 2023

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• U.S. freight forwarders warned about potential strike action at UPS and Yellow Freight.
• Past UPS strike in 1997 caused supply chain chaos, and the current strike could have more severe consequences due to added air cargo security requirements.
• Carriers on the Asia-North Europe route use blank sailings and inducement-only port calls to manage soft trade demand.
• Freight rates from China to North Europe are under pressure due to oversupply, with a significant decline from last year.
• ILWU Canada withdraws the July 22 strike notice.
• Carriers achieved almost full success on the August 1st General Rate Increase (GRI).

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• U.S. freight forwarders warned about potential strike action at UPS and Yellow Freight.
• Airforwarders Association (AfA) executive director describes it as a "perfect storm" with potential disruptions to goods flow.
• Forwarders are advised to validate with the Known Shipper Program, contact shippers using UPS or Yellow Freight, and anticipate delays.
• Contract negotiations between UPS and unions have broken down, and the contract is set to expire on July 31.
• Workers authorize strike action and will not work beyond the contract's expiration.
• Yellow Freight (YRC Worldwide) negotiating with unions amid restructuring efforts after receiving a reprieve from lenders.
• The company is trying to refinance debts, including a large federal government emergency COVID loan.
• Freight rates from China to North Europe are under pressure due to oversupply, with a significant decline from last year.
• Carriers do not expect a traditional peak season, leading to downward revisions in full-year earnings predictions.The U.S. trucking industry saw growth in revenue and tonnage in 2022, despite a freight recession expected to continue into 2024.
• Trucks moved 11.46 billion tons of freight, generating $940.8 billion in revenue.
• Trucking employed 8.4 million people, including 3.54 million professional truck drivers, with an increasing number of female drivers.
• Most trucking fleets are small businesses operating ten or fewer trucks.
• Trucks accounted for a significant portion of U.S. trade with Canada and Mexico, transporting goods worth $947.92 billion.
• Carriers achieved almost full success on the August 1st General Rate Increase (GRI).
• Spot rates have been rising for three consecutive weeks, reaching USWC $1,900 to $2,000/40’HC, USEC $3,000 to $3,100/40’HC, and GULF $3,200 to $3,400/40’HC.
• To manage capacity, carriers reduced Asia-USWC capacity by 15% compared to June and Asia-USEC capacity by 10%.
• Blank sailings will continue in August, with OA increasing blank sailings to USEC/GULF, and THEA increasing blank sailings to PNW and USEC.
• Pre-booking 4 weeks with carriers is necessary to secure space, and for some low-price services, pre-booking up to 6 weeks is recommended for safety.
• Despite some recent increases on specific lanes, overall shipping rates remain significantly lower compared to a year ago.
• Carriers are using large blank sailing programs to balance supply and demand and prevent further rate erosion.
• The trend of blank sailings is expected to intensify with the arrival of 2.4 million TEU of additional capacity by Q1 2024.

Conclusions

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.

• ILWU Canada withdraws the July 22 strike notice.The union had initially rejected a tentative wage deal recommended by federal mediators and resumed their strike.
• The Canada Industrial Relations Board declared the strike unlawful and ordered the union to cease the work stoppage.
• A new strike notice was served for July 22 but was revoked a few hours later.
• The British Columbia Maritime Employers Association states that the situation remains fluid and unpredictable.

Conclusions

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.

• The Port of San Diego introduces the US's first two electric cranes as part of its plan to transition all cargo handling equipment to zero emission vehicles by 2030.
• The Port of Long Beach installs a new charging station for electric trucks to support the industry's shift to electric heavy goods vehicles (HGVs).
• Drought conditions in the US are posing a threat to inland waterway transportation.
• Water levels on the Mississippi and Ohio rivers are decreasing, leading to potential narrowing of shipping lanes and increased risk of barges running aground.

Conclusions

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: 44 minutes for single transactions, and 72 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 27 / 40 minutes for single and double transactions respectively.

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: 23 minutes at Wando Welch Terminal, and 17 minutes at North Charleston Terminal.

Savannah:

• Waiting time for vessel berth at the terminal is up to 5 days, depending on the size of the vessel.

• Average gate turn times are 38 / 57 minutes for single and double transactions respectively.

• Starting Sunday, July 9, 2023 GPA no longer offers a Sunday gate.

• Monday-Saturday gate hours remain the same.

Houston:

• Barbours Cut Terminal has no waiting time for vessel berthing.

• The average gate turn time is 44 minutes.

Oakland:

• Average wait time of up to 6 days at Oakland Int’l Container Terminal (OICT) and up to 7 days at TraPac.

• Average import deliveries can take up to 7.3 days at TraPac and OICT.

• Average gate turn times are 58 / 54 minutes for OICT and TraPac respectively.

Seattle-Tacoma:

• Wait time of up to 7 days at Tacoma.

• Import deliveries are 3.1 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 48 / 30 / 41 minutes for T18, Washington United Terminal, and HUSKY respectively.

• T18 will be closed on July 21 and 28, 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 3.8 days, on-dock rail dwell is 3.6 days, and import units on the street are averaging at 4.1 /6.5 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 20-77 minutes, depending on the terminal.

• Chassis Pools: All pools are operating as normal except:

1. Columbus - Deficit on 40’ chassis
2. Seattle - Constrained 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.

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.