Freight market update - 27 March 2024

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• Hapag-Lloyd, the ocean carrier, holds a cautiously optimistic outlook for the remainder of 2024.

• Rolf Habben Jansen, CEO of Hapag-Lloyd, observes low inventory levels globally and notes a strong recovery post-Lunar New Year.

• Data from WorldACD reveals a 4% year-on-year increase in global demand for the two weeks ending March 10.

• Data from WorldACD shows a substantial year-over-year increase in tonnages for routes such as Dubai-Europe (205%), Bangkok-Europe (over 30%), and Colombo-Europe (20%).

• Container activity at the Port of Los Angeles surged by 60% in February compared to the previous year, reaching a total of 781,434 TEUs.

• Beeontrade expresses deep sadness regarding the tragic incident in Baltimore involving a collision of a cargo ship and the subsequent collapse of the Francis Scott Key Bridge, causing distress to several individuals.

• The incident has significant implications for one of the busiest ports in the U.S. East Coast. While Baltimore handles about 13% of quarterly container volumes compared to the Port of New York/New Jersey, diversions may lead to congestion at alternative ports, causing delays for importers.

• A massive cargo ship collided with Baltimore’s Francis Scott Key Bridge early Tuesday, causing the 1.6-mile structure to collapse, sending cars and people into the water. Six construction workers are presumed dead as their bodies have not been found.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Following the Chinese New Year holiday, there has been a slight increase in demand, particularly from BCO orders, prompting carriers to announce a GRI (General Rate Increase) for April.
• However, overall demand remains weak, and the sustainability of GRIs is uncertain. Despite this, it is causing disruption in the spot market, particularly as medium-sized customers seek to commit to quarterly deals.
• Economic experts predict a 2% increase in global demand for 2024, with Europe expecting a 0.6% rise, the USA anticipating a 2.1% increase, and China projecting a 4.7% growth.
• Capacity is forecasted to grow by 11% in 2024 and by 7% in 2025, with an order book totaling 7 million TEUs. There are concerns regarding overcapacity in the long term, although the resolution of the Red Sea crisis could significantly influence this outlook.
• THE Alliance plans to reintroduce 2 Transpacific routes to the Pacific NorthWest and the US East Coast in April.
• Meanwhile, ONE and Wan Hai are forming a new partnership focused on the Pacific SW, set to commence in May.
• These strategic maneuvers aim to assure customers that THE Alliance carriers will maintain competitiveness in the Transpacific market despite Hapag-Lloyd’s departure next year.
• Rates from Korean Airlines have increased and are fluctuating.
• Asiana Airlines are confirming rates on a case-by-case basis, with space fully booked this week.
• DLC/PEK to the USA: Most airlines have increased rates this week, and space is fully booked. Dense cargo can be booked with spot rates.
• TAO to the USA: The market is stable this week, with space tight and air freight rates similar to last week.

Turkey → North America

• Container activity at the Port of Los Angeles surged by 60% in February compared to the previous year, reaching a total of 781,434 TEUs.
• Gene Seroka, the Executive Director of the Port of Los Angeles, highlighted at the port's March media briefing that uncertainties surrounding labor negotiations on the East and Gulf Coasts, as well as challenges at the Suez and Panama Canals, might lead to a shift of cargoes towards the West Coast.
• Seroka mentioned that some companies are considering diversifying their business by shifting a portion of their cargo to different gateways.
• Rates on the East Coast are increasing, contributing to a wider gap between East Coast and West Coast rates, which could impact contract negotiations.
• Seroka suggested the possibility of an earlier-than-usual peak season for the West Coast and stated that the port is currently operating at 75% to 80% of peak capacity.
• Loaded imports saw a significant increase of 64% compared to the previous year, totaling 408,764 TEUs, while loaded exports rose by 61% to 132,755 TEUs.
• The Port processed 239,916 empty containers in February, marking a 54% increase over the same period in 2023.
• Year-to-date, the Port of Los Angeles has experienced a 35% increase in volume, handling a total of 1,637,086 TEUs.
• Mexico has become the largest trading partner for the United States, surpassing China as the leading source of goods imported to the U.S. in 2023, according to data released by the U.S. Commerce Department.
• This shift in trading dynamics has sparked inquiries into the extent of Chinese involvement in facilitating Mexican exports to the U.S.
• Container shipper imports from China to Mexico saw a substantial 60% increase in January compared to the previous year, making the China-Mexico route one of the busiest, as reported by analysts at Xeneta.
• Data from Container Trade Statistics revealed that 117,000 TEUs were shipped between China and Mexico in January 2024, up from 73,000 TEUs in January 2023.
• Container shipping volume between China and Mexico surged by 34.8% in 2023, a significant rise from the 3.5% growth observed in 2022, according to Peter Sand, chief analyst at Xeneta.
• Sand suggested that businesses might be sourcing goods from other countries initially manufactured in China, potentially as a strategy to circumvent U.S. tariffs, which could lead to increased Chinese imports through Mexico.
• Chinese investment in Mexico has experienced a notable uptick, escalating from $38 million in 2011 to $386 million in 2021.
• Chinese companies have emerged as the fastest-growing source of foreign investment in Mexico, with a predominant focus on the manufacturing sector.

North America → Turkey

• Hapag-Lloyd, the ocean carrier, holds a cautiously optimistic outlook for the remainder of 2024.
• Despite reporting a revenue decline, Hapag-Lloyd remains positive amid disruptions in the ocean container market.
• Rolf Habben Jansen, CEO of Hapag-Lloyd, observes low inventory levels globally and notes a strong recovery post-Lunar New Year.
• Jansen anticipates an early arrival of this year's peak season, expecting increased shipments between June and August.
• According to reports from FreightWaves, Jansen suggests a potential surge in cargo movement during the aforementioned period.
• Historically, the ocean container peak season typically spans from September to October, culminating with the Golden Week.
• Following the Lunar New Year holiday on February 10 this year, data trends indicate a potential dip in volumes for March.
• However, Jansen's forecast suggests a shift towards peak season volumes as early as summer.
• U.S. shippers might expedite cargo movement preemptively, considering possible labor strikes at East Coast and Gulf Coast ports.
• Global air cargo demand continues to grow, maintaining momentum despite a slight softening.
• Data from WorldACD reveals a 4% year-on-year increase in global demand for the two weeks ending March 10.
• The persistence of growth is attributed partly to ongoing sea-air demand, as shippers seek to avoid extended shipping times, and increased e-commerce activity.
• Key sea-air hubs like Dubai, Colombo, and Bangkok have seen significant demand for cargo bound for Europe.
• Data from WorldACD shows a substantial year-over-year increase in tonnages for routes such as Dubai-Europe (205%), Bangkok-Europe (over 30%), and Colombo-Europe (20%).
• E-commerce demand remains strong, with Cathay Cargo reporting that e-commerce accounts for 50-60% of its business from Hong Kong, up from approximately 30%.
• Ludwig Hausmann, a senior partner at McKinsey, predicts that cross-border e-commerce share of total air cargo volume will reach 25-30% by 2027, indicating a significant industry shift.

Baltimore Incident

• A massive cargo ship collided with Baltimore’s Francis Scott Key Bridge early Tuesday, causing the 1.6-mile structure to collapse, sending cars and people into the water.
• Six construction workers are presumed dead as their bodies have not been found.
• The Singaporean-flagged container vessel named Dali struck one of the 47-year-old bridge’s pillars shortly before 1:30 a.m. Tuesday.
• The ship, measuring about 984 feet long and weighing 95,000 gross tons (213 million pounds) at the time of the crash, was chartered to carry cargo by Danish shipping giant Maersk.
• A total blackout occurred on the ship just minutes before hitting the bridge, indicating a loss of engine power and electrical power, according to Clay Diamond, executive director and general counsel of the American Pilots Association.
• Six construction workers who were filling potholes on the bridge disappeared after it collapsed and are now presumed dead.
• After a day-long search, officials terminated the rescue mission on Tuesday evening.
• Surviving the frigid, 50-foot-deep water for several hours was deemed virtually impossible, and the dark water was too perilous for divers to navigate amid sharp debris from the crash.
• Beeontrade expresses deep sadness regarding the tragic incident in Baltimore involving a collision of a cargo ship and the subsequent collapse of the Francis Scott Key Bridge, causing distress to several individuals.
• Our heartfelt condolences go out to the victims, their families, and the entire affected community during this devastating event.
• We wish to inform our esteemed customers about potential delays resulting from this incident and highlight some crucial points to consider:
• Port Congestion: The incident has significant implications for one of the busiest ports on the U.S. East Coast. While Baltimore handles about 13% of quarterly container volumes compared to the Port of New York/New Jersey, diversions may lead to congestion at alternative ports, causing delays for importers.
• Rerouting Challenges: With approximately 1.3 million trucks crossing the bridge annually (around 3,600 per day), trucks carrying hazardous materials will now need to take a detour of approximately 30 miles around Baltimore due to the bridge collapse.
• Freight Rates: Diversions resulting from this incident have already impacted freight rates from Asia to the U.S., nearly doubling the prices compared to before the accident.

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: 45 minutes for single transactions, and 68 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 37 / 51 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 20 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 4 days, depending on the size of the vessel.
• Frequent river closures are expected due to fog during this week.
• Average gate turn times are 34 / 49 minutes for single and double transactions respectively.
• Import dwell time is 4.9 days.
• Berth 2 is back online helping to reduce waiting times.

Houston:

• Barbours Cut Terminal has up to 3 days waiting time for vessel berthing.
• 3 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 34 minutes and Bayport Container Terminal is 51 minutes.
• Loaded import dwell is at 3.6 days.

Oakland:

• Average wait time of up to 4 days at Oakland Int’l Container Terminal (OICT) and 1 day at TraPac.
• Average import deliveries can take up to 4 days at TraPac and 4 days at OICT.
• Average gate turn times are 64 / 72 minutes for OICT and TraPac respectively.
• OICT - Berth 55 is operational.
• Hoot shifts are being worked to help alleviate the backlog of vessels waiting for berthing.

Seattle-Tacoma:

• No waiting time at Husky and 3 days at WUT at Tacoma.
• 2 days waiting time in Seattle.
• Import deliveries are 1.6 days at Husky – due to EB/WB railcar imbalance, 1.4 days at Washington United Terminal, and 1-3 days at T18.
• The average gate turn times are 30 minutes for T18, 39 minutes for Washington United Terminal, and 56 minutes for HUSKY.
• Terminal 18 will be closed Fridays through March and April 1, 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 5.8 days, and import units on the street are averaging at 3.8 /5.3 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 / 100 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal.

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.