Freight Market Update - 09 November 2022

Highlights for US

• Tropical storm NALGAE struck Guandong China last week.
• New container terminal in Baltimore adds to growing logistics hub.
• Labor issues continue in USWC.
• Tropical storm Nicole shut down ports in Florida.

Ocean Freight Market Update

Asia → North America

U.S / CA 

• Falling demand from Asia and expects carriers on the trans-Pacific trade to withdraw even more capacity in the coming months than they already have.
• Tropical storm NALGAE struck Philippines on 29 Oct and landed on the western cost of Guandong province, around 60km from Shenzhen on 03 Nov but effect of the storm fell.
• The volume prospects of Asia-Pacific market remain weak, according to our surveys with local factories, many of them have not received orders due in January, and December orders are also slow. As Chinese New Year is earlier in January 2023, December was supposed to be the busiest month with volume spikes. But the traditional peak season is not likely to appear this year, and we may not see a big increase in volume.
• Given the weak demand, a continued decline in spot rates seems inevitable. However, after rates had bottomed out, there could be a bounce-back in demand, which would support a freight rate recovery. The decline of spot rates on Asia-USWC has shown signs of bottoming out. More and more carriers have agreed on the strategy to “take out capacity to meet demand”, although no one wants to be the first to suspend a service, which potentially lose market share. More radical capacity reduction plans can be expected especially from THEA while 2M already suspended 1/3 of its USWC services. The blank sailing and service suspension to USEC will also increase as the berth congestions in both Savannah and Houston are getting improved, and more capacity will be released to the market.

Rates: Transpacific ocean spot rates were stable last week, suggesting that decreases in ocean capacity from blanked sailings and carriers leaving the lane may be slowing the rate decline.

Rates to the West and East Coasts fell 16% and 18% respectively in October.

Space: No space issue.

Recommendation: Book at least 2 weeks prior to cargo ready date due to blank sailings.

Turkey → North America

• Demand is dropping for imports to the USA while capacity to the U.S. East Coast (USEC)continues to rise.
• Space is available for the west coast and rail from NYC to west coast is still an alternative option.
• CMA service will begin at the end of the month, if we approach CMA for target rate, We may get target rate you asked for.

Rates: Stable currently.

Space/Capacity/Equipment: No space, equipment and capacity problem. Hapag still has space issue.

North America → Turkey

• North America remains the most congested region, with East Coast ports faring worse after a lot of cargoes shifted from the West Coast to avoid potential delays at Los Angeles/ Long Beach relating to the unsigned port labor contract.
• For US West coast, arrivals and available capacity for Los Angeles is generally open whereas Oakland and Seattle still congested.

Rates: Stable currently across US.

Check Maersk spot rates which has the lowest rate in the market.

Capacity/Equipment: Maersk and hapag vessels has capacity problem. There are equipment and chassis problem in most terminals.

North America Vessel Dwell Times

Terminal Updates

• Driver and labor shortages in Montreal and Toronto are causing increased congestion and rail dwell times in Vancouver.
• On the morning of 2nd November, the port’s Everport, TraPac, OICT and Howard terminal were closed, however the Matson and Shippers Transport Express terminals remained open. However, terminals reopened during shift began.
• A huge 165-acre terminal and logistics hub with an on-dock rail facility is being built at the former site of the Bethlehem Steel plant in Sparrows Point. It’s expected to ease capacity issues for Conrail and also boost growth at the Port of Baltimore.
• Tropical Storm Nicole Forecast to Become a Hurricane as It Nears Florida.

South Florida Container Terminal (SFCT)

Wednesday: Closed

Thursday: Closed

Friday: TBD

Port of Miami (POMTOC)

Wednesday: Closed

Thursday: Closed

Friday: TBD

Florida International Terminal (FIT)

Wednesday: Closed

Thursday: TBD

Friday: Closed

Port Everglades (PEV)

Wednesday: Closed

Thursday: TBD

Friday: Closed

Below Airports closed yesterday due to storm.
Daytona Beach International Airport
Melbourne Orlando International Airport (MLB)
Orlando International Airport (MCO)
Orlando Sanford International Airport (SFB)
Palm Beach International Airport (PBI)

Intermodal

US Domestic Trucking Market Trends

• As the temperature drops, challenging daily winter weather driving conditions are on the rise. As we head into mid-November, winter hazards are on the horizon for much of the United States and with that comes an increased chance for the weather to wreak havoc on shipping operations.
• According to the U.S. Department of Transportation, an estimated 23% of all delays on highways are due to snow, ice and fog. In an average year, approximately 22% of property damage-only crashes occur during adverse weather, or about 919,700 incidents, and the majority of weather-related crashes happen on wet roads and during rainfall.
• For shippers, delays and damages due to the weather will inevitably take a financial toll and impact the shipper’s reputation with customers. While they can be reimbursed through a freight claims process, the business still suffers from lost inventory, revenue and time. Shippers expect carriers to protect their cargo from the elements and ensure it arrives intact. After all, responding to daily weather, and the considerations and challenges that come along with it, is part of a trucking company’s job, as is communicating critical shipment updates with shippers.
• As the winter approaches, shippers need to know that the carriers they partner with are going to provide dependable service regardless of the weather. The best way to determine how reliable a carrier will be as the weather becomes more unfavorable is by looking at a carrier’s yearlong, everyday safety practices.

“If a carrier has a strong safety culture and is prepared to act during any time of crisis, then severe weather isn’t a significant factor. Customers should depend on their carrier to deliver their product safely and timely regardless of any weather-related impacts, equipment breakdowns, traffic, etc.,” said Rick Simpson, vice president of operations at PGT Trucking, a carrier providing flatbed trucking excellence.

• The USDOT reports that trucking companies lose an annual 32.6 billion vehicle hours due to weather-related congestion in 281 of the nation’s metropolitan areas. Because drivers have a limited number of hours to drive each day, these slowdowns could force a driver to shut down early, potentially causing a late delivery. In the flatbed vertical, cargo is more exposed to the weather — especially in winter — so tarping is crucial to preserving the integrity of the shipment
• Fuel Surcharges increased due to fuel prices rises last week.