Freight Market Update - December 29, 2022

From the Editor’s Desk

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Key takeaways for the US

• The holiday season has resulted in softened demand and production in various parts of Asia.
• The holidays and winter conditions are expected to cause delays and backlogs in shipments globally.
• A new fleet of chassis will be built by South Carolina’s port authorities.
• Low import and export volumes globally.
• We expect volumes to normalize soon in the new year.

Read on for more in-depth updates.

Ocean Freight Market Update

Asia to North America

U.S / CA 

Global Market Conditions

• Maersk has collaborated with the terminal to reduce delays to less than a day in Vancouver.
• However, the average waiting time in the market still remains at 20-40 days.
• After the Lunar New Year, we expect very soft volumes. This is due to factories offering slow production owing to increasing infection.
• Current rates are expected to remain flat before the Chinese New Year. Usually, the FAK/spot rate spaces would be subjected to rollover.
• The MSC can provide sufficient space protection under diamond rates.
• Hapag-Lloyd, HMM, ONE, and Yang Ming will neither close services nor start any new loops in their 2023 service plan.
• Any revisions to the current TOP network will be limited. They majorly concern the US East Coast.
• Over 24,000 TEU Megamax new buildings have been introduced in THEA - Far East - NEU loops.
• Around 14,000-15,000 TEU ships are expected to upgrade to Asia-USEC services in the near future.

Day 7 Product

• CMA, Cosco, Evergreen, and OOCL (Cosco Group) signed an agreement on a joint Day 7 Product.
• It will be introduced in January 2023.
• Two loops have been removed from the Day 7 Product.
• These loops are the Cosco and OOCL standalone services SEAX/PCSX, the Cosco-operated China - Prince Rupert Express CENX.
• In reality, these two loops were already closed in December.
• The overall network capacity will remain unchanged as compared to the current proforma schedules.
• The OA’s primary service upgrade focuses majorly on Southeast Asian regions as the US importers increasingly source from Asia.
• They import from Asian countries such as VN, TH, and India.
• The OA is expected to expand its AAC/YANGTSE PSW service to cover any Vietnamese direct call ports.
• These Vietnamese ports include CAI, MEP, and HAIPHONG.
• Meanwhile, Cosco and OOCL are launching their standalone service, AWES/ISE to offer more options from the Far East to the USEC.

Conclusions

Rates: The market has witnessed no movements in the past week. It is quiet as all carriers have extended their current rates until 14 January 2023. They will most likely not change the rates for the whole month.

Space: Space open, no issues with equipment.

Recommendation: We recommend blank sailings to continue. Book at least two weeks prior to the date your vessel is due to depart.

Turkey to North America

• The port situation in USEC has been showing improvement every day.
• The average waiting time for USEC ports is around 1-3 days. This is an all-time low period that is showing progress.
• Berth utilization and terminal yard utilization have begun to normalize to a great extent and waiting times have reduced in all terminals.
• However, the import volumes continue to decline constantly.
• Oakland port has witnessed a high volume of imports.
• This has caused a delay for vessels and shipments in that region.

Conclusions

Rates: Rates are stable and the same as last week.

Space for capacity: No capacity issues except for Hapag-Lloyd.

Space for equipment: No issues with equipment.

North America to Turkey

• Poor weather conditions have been recorded.
• This has caused delays and backlogs.
• This bad weather problem has made deliveries hard and slow.

Conclusions

Rates: Stable rates have remained the same as last week.

Space for capacity: No massive capacity issues. However, some intermodal terminals have been extremely congested lately.

Space for equipment: Equipment problems have started due to low import levels.

Terminal Updates

• South Carolina Port Authorities are building a chassis fleet.
• It would have approximately 13,000 chassis and is expected to get completed by March 2023.
• Savannah Port Berth (CB#1) is undergoing major reconstruction.
• It is a two-year project that is expected to get done in June 2023.
• Six new Post Panamax Cranes will be installed on this berth.
• CB#1 is ongoing on one end. Additionally, there is a GA steamship property that will be completed by May-June 2023.
• It is moving the current terminal CFS warehousing upriver to the new location.
• Following these updates, the chassis counts in Tacoma have improved greatly.

 US Domestic Trucking Market Trends

• We have noticed flatbed load posts lowered at almost four times last week than last year.
• However, weekly volumes have increased by about 10% w/w.
• The load posts are at their lowest level in six years.
• The flatbed carrier equipment posts have remained at their highest level in six years.
• Last week’s equipment posts volumes were 60% higher as compared to the average over the last five years.
• Due to these values, last week’s Load To Truck Ratio (LTR) increased from 7.83 to 9.52.
• This is notably the lowest LTR level ever recorded for flatbeds in the last six years during this time of the year.
• In terms of spot rates, the flatbed linehaul rates have increased to a national average of $2.07/mile. This is following last week’s $0.03/mile gain.
• Last week’s average spot rate is 20% lower than last year.
• This is $0.52/mile and $0.03/mile lower than this time in 2018.
• Last week’s national average is still at $0.20/mile higher than the rates in 2019.

 Final Thoughts

With the given updates, we can safely conclude that the market is faring well with a sufficient supply of equipment and capacity.

Although some regions are facing congestion and prolonged vessel waiting durations, the delays are compensated by other places. The holiday season and winter climate prove difficult for various regions. Demands and production have been falling in some places making it hard to balance trade.

We can expect a steady and consistent increase in the market owing to these trends. Be informed and pick the right ports for your import and export shipments. This will avoid prolonged vessel waiting time and delays due to congestion.

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