Freight market update - 8 May 2024

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• The IMF is upgrading its 2024 economic projections for the Asia-Pacific region, expecting a growth rate of 4.5% in 2024 and 4.3% in 2025.

• China's growth is anticipated to slow from 5.2% in 2023 to 4.6% in 2024 and further to 4.1% in 2025.

• In April, 50 newbuild vessels with a total capacity of 333,000 TEUs were delivered, surpassing the previous record set in March.

• The introduction of additional belly capacity from airlines' summer schedules contributed to a 5% year-on-year increase in overall cargo capacity, leading to a decrease in the dynamic load factor from 62% in March to 59% in April.

• More than 9,000 workers at Canadian National Railway Co. (CN) and Canadian Pacific Kansas City Ltd (CPKC) may strike as early as May 22 if new deals on contract demands are not reached.

• China's logistics sector expanded by 5.9% to 88 trillion yuan ($12.4 trillion) in Q1, as reported by the China Federation of Logistics and Purchasing.

• Saudi Arabia and China have signed an agreement to establish a 12-factory industrial city and logistics zones focused on construction materials in Cairo, reflecting the strong ties between the two countries.

Read on for more in-depth updates.

Asia → North America

US/CA

Transpacific Trends and Market Updates

• The IMF is upgrading its 2024 economic projections for the Asia-Pacific region, expecting a growth rate of 4.5% in 2024 and 4.3% in 2025.
• The region surpassed IMF expectations in 2023 with a growth rate of 5% and continues to show resilience.
• Around 60% of global growth in 2024 is expected to come from the Asia-Pacific region, with domestic demand being a key driver of economic performance.
• China's growth is anticipated to slow from 5.2% in 2023 to 4.6% in 2024 and further to 4.1% in 2025.
• India's and the Philippines' 2024 growth projections have been revised upward to 6.8% and 6.2%, respectively.
• Indonesia's growth remains stable at 5.0% in 2024 and 5.1% in 2025.
• China's logistics sector expanded by 5.9% to 88 trillion yuan ($12.4 trillion) in Q1, as reported by the China Federation of Logistics and Purchasing.
• This growth rate is 2 percentage points higher than the previous year, with a significant surge of 11.6% observed in consumer goods logistics.
• Total sector revenue reached 3.1 trillion yuan, showing a 4.5% increase year-on-year.
• The China Federation of Logistics and Purchasing reported substantial growth in China's logistics industry for Q1. Social logistics, covering the movement of goods and services, increased by 5.9% to 88 trillion yuan compared to the same period last year.
• This year's growth represents a notable improvement, with the growth rate accelerating by 2 percentage points compared to the previous year.
• However, the growth was not uniform across all categories. Logistics related to industrial products experienced a 6% rise, while logistics for consumer goods surged by 11.6%.
• Imported goods also witnessed an increase, with logistics growing by 5.5%, according to Chinese media reports.
• With less than six months remaining until the US presidential election, both Democratic nominee Joe Biden and Republican nominee Donald Trump have pledged to adopt tough stances on China.
• Despite these promises, the Economist Intelligence Unit (EIU) predicts that China is likely to expand its influence in the global supply chain.
• The EIU anticipates a persistent deterioration in economic and diplomatic relations between China and the US throughout this decade, regardless of the election outcome.
• Analysts at the EIU suggest that both candidates will pursue policies aimed at increasing pressure on China's technology sector and justifying future trade and investment restrictions based on national security concerns.
• In April, President Biden proposed tripling tariffs on Chinese steel and aluminum imports, echoing former President Trump's approach of imposing levies on various Chinese goods.
• Trump indicated in February his intention to impose tariffs exceeding 60% on Chinese goods if re-elected.
• If Biden wins the presidency, he is expected to maintain collaboration with like-minded governments.
• Saudi Arabia and China have signed an agreement to establish a 12-factory industrial city and logistics zones focused on construction materials in Cairo, reflecting the strong ties between the two countries.
• The cooperation pact was jointly signed by the state-owned National Housing Company (NHC) and China’s CITIC Construction Group during an official visit by Saudi Minister of Municipal, Rural Affairs, and Housing Majed Al Hogail to China.
• The agreement aims to facilitate the swift implementation of housing projects in Saudi Arabia, adhering to global standards, by attracting major manufacturers of construction materials and leveraging Chinese expertise in the sector.
• The pact is expected to enhance the economic and developmental impact of the real estate sector, promote the development of residential projects, improve their quality, and advance the transformation of the Saudi construction industry through the establishment of industrial cities and logistics zones.

Turkey → North America

• April saw a slowdown in global air cargo demand after four consecutive months of significant growth, with a rise of over 11%.
• The introduction of additional belly capacity from airlines' summer schedules contributed to a 5% year-on-year increase in overall cargo capacity, leading to a decrease in the dynamic load factor from 62% in March to 59% in April.
• Despite a y/y rise in global air cargo spot rates in April due to Middle East conflicts and strong e-commerce demand, this increase is not expected to be sustained.
• The impact of the Red Sea shipping disruption on air freight demand is anticipated to ease as shippers and forwarders have developed plans to manage delays.
• Some shippers and forwarders are reserving capacity in anticipation of the Q4 peak season, considering the e-commerce rush experienced last year.
• Airlines are adjusting their strategies, such as withholding some available capacity in anticipation of potentially higher revenues during the Q4 period.
• Employees at Canada’s two largest railways have authorized a strike, potentially leading to a nationwide rail shutdown and concerns about disruption in North American supply chains.
• More than 9,000 workers at Canadian National Railway Co. (CN) and Canadian Pacific Kansas City Ltd (CPKC) may strike as early as May 22 if new deals on contract demands are not reached.
• Paul Boucher, president of the Teamsters Canada Rail Conference, emphasized the potential scale of disruption, stating it would be unprecedented in Canada.
• Supply chains from Halifax to Vancouver and down through the Midwest to the Gulf of Mexico would be impacted by the strike.
• Canadian Pacific stated that the strike would disrupt essential supply chains throughout North America and significantly affect trade between Canada, the U.S., and Mexico.
• CN and CPKC handle three-quarters of the overall tonnage carried by the sector, underlining the potential impact of their work stoppage.
• Vessel utilization across all trades has surged to 90 to 95%, propelled by factors such as a robust US economy, advance orders compensating for extended lead times, and the increased number of ships required for managing new routings via the Cape of Good Hope.
• Rates continue to remain high, and there are expectations of a significant increase in May, particularly on the Far East to Europe route. Carriers are likely to sustain these high prices over the next couple of months.
• Businesses that can accurately forecast their capacity requirements and plan ahead will gain an advantage in securing space and favorable rates in anticipation of the sales rush.

North America → Turkey

• Containers currently on the water will be discharged and terminated at POD Norfolk.
• For any ad hoc inland delivery required to Baltimore, please contact the Import Customer Service team.
• Inlands will be invoiced at cost.
• No barge solution can be provided until further notice.
• Containers still at quay or yet to be ingated in Asia can load to alternative POD Norfolk or New York.
• Bookings would be rated as per existing Norfolk/New York contract rate.
• For any ad hoc inland delivery required to Baltimore, we can quote rates as per public tariff.
• No barge solution can be provided until further notice.
• Unfortunately, as we do not have visibility on when we will have access to Baltimore Seagirt terminal by water, we cannot accept any booking request to POD Baltimore until further notice.
• Additionally, we cannot offer barge solutions into Baltimore until further notice.
• In April, 50 newbuild vessels with a total capacity of 333,000 TEUs were delivered, surpassing the previous record set in March.
• This capacity addition exceeds the entire fleet size of Pacific International Lines, the world's 12th largest container line, and represents a 1.1% share of the global market.
• Despite predictions of overcapacity for 2024, the market has absorbed all new capacity due to factors such as rerouting of vessels and slow steaming, which have created artificial fresh tonnage demand.
• This additional demand has also limited the idle container ship capacity, with only 0.6% of the global fleet being idle by late April.
• The global container fleet currently stands at 29.37 million TEU and is expected to reach 30 million TEU by June, according to Linerlytica’s assessment.

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 2 days waiting time is expected at Port Liberty Terminal Bayonne.
• Average gate turn times: 41 minutes for single transactions, and 63 minutes for double transactions.
• Terminal change to Port Liberty New York.
• An earthquake hit New York City, New Jersey with 4.8 Magnitude on April 5, 20204.
• However, no issues were reported at Maher, Port Liberty, APMT NYC or Greenwich terminal in Philadelphia.
• 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 3 days at Wando Welch Terminal and 0.5 days at North Charleston Terminal.
• Average truck turn times: 18  minutes at Wando Welch Terminal, and 23 minutes at North Charleston Terminal.
• Dock construction at Wando Welch terminal started on March 11, 2024.
• It is reducing berth space from 3 to 2 berths for one year.
• Berths will be given on a first come, first serve basis.
• This project will also limit the amount of class 1.1 and 1.2 that can be handled at the terminal during this time.

Savannah:

• Waiting time for vessel berth at the terminal is up to 2 days, depending on the size of the vessel.
• Frequent river closures are expected due to fog during this week.
• Average gate turn times are 35 / 54 minutes for single and double transactions respectively.
• Import dwell time is 2 days.
• Berth 2 is back online helping to reduce waiting times.

Houston:

• Barbours Cut Terminal has up to 1 day waiting time for vessel berthing. The same goes for the 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 times at Barbours Cut Container Terminal are 32 / 53 minutes for single and double transactions.
• The gate turn times are 34 / 55 minutes for single and double transactions at Bayport Container Terminal.
• Loaded import dwell is at 3.5 days at Barbour's Cut and 3.3 days at Bayport.

Oakland:

• Average wait time of up to 3 days at Oakland Int’l Container Terminal (OICT) and TraPac.
• Average import deliveries can take up to 6 days at TraPac and 3.1 days at OICT.
• Average gate turn times are 64 / 76 minutes for OICT and TraPac respectively.
• OICT reported two cranes are non operational.
• Port of Oakland has started the bollard and fender replacement project at OICT, starting with Berth 55 through Berth 59.
• The project is expected to last into Q1 of 2025.

Seattle-Tacoma:

• 1 day waiting time at Husky and 3 days at Washington United terminal at Tacoma.
• 3 days waiting time in Seattle.
• Import deliveries are 2.7 days at Husky – due to EB/WB railcar imbalance, 4.3 days at Washington United Terminal, and 1-3 days at T18.
• The average gate turn times are 23 minutes for T18, 41 minutes for Washington United Terminal, and 40 minutes for HUSKY.
• Terminal 18 will be closed on May 10, 17 and 24, 2024.
• Husky Terminal will have a Saturday gate (May 4, 2024) and Monday hoot gate (May 6, 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 days, on-dock rail dwell is 4.2 days, and import units on the street are averaging at 3.4 / 4.8 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 23 / 63 minutes, depending on the terminal.

Chassis Pools

All pools are operating as normal except:

• Chicago – Constrained on 20’ chassis.
• Indianapolis – Constrained on 40’ chassis.
• Memphis – Constrained on 20’ 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.

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.