/ By COH Marketing / Market Update（EN） • 市场动向(中文)/ 0 Comments

Freight Market Update: March 14, 2023

Ocean Freight Market Update

Asia → North America (TPEB)

  • Transpacific Eastbound (TPEB) Carriers look to pick up rate slack amid low volume market.
    • U.S.: Current TPEB market capacity and demand levels look to hold through the end of March. Prospects of general rate increases (GRI) for April 1st appear more common from the carriers than in previous months. Routine blank sailings on almost all tradelanes will persist through the end of March, as well.
    • Canada: Market and rate conditions are similar to the U.S. Vancouver continues to see stable vessel dwell counts (1 vessel) as well as berthing delays (3 days, 9 days for rail dwell).
  • Rates: Soft on most origin-destination combinations.
  • Space: Open.
  • Capacity/Equipment: Open.
  • Recommendation: Book at least 2 weeks prior to cargo ready date (CRD), and keep upcoming blank sailings in mind.

Asia → Europe (FEWB)

  • Demand and Supply are a bit more balanced this week after the blank sailings seen immediately following Lunar New Year (LNY). Booking intake is gradually improving but still not as strong as pre-LNY. Rates are still under pressure.
  • Rates: Generally reduced or extended for the first half of March.
  • Capacity/Equipment: Still seeing around 10-20% blank sailing average in weeks 11/12/13 to adjust for the decrease in demand. Expect the carriers to continue the same trend into March.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays (rolls).

Europe → North America (TAWB)

  • Demand remains low and space continues to be widely available. Capacity is still outstripping demand and we expect this to continue for the foreseeable future.
  • Rates: The drop continues as demand is not picking up at the same pace as last year and vessel utilization is in the 65-70% range, down from 90% a few months ago.
  • Space: Due to the easing of congestion, space into the U.S. East Coast (USEC) and U.S. West Coast (USWC) is coming online.
  • Capacity/Equipment: Equipment availability keeps getting better as congestion disappears. Low empty stacks at inland depots are also getting better in some areas, but prioritize pick-up from the Port of Loading if possible.
  • Recommendation: Book 2-3 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.

Indian Subcontinent → North America

  • An increase in rates is expected as carriers announce General Rate Increases (GRIs) for the end of March and April. Full implementation of these GRIs is not expected, but slight increases will be felt across most Ports of Loading (POLs).
  • Rates: Remain from 1H March.
  • Space: Open.
  • Capacity/Equipment: Slight capacity constraints to USWC. Equipment remains top of mind, but varies drastically based on carrier, POL, and equipment type.
  • Recommendation: Be open to procuring equipment from wet ports vs. inland container depots and to use alternative services that may be slightly more expensive, but with less service disruptions.

North America → Asia

  • Capacity is available across all major services, and carriers are looking for volume opportunities. No major services to the Asia Pacific (APAC) region are seeing space constraints.
  • Congestion has been cleared out across most North American container yards with improved operations as a result of lowered demand.
  • Equipment is available and ample in most major markets.
  • The outlook at the end of Q1 and headed into Q2 is that most of the existing capacity will remain in place as carriers lightly reshuffle vessel capacity across trades.
  • Rates: Rate pressures continue the trend slightly downwards MoM on certain lanes from coastal ports to Asia base ports. All carriers are trying to push cargo onto these lanes/services. Deals below existing market levels are available for consistent volume opportunities.
  • Space: Very open, allocation requests can be made to carriers for high volume weeks or projects with a high probability of acceptance.
  • Capacity/Equipment: no major capacity changes in the market. No major equipment hurdles to highlight. The only pocket shippers should monitor are IPI’s where chassis availability may be low.
  • Recommendation: book 1-2 weeks prior to CRD on all coastal to Asia-based port lanes, and book 2-3 weeks prior to CRD on all inland to Asia and feeder port lanes.

North America → Europe

  • Capacity from the USEC is available, while certain services from the USWC and Gulf remain tight but stable.
  • Most USEC to N. Europe (NEU) and Mediterranean (MED) services have low capacity utilization levels with no space constraints.
  • Gulf Coast to NEU and MED services continue to have medium to high utilization levels as the market has seen a reintroduction of capacity. Still there are some inconsistencies in the schedules from the Gulf.
  • The USWC to NEU, MED services are still limited in options and therefore utilization levels are artificially high.
  • Rates: Rates trended slightly downward QoQ on USEC to NEU lanes. Carriers made adjustments early in Q1 and since then rates have remained flat. Gulf and USWC rates were not adjusted in Q1 given the utilization levels on those services. Carriers are willing to make deals for USEC opportunities.
  • Space: Space is open from USEC, manageable from Gulf, and limited from USWC.
  • Capacity/Equipment: no major capacity changes in the market. No major equipment hurdles to highlight in the US, save for pockets of potential chassis issues out of IPI’s.
  • Recommendation: book 2 weeks prior to CRD on all EC to NEU, MED lanes, book 3 weeks prior to CRD on all Gulf to NEU, MED lanes, book 4 weeks prior to CRD for all PSW to NEU lanes.

North America Vessel Dwell Times

Air Freight Market Update

Asia

  • N. China: TPEB demand has decreased this week with rates also lowering as well. The FEWB market is showing an opposite trend with both demand and rates increasing from the week prior.
  • S. China: TPEB supply is tight with demand increasing in the market, resulting in rates increasing from the week prior. The Far East Westbound (FEWB) market is following at a similar trend but at a slower pace. As demand increases, expect longer booking times at origin.
  • Taiwan: The market is picking up as we approach the quarter end. Rates are increasing while capacity is getting tighter.
  • Korea: Rates remain the same as the previous week with no large increases in market demand.
  • SE Asia: Quarter-end TPEB demand in northern Asia is causing rates to increase and hub capacity to tighten. The FEWB market remains stable.

Europe

  • TAWB demand continues to fluctuate between point pairs Ex EU and UK, this is reflected in the rate levels increasing and decreasing week over week.
  • There is sufficient capacity available in the market, however, expect longer lead days for direct routing. Where possible indirect options via secondary hubs are providing shorter lead days and better rates.
  • No operational disruptions reported in EU & UK.
  • For all lanes: Continue to place bookings early to secure best uplift options/routings. If the lead time can take a deferred option via a secondary hub, bookings could benefit from lower rate levels.

Americas

  • Export demand remains steady from all markets.
  • US airports are running at a normal pace.
  • Capacity is opening up further, especially into Europe.
  • Rates remain stable week over week.

Trucking & Intermodal

Europe

  • Inland waterway shipping, or in short barging, is becoming more and more the transport modality of choice for moving containers from the Rotterdam Ocean Port to the ‘Hinterland’, not only into the Netherlands but also cross border to Germany and Switzerland.
  • There is an expectation that container transport to and from the main port of Rotterdam will grow significantly over the next 20 years. If this growth is accommodated by road transport, our roads will become completely blocked. There is a lot of unused capacity in the system of inland waterways and inland shipping is capable of transporting large volumes. Compared to transport by lorry or plane, inland shipping produces far less CO2. Moreover, inland shipping accidents are rare.

Americas

Import/Export Market Trends

  • Congestion is improving at Canadian ports and rail ramps, there are no significant operational delays.
  • CP Vaughan Intermodal Terminal is an exception where truckers, at time, are still experiencing 4-6 hours of waiting time.
  • CN continues shuttling containers from Brampton terminal to the CN Misc terminal, charging $300 per container.
  • Memphis, Houston, Detroit, Savannah, and Oakland are seeing some delays and import dwells > 10 days.
  • The port of Houston will be discontinuing Saturday operations at Bayport + Barbours cut on April 29th.
  • Congestion fees will no longer be active, effective March 1.
  • Majority of US ports and rail ramps are fluid, and not experiencing any significant delays.
  • Highway Diesel have remained relatively stable YTD.

US Domestic Trucking Market Trends

  • The FreightWaves SONAR Outbound Tender Volume Index (OTVI), which measures contract tender volumes across all modes, was down 25% year-over-year (3.3% month-over-month), or 9.6% when measuring accepted volumes after the significant decline in tender rejection rates. ‘
  • In addition to this, the Cass report indicated year-over-year volumes were down 3.9% in December after falling 3.3% month-over-month from November. This trend illustrates shipment volumes are declining compared to last year, but much more gradually.
  • The Morgan Stanley Dry Van Freight Index is another measure of relative supply; the higher the index, the tighter the market conditions.
  • Throughout December, trends closely followed this curve, indicating that market pressures were consistent with average historical trends. Looking forward, we expect to see softening through at least February as seasonal demand eases in the first two months of the year.

Customs and Compliance News

Next COAC Meeting Scheduled

CBP’s Commercial Customs Operations Advisory Committee (COAC) will next meet March 29, 2023 in Seattle, CBP said in a notice. The trade community can submit comments, which are due in writing by March 24, 2023.

UFLPA Interactive Dashboard Announced

On March 14, 2023, Acting CBP Commissioner Troy Miller announced a new Uyghur Forced Labor Prevention Act (UFLPA) interactive dashboard. The statistics provided on this dashboard include shipments subject to UFLPA reviews or enforcement actions. This dashboard shows the commodity type found in detained shipments and their country of origin.

Freight Market News

Maersk Returns to Ukraine With Container-on-Barge Service

After ceasing operations in Ukraine, Maersk announced a return to service via freshwater ports along the Danube estuary in the northern part of the country. The shallow-draft terminals have operated relatively smoothly throughout the year, so Maersk has implemented container-on-barge services via the Constanta/Danube Channel and the Black Sea with a transit time of approximately a day and a half.

Source from Flexport.com

/ By COH Marketing / Market Update（EN） • 市场动向(中文)/ 0 Comments

Freight Market Update: March 7, 2023

Ocean Freight Market Update

Asia → North America (TPEB)

  • Transpacific Eastbound (TPEB) rates soften amid low demand.
    • U.S.: TPEB rates are back to seeing minor mitigations to most U.S. gateways and inland destinations this week. Overall, delays and congestion are down but the consistent weekly blank sailings can expect to remove 30% of capacity from the market. Current capacity remains above any projected container volumes, spurring recent rate reductions.
    • Canada: Market and rate conditions are similar to the U.S. Vancouver continues to see stable vessel dwell counts (3 vessels) and berthing delays (13 days, 9 days for rail dwell). The low TPEB demand is further playing a key role in keeping West Coast port and rail congestion low.
  • Rates: Soft on most origin-destination combinations.
  • Space: Open.
  • Capacity/Equipment: Open.
  • Recommendation: Book at least 2 weeks prior to cargo ready date (CRD), and keep upcoming blank sailings in mind.

Asia → Europe (FEWB)

  • Demand and Supply are a bit more balanced this week after the blank sailings seen immediately following Lunar New Year (LNY). Booking intake is gradually improving but still not as strong as pre-LNY. Rates are still under pressure.
  • Rates: Generally reduced or extended for the first half of March.
  • Capacity/Equipment: Still seeing around 10-20% blank sailing average in weeks 11/12/13 to adjust for the decrease in demand. Expect the carriers to continue the same trend into March.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays (rolls).

Europe → North America (TAWB)

  • Demand remains low, space continues to be widely available. Inventories stock in the US are still very high so demand is not picking up as expected.
  • Rates: The drop continues as demand is not picking up at the same pace as last year and vessel utilization is in the 65-70% range, down from 90% a few months ago.
  • Space: Due to the easing of congestion, space in the U.S. East Coast (USEC) and U.S. West Coast (USWC) is coming online.
  • Capacity/Equipment: Equipment availability keeps getting better as congestion disappears. Low empty stacks at inland depots are also getting better in some areas, but prioritize pick-up from the Port of Loading if possible.
  • Recommendation: Book 2-3 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.

Indian Subcontinent → North America

  • Continued rate reductions were seen in the 2nd half of February, but the expectation is that stabilization will occur as we head into March.
  • Rates: Decreased week-over-week.
  • Space: Open.
  • Capacity/Equipment: Capacity is open with few blank sailings and limited disruptions. Equipment will continue to be an issue based on carrier choice and empty pickup location.
  • Recommendation: Be open to procuring equipment from wet ports vs. inland container depots as equipment deficits are being felt in many areas.

North America → Asia

  • Capacity is available across all major services, and carriers are looking for volume opportunities. No major services to the Asia Pacific (APAC) region are seeing space constraints.
  • Congestion has been cleared out across most North American container yards with improved operations as a result of lowered demand.
  • Equipment is available and ample in most major markets.
  • The outlook at the end of Q1 and headed into Q2 is that most of the existing capacity will remain in place as carriers lightly reshuffle vessel capacity across trades.
  • Rates: Rate pressures continue the trend slightly downwards MoM on certain lanes from coastal ports to Asia base ports. All carriers are trying to push cargo onto these lanes/services. Deals below existing market levels are available for consistent volume opportunities.
  • Space: Very open, allocation requests can be made to carriers for high volume weeks or projects with a high probability of acceptance.
  • Capacity/Equipment: no major capacity changes in the market. No major equipment hurdles to highlight. The only pocket shippers should monitor are IPI’s where chassis availability may be low.
  • Recommendation: book 1-2 weeks prior to CRD on all coastal to Asia-based port lanes, and book 2-3 weeks prior to CRD on all inland to Asia and feeder port lanes.

North America → Europe

  • Capacity from the USEC is available, while certain services from the USWC and Gulf remain tight but stable.
  • Most USEC to N. Europe (NEU) and Mediterranean (MED) services have low capacity utilization levels with no space constraints.
  • Gulf Coast to NEU and MED services continue to have medium to high utilization levels as the market has seen a reintroduction of capacity. Still there are some inconsistencies in the schedules from the Gulf.
  • The USWC to NEU, MED services are still limited in options and therefore utilization levels are artificially high.
  • Rates: Rates trended slightly downward QoQ on USEC to NEU lanes. Carriers made adjustments early in Q1 and since then rates have remained flat. Gulf and USWC rates were not adjusted in Q1 given the utilization levels on those services. Carriers are willing to make deals for USEC opportunities.
  • Space: Space is open from USEC, manageable from Gulf, and limited from USWC.
  • Capacity/Equipment: no major capacity changes in the market. No major equipment hurdles to highlight in the US, save for pockets of potential chassis issues out of IPI’s.
  • Recommendation: book 2 weeks prior to CRD on all EC to NEU, MED lanes, book 3 weeks prior to CRD on all Gulf to NEU, MED lanes, book 4 weeks prior to CRD for all PSW to NEU lanes.

Air Freight Market Update

Asia

  • N. China: TPEB demand continues to increase leading to tight capacity conditions. Space is already quite full through the end of the week. The main contributing factor is an increase in e-commerce demand. As a result, rates have increased this week. The FEWB market remains unchanged with rates remaining the same as the previous week.
  • S. China: Supply is tight with demand increasing in the market, resulting in rates increasing from the week prior.
  • Taiwan: The market is slack with some carriers canceling freighter flights on the TPEB tradelane.
  • Korea: Rates remain the same as the previous week with no large increases in market demand.
  • SE Asia: Markets are soft and demand remains unchanged with no signs of increases heading into March.

Europe

  • Overall Demand has increased with more fluctuations in rates WoW across point pairs.
  • Currently direct routings have a longer lead time and higher rates.
  • More indirect options available with one or more connections at a cheaper rate but with a slightly longer TT.
  • No major disruptions or delays across major hubs.

Americas

  • Export demand remains steady from all markets.
  • US airports are running at a normal pace.
  • Capacity is opening up further, especially into Europe.
  • Rates remain stable week over week.

Trucking & Intermodal

Europe

  • Inland waterway shipping, or in short barging, is becoming more and more the transport modality of choice for moving containers from the Rotterdam Ocean Port to the ‘Hinterland’, not only into the Netherlands but also cross border to Germany and Switzerland.
  • There is an expectation that container transport to and from the main port of Rotterdam will grow significantly over the next 20 years. If this growth is accommodated by road transport, our roads will become completely blocked. There is a lot of unused capacity in the system of inland waterways and inland shipping is capable of transporting large volumes. Compared to transport by lorry or plane, inland shipping produces far less CO2. Moreover, inland shipping accidents are rare.

Americas

Import/Export Market Trends

  • Congestion is improving at Canadian ports and rail ramps, there are no significant operational delays.
  • CP Vaughan Intermodal Terminal is an exception where truckers, at time, are still experiencing 4-6 hours of waiting time.
  • CN continues shuttling containers from Brampton terminal to the CN Misc terminal, charging $300 per container.
  • Memphis, Houston, Detroit, Savannah, and Oakland are seeing some delays and import dwells > 10 days.
  • The port of Houston will be discontinuing Saturday operations at Bayport + Barbours cut on April 29th.
  • Congestion fees will no longer be active, effective March 1.
  • Majority of US ports and rail ramps are fluid, and not experiencing any significant delays.
  • Highway Diesel have remained relatively stable YTD.

US Domestic Trucking Market Trends

  • The FreightWaves SONAR Outbound Tender Volume Index (OTVI), which measures contract tender volumes across all modes, was down 25% year-over-year (3.3% month-over-month), or 9.6% when measuring accepted volumes after the significant decline in tender rejection rates. ‘
  • In addition to this, the Cass report indicated year-over-year volumes were down 3.9% in December after falling 3.3% month-over-month from November. This trend illustrates shipment volumes are declining compared to last year, but much more gradually.
  • The Morgan Stanley Dry Van Freight Index is another measure of relative supply; the higher the index, the tighter the market conditions.
  • Throughout December, trends closely followed this curve, indicating that market pressures were consistent with average historical trends. Looking forward, we expect to see softening through at least February as seasonal demand eases in the first two months of the year.

Customs and Compliance News

USTR Releases 2023 Trade Policy Agenda

On March 1, the Office of the United States Trade Representative (USTR) released the Biden Administration’s 2023 Trade Policy Agenda and 2022 Annual Report. Trade priorities for 2023 include advancing a worker-centered trade policy, realigning the U.S.-China trade relationship, engaging with trading partners and multilateral institutions, promoting policy confidence through enforcement, and expanding stakeholder engagement.

Freight Market News

Walmart’s Store-Fulfilled Delivery Sales Nearly Triple in Two Years

Expanding into omnichannel shopping options has been a winning strategy for many retailers over the last few years. Walmart has proven to be no exception, with a 3x increase in store-fulfilled deliveries in just the last 2 years. They now have 3,900 of their 4,717 U.S. locations providing inventory to fill customer orders.

MSC, World’s Biggest Shipping Company and U.S.-China Trade Bellwether, Is Betting on a Rebound for Global Economy

The conversation with MSC CEO Soren Toft ranges pretty widely, but always comes back to one main point—he sees a positive turn for the shipping market coming in the second half of 2023. U.S. and European consumers remain active, and major retailers are selling down their overstocks from last year. Touching on the recent announcement of the end of the 2M alliance between MSC and Maersk, Toft says he remains optimistic and that the dissolution was the result of the two companies simply having different visions for their respective futures.

Source from Flexport.com

/ By COH Marketing / Market Update（EN）/ 0 Comments

Freight Market Update: November 22, 2022

Ocean Freight Market Update

Asia → North America (TPEB)

  • Transpacific Eastbound (TPEB) demand continues on a declining trend:
    • U.S.: Rates continue to fall for all gateways, nearing rate levels seen pre-pandemic. Although carrier reliability is up YoY and overall TPEB capacity is continuing to grow, port and rail congestion is still seen at the major US gateways to some extent, most notably at Houston for vessel dwell (12 days) and Los Angeles/Long Beach as rail dwell (14 days).
    • Canada: Market and rate conditions are similar to the U.S. Vancouver saw an improvement in the vessel count but a deterioration in berthing delays (29 days).
  • Rates: Remain soft on most origin-destination combinations.
  • Space: Open.
  • Capacity/Equipment: Open, except in a few pockets.
  • Recommendation: Book at least 2 weeks prior to cargo ready date (CRD) and keep in mind upcoming blank sailings.

Asia → Europe (FEWB)

  • No change in the sluggish demand throughout November with a similar outlook going into early December. Rates are still following a downward trend. Space is readily available but schedule reliability is affected. Port congestion in Europe continues to cause delays and late return of vessels to Asia.
  • Rates: Ongoing pressure on spot rates due to low demand.
  • Capacity/Equipment: Space is generally open despite the impact of blank sailings and vessel delays.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Air Freight Market Update

Asia

  • N. China: TPEB demand is picking up slightly due to an increase in month-end shipping orders and rates have increased compared to last week. Far East Westbound (FEWB) demand and rates remain stable.
  • S. China: Market rates remain at similar levels to last week. The Covid outbreak in the Guangzhou area continues to affect manufacturing operations, resulting in cargo output delays.
  • Taiwan: There is a slight peak before the Thanksgiving holiday, however, overall demand is low in the market.
  • Korea: The market remains soft for the Thanksgiving holiday. Additional freighter capacity to Los Angeles (LAX) has been added to the market.
  • SE Asia: The overall export markets in Southeast Asia continue to be soft.

Europe

  • Overall demand levels out of Europe remain low for this time of the year.
  • Capacity available in the market is sufficient to meet demand levels, with slightly higher lead days into some main hubs in North America.
  • Terminal congestion in Amsterdam (AMS) and London Heathrow (LHR) might lead to delays.
  • Watch out for the upcoming holiday season, which might create bottlenecks both in the air and on the ground.

Americas

  • Export demand remains steady from all markets.
  • US airports are running at a normal pace.
  • Capacity is opening up further, especially into Europe.
  • Rates remain stable week over week.

文章来源：Flexport

/ By COH Marketing / Market Update（EN）/ / 0 Comments

White House Keeping Distance from Critical Rail and Dockworker Labor Talks For Now

The White House is monitoring labor talks in the logistics industry as unions representing 115,000 rail workers and 22,000 West Coast dockworkers negotiate fresh contracts, but won’t get directly involved in either bargaining process now, its supply-chain envoy said.

“The administration is watching as closely as it can be watched without being a point of interference, which would not be appropriate,” Stephen Lyons said in a virtual briefing Wednesday. “Negotiations are at a place where you’d think the negotiation should be at this particular point.”

Labor impasses are spreading across the US logistics network in the busiest months of the year for shipping, as retailers stock up on back-to-school and year-end holiday goods. Dock- and railroad-worker unions are currently negotiating contracts with employers, with the latter threatening to strike as soon as July 18.

Talks between the nation’s largest railroads and workers — which started in January 2020 — are in a 30-day cool-off period after a union rejected a binding mediation offer from the National Mediation Board. Next, the Biden administration could appoint a presidential emergency board to resolve the dispute.

Rail Congestion Threatens Nationwide Logjam, LA’s Seroka Says

“We’ve got to get these folks some wage increases; we’ve got to address some of these issues,” Lyons said, adding he doesn’t want to get ahead of President Joe Biden as he makes a decision. “We’ll see what happens on the 17th. But I do think there’s a commitment there.”

Contract Discussions
Separately, the International Longshore and Warehouse Union and the Pacific Maritime Association, which represents about 70 employers, began discussing a new contract in May and are continuing to do so after their previous pact expired July 1. Officials from the ILWU and the PMA, which represents employers, met with Biden when he visited the Port of Los Angeles last month and have recently reaffirmed their commitment to keeping cargo moving despite the lack of a contract.

Any slowdown in operations at the two ports that are responsible for 42% of all containerized trade with Asia could stoke annual inflation that’s running at the fastest pace since 1981, and damp economic growth.

Biden, who’s pledged to be the most pro-union president in US history, has directed Cabinet members and logistics-area experts to smooth out pandemic-era port logjams that spurred shortages and delays. Lyons and Labor Secretary Marty Walsh have been in touch with both parties, the port envoy said.

Port of Los Angeles Kicks Off Peak Season with Record June

Meanwhile, about 70,000 truck owner-operators in California — home to the nation’s biggest port complex at Los Angeles and Long Beach — are now in limbo as a local gig-work law starts applying to them.

California’s Assembly Bill 5 requires workers satisfy a three-part test to be considered independent contractors, or else be seen as employees entitled to job benefits. The state’s truck owner-operators must now comply with AB5 after the Supreme Court on June 30 refused to review a case challenging the legislation that sets out the tests for employment-status classification.

‘So Critical’
On Wednesday, truckers demonstrated against the changes at the port gateways of Los Angeles, Long Beach and Oakland, according to the Harbor Trucking Association.

L.A. operations weren’t affected, and the port had planned for the protest days ahead Executive Director Gene Seroka said.

“We gave them the breadth and depth and space they needed to voice their opinions but kept this cargo moving; these drivers are very respectful of just that,” Seroka said at the virtual briefing Lyons also attended. “They have a message to put out there and are continuing to do so. I applaud them for coming out here today.”

The Biden administration is still assessing the AB5 issue in California, Lyons said.

“The truckers are so critical to their supply chain — we’ve got to make sure that we’re setting the conditions to take care of them to the best of our ability.”

/ By COH Marketing / Market Update（EN）/ / 0 Comments

Cargo Shipowners Cancel Sailings as Global Trade Flips From Backlogs to Empty Containers

Dozens of sailings from Asia to U.S. ports are set to be canceled in October as deteriorating economic conditions weigh on demand to ship goods worldwide

Ocean carriers are canceling dozens of sailings on the world’s busiest routes during what is normally their peak season, the latest sign of the economic whiplash hitting companies as inflation weighs on global trade and consumer spending.

The October cancellations are a sharp reversal from just a few months ago, when scarce shipping space pushed freight rates higher and carriers’ profits to record levels. Last October, companies like Walmart Inc. and Home Depot Inc. were chartering their own ships to get around bottlenecks at ports to meet a surge in demand for imports.

Trans-Pacific shipping rates have plummeted roughly 75% from year-ago levels. The transportation industry is grappling with weaker demand as big retailers cancel orders with vendors and step up efforts to cut inventories. FedEx Corp. recently said it would cancel flights and park cargo planes because of a sharp drop in shipping volumes. On Thursday, Nike Inc. said it was sitting on 65% more inventory in North America than a year earlier and would resort to markdowns.

The erosion in global economic conditions, from the war in Ukraine to factory shutdowns in China, have dealt heavy blows to trade activity. The International Monetary Fund has cut its forecast for global growth in gross domestic product multiple times this year. Consumer prices are rising at the fastest rates in years in the U.S., countries in Europe and other parts of the world.

One response to the melting demand has been to reduce sailing trips. In September, container capacity offered by ship operators in the Pacific was down 13%, dropping the equivalent of 21 ships that can each move 8,000 containers in a single voyage, from a year earlier, according to shipping-data providers Xeneta and Sea-Intelligence. 

For the two weeks starting Oct. 3, a total of about 40 scheduled sailings to the U.S. West Coast from Asia and 21 sailings to the East Coast from Asia have been scrapped, according to the data companies as well as customer advisories viewed by The Wall Street Journal. Typically at this time of year, an average of two to four sailings a week are blanked, the industry’s term for canceled sailings.

Carriers also are increasingly canceling trips along key Asia-to-Europe routes, the data providers said.

“In the first week of October, one-third of previously announced capacity will be blanked and for the second week, it will be around half,” said Peter Sand, chief analyst at Xeneta. “The downturn pace in recent weeks has been very fast and it looks like carriers misread the low volumes of a nonexistent peak season.”

The period between late summer and early fall typically is the busiest time of year for the largest carriers, as retailers and other importers build inventories ahead of the holiday shopping season.

Daily freight rates now average $3,900 to move a single container across the Pacific, compared with$14,500 at the start of the year and more than $19,000 in 2021, according to the Freightos Baltic Index.

M editerranean Shipping Co., the world’s largest container carrier by capacity, has voided some sailings recently, including a six-ship service from China to Los Angeles and Long Beach.

The rotation, which MSC operated in alliance with A.P. Moller-Maersk A/S, was suspended “due to significantly reduced demand for shipments into the U.S. West Coast during the past weeks,” according to a customer notice posted Wednesday on MSC’s website. The suspension will remove nearly 12,000 containers a week in capacity from the trans-Pacific trade, and the action would help strengthen the transit times it offers, MSC said in its notice.

MSC declined to comment beyond the notice as did a Maersk spokesman. A Hapag-Lloyd AG spokesman said the company hasn’t canceled sailings as a result of weaker demand. Cosco Shipping Holding Co. and CMA CGM, two other major container operators, didn’t respond to requests for comment.

Some carriers are reluctant to share details on canceled sailings to avoid showing competitors what is happening in their network. Voyages can be scrapped because of port congestion, scheduling issues or falling demand.

Consumer spending on bulky items like furniture and appliances that are often imported into the U.S. has cooled in recent months, according to government data. Such items were in hot demand earlier in the pandemic as Americans spent more time at home and renovated their houses.

A  flotilla of new container ships under order will add capacity over the next two years, meaning that freight rates could come under more pressure as more ship space becomes available.

Ocean container capacity is slated to increase 4% this year and is expected to rise by 8.8% in 2023 and a further 9.7% in 2024, according to London-based shipping adviser Braemar PLC. Since early 2020 some 1,056 ships that can move about eight million boxes were ordered, compared with 688 vessels ordered from 2015 to 2019 that can move around five million boxes.

“The global economy has thrown a few curveballs this year, and our outlook on future demand is uncertain and tepid,” said Jonathan Roach, a container analyst at Braemar. “Overcapacity will likely become an issue from the middle of 2023 through to 2024 and potentially beyond.”

Overcapacity pushes operators to undercut each other, putting pressure on freight rates. Boxship operators fought deep losses for nearly a decade starting in 2008, which prompted consolidation in the industry. The top six ocean-freight carriers move more than 70% of all containers worldwide.

Freight rates on key shipping routes remain above prepandemic levels, and the largest operators have plenty of cash to weather a near-term economic downturn. The costs carriers face are rising, too. Bunker fuel prices, which have cooled since hitting records this summer, are above their late 2019 levels. Port operators are also charging more for ships to dock, passing along the higher energy prices they are facing to the carriers.

“The cost of electricity, particularly in Europe, is significant because the cranes and other heavy equipment run on electrical power,” said Tiemen Meester, chief operating officer for ports and terminals at DP World, a Dubai-based operator of terminals in ports worldwide.