Freight market update - 7 August 2024

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• Lufthansa Cargo's operating profit decreased by 3% in the second quarter due to increased expenses and lower yields, even though core transportation revenue rose.

• In April, United Cargo launched a new, larger facility near Newark International Airport, doubling its cargo space at the hub to 319,000 square feet.

• Maersk has implemented recovery measures on its AMEX service connecting South Africa to the US, which has encountered delays from adverse weather in South Africa and extended waiting times in Freeport on the US Gulf Coast.

• The US FMC has introduced new regulations requiring ocean carriers to document their policies for handling exports, notify shippers of schedule and service changes, and ensure adequate loading times for ships.

• A significant change is the requirement for carriers to annually file a "documented export policy" with the FMC, detailing their pricing strategies, services, routes, and available equipment for US exports.

• Container shipping capacity has increased by 1.6 million TEU since the beginning of 2024, marking an 11% year-over-year increase to 29.5 million TEU.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• Recent weeks have seen the ongoing attacks in the Red Sea intensifying in a wider area of effect.
• Mid-month saw rocket attacks against two oil tankers, as well as two separate incidents against merchant vessels.
• More alarming was an attack against the port of Tel Aviv itself, expanding the area of operations into the Eastern Mediterranean.
• Houthi attacks have already led to a 90% reduction in Red Sea container throughput since the conflict began, according to a report by the Defence Intelligence Agency.
• The increased risk has driven up war-risk insurance premiums to between 0.7% and 1% of a ship’s total value, compared to less than 0.1% prior to the conflict.
• Lars Jensen, CEO of Vespucci Maritime, noted that the expanded range of Houthi capabilities now poses a threat not only to the southern Red Sea but potentially to the entire waterway.
• Due to the recent typhoon, some flights from Shanghai (SHA) have been canceled, creating a backlog that will be cleared by mid-week.
• The market from the Indian Subcontinent to Europe is experiencing significant disruptions.
• For the first half of August, FAK rates from India have risen, with Named Account Contracts (NACs) seeing a Peak Season Surcharge (PSS).
• Heavy congestion is reported at transshipment ports such as Singapore and Colombo.
• In Colombo, recent student protests, highway blockades, and curfews have exacerbated delays, leading to significant container backlogs.
• Importers are facing high demurrage charges, with the Chittagong port yards now occupying 80% of their space due to the congestion.
• The government is considering waiving these charges to alleviate the burden on businesses.
• There is a significant imbalance in equipment, especially with 20ft containers being more prevalent in imports and 40ft containers being used for exports in Bangladesh.
• In South India, carriers are struggling with equipment availability due to transshipment issues in Colombo.
• The overall equipment situation is showing slight improvement, but challenges remain.

Turkey → North America

• The US Federal Maritime Commission (FMC) has introduced new regulations requiring ocean carriers to document their policies for handling exports, notify shippers of schedule and service changes, and ensure adequate loading times for ships.
• These rules aim to balance the interests of exporters and liner operators, addressing complaints from US agriculture shippers that carriers prefer returning empty containers to Asia for higher-paying import cargo rather than accommodating US exports.
• A significant change is the requirement for carriers to annually file a "documented export policy" with the FMC, detailing their pricing strategies, services, routes, and available equipment for US exports.
• This policy will help determine if a carrier has unreasonably refused an exporter's container.
• The new rules consider blank sailings or sudden schedule changes without sufficient notice as potential unreasonable refusals to handle exports.
• Despite ocean carriers' arguments that such changes can be unavoidable and not their fault, the FMC emphasized the need for shippers to receive timely notifications to make informed business decisions.
• The "cut-and-run" practice, where a ship leaves port earlier than expected, leaving export cargo behind, is also addressed.
• The FMC asserts that vessel operators are responsible for scheduling sufficient loading time.
• Additionally, the FMC considers excessively high price quotes for export services as potentially unreasonable refusals to deal.
• While carriers can refuse exports for safety and operational reasons, the FMC will scrutinize instances where a ship is designated as a "sweeper" for repositioning empty containers.
• These new rules will take effect 60 days after their publication, pending approval from the US Office of Management and Budget.
• Container shipping capacity has increased by 1.6 million TEU since the beginning of 2024, marking an 11% year-over-year increase to 29.5 million TEU.
• According to Niels Rasmussen, chief shipping analyst at BIMCO, this is the fastest growth in 15 years.
• The 12,000-17,000 TEU ship segment has expanded the most, making up 22% of the container fleet.
• This segment’s capacity has grown 25% year-over-year in the first half of 2024.
• Shipowners have moved away from ordering ships with capacity over 17,000 TEU because these larger ships are operationally limited to ports in Asia and Europe.
• The ships currently in service already cover most of these trade lanes.
• The total container fleet capacity is expected to reach 30 million TEU by the end of 2024.
• An additional 4.3 million TEU will be added by 2027.
• Cargo volume growth is not likely to match the expansion, hence ship recycling is expected to increase.
• The eventual reopening of the Red Sea and Suez Canal routes will mean that the demand for ships will decrease, according to Rasmussen.

North America → Turkey

• Earnings results show that the cargo business at publicly traded passenger and combination airlines saw improvement in the second quarter compared to the previous three months, as the recovery from a prolonged freight downturn solidified this year.
• Lufthansa Cargo's operating profit decreased by 3% in the second quarter due to increased expenses and lower yields, even though core transportation revenue rose.
• The peak shipping season is anticipated to drive strong growth for the remainder of the year.
• Notably, financial and operational performance showed improvement compared to the first quarter.
• United Airlines reported a 14.4% rise in second-quarter cargo revenue, totaling $414 million.
• In April, United Cargo launched a new, larger facility near Newark International Airport, doubling its cargo space at the hub to 319,000 square feet.
• Newark contributes to almost 30% of United’s global tonnage and cargo revenue.
• Delta Air Lines achieved a 16% year-over-year increase in second-quarter cargo revenue, reaching $199 million.
• In contrast, American Airlines saw a 1.3% drop in cargo revenue, falling to $195 million.
• Shippers are facing significant delays due to the ongoing Red Sea crisis, as shown by recent port congestion data.
• Danish carrier Maersk has implemented recovery measures on its AMEX service connecting South Africa to the US, which has encountered delays from adverse weather in South Africa and extended waiting times in Freeport on the US Gulf Coast.
• The Jones Act, which requires shipping between US ports to be conducted by US-built, US-flagged ships with American crews, has further complicated logistics, leading to a backlog of containers in Freeport.
• This congestion is worsened by an influx of imports into Freeport via other services, straining the port's capacity.
• Globally, Beacon's supply chain visibility platform has identified Durban, Ningbo-Zhoushan, Vancouver, Los Angeles, and Chittagong as the most congested ports.
• Increased wait times have been noted in ports like Charleston, Zhoushan, Jebel Ali, Manila, and Chittagong, with 64% of Southeast Asian ports experiencing rising congestion.
• Despite relatively stable congestion levels in North American ports, potential strikes on the US east and Gulf coasts threaten stability.
• The Red Sea crisis has intensified port congestion due to heightened vessel utilization and longer lead times, compounded by shippers front-loading to avoid further delays.
• Beacon CEO Fraser Robinson emphasized the need for robust and adaptable supply chain strategies to manage these challenges.

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:

• 2 days waiting time is expected for a berth at Maher Terminals LLC and 1 day at APM Terminals.
• Waiting time of up to 3 days is expected at Port Liberty Terminal Bayonne.
• Average gate turn times are 56 minutes for single transactions and 79 minutes for double transactions.

Norfolk:

• Currently, most vessels berth on arrival.
• Bigger vessels wait approximately 2 days for a berth.
• Average gate turn times are 32 minutes for single transactions and 45 minutes for double transactions.

Charleston Terminal:

• 3 days waiting time for Wando Welch Terminal and 0.5 Days for North Charleston Terminal.
• Average truck turn times are 17 minutes at Wando Welch Terminal and 24 minutes at North Charleston Terminal.
• Dock construction at Wando Welch Terminal started on March 11, 2024, reducing berth space from 3 to 2 berths for one year.

Savannah:

• The waiting time for a vessel berth at the terminal is up to 2 days, depending on the vessel's size.
• Average gate turn times are 33 minutes for single transactions and 53 minutes for double transactions.
• Import dwell time is 1.6 days.

Houston:

• There is up to a 1 day waiting time for vessel berthing at Barbours Cut Terminal and Bayport Container Terminal.
• Average gate turn times at Barbours Cut Container Terminal are 33 minutes for single transactions and 54 minutes for double transactions.
• Average gate turn times at Bayport Container Terminal are 36 minutes for single transactions and 58 minutes for double transactions.
• Loaded import dwell time is 3.9 days at Barbours Cut and 3.7 days at Bayport.

Oakland:

• The average wait time is up to 1 day at Oakland International Container Terminal (OICT).
• The average wait time is 2 days at TraPac.
• Average import deliveries can take up to 4.9 days at TraPac.
• Average import deliveries can take 3.2 days at OICT.
• Average gate turn times are 86 minutes at OICT and 82 minutes at TraPac.

Seattle-Tacoma:

• There is a 17 day waiting time at Husky Terminal and 10 days at Washington United Terminal in Tacoma.
• There is a 4 day waiting time in Seattle.
• Import rail dwell times are 6.1 days at Husky Terminal.
• Import rail dwell times are 7.2 days at Washington United Terminal.
• Import rail dwell times are 1-3 days at Terminal 18 (T18).
• Average gate turn times are 30 minutes at T18.
• Average gate turn times are 36 minutes at Washington United Terminal.
• Average gate turn times are 71 minutes at Husky Terminal.
• T18 will be closed August 9, 16, 23 and 30, 2024.
• Husky Terminal will have hoot gates on August 5,6,7 and 8, 2024.

Los Angeles/Long Beach:

• Port of Los Angeles dwell time for local import cargo is 3.3 days.
• On-dock rail dwell time at Port of Los Angeles is 5.3 days.
• Import units on the street at Port of Los Angeles are averaging 4.2 days for 20 ft containers and 6.4 days for 40+ ft containers.
• The number of arrivals during July is expected to be 29 arrivals above normal.
• Average terminal gate turn time at Port of Long Beach is between 24 and 68 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

• Memphis – Constrained on 40’ chassis
• Pittsburg - Constrained on 40’ chassis
• Buffalo - Constrained on 20’ 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.

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.