Trends to Watch

[Ocean – FEWB]

• The Red Sea situation continues to be chaotic with vessels rerouting via the Cape of Good Hope, impacting on-time performance and schedule reliability.
• Bookings remain strong after the Chinese Labor Holiday. Another round of GRI (General Rate Increase) for the second half of May is confirmed for $1000 per 40-foot container. Shippers are pushing cargo for earlier departure to avoid further freight cost increase. Unless space has already been secured, all vessels are full. To push cargo on sooner ETD (estimated time of departure) and avoid delays, more carriers are open to Premium options to get cargo loaded on the first available departure date with higher equipment priority.
• Carriers announced more blank sailings coming in June (three from Ocean Alliance as voided and one from MSC as slide-down).
• Carriers are also trying to push for another GRI for the first half of June, considering the current over-demand. Flexport will continue to monitor the market developments.
• More equipment shortages were reported by CMA/Evergreen/Hapag Lloyd/Yangming/HMM. Foreseeing the situation will be tough through May until empty containers are fully recovered. It is highly recommended to pick up containers right after the container yard opens, or as soon as EIR (Equipment Interchange Receipt) is available to print per carrier local practice. Don’t wait till the last minute!

[Air – Global] (Data Source: WorldACD)

• Global Tonnage Decline: Worldwide air cargo tonnages decreased by 12% WoW in the week starting April 29, primarily impacted by China’s Labor Day holiday and Japan’s Golden Week, with significant WoW declines in Asia Pacific (-16%) and moderate falls in other regions, including Europe and Central & South America.
• Rate and Demand Variances: Despite overall tonnage declines, demand and rates from the Middle East & South Asia (MESA) to Europe remain high, with average global rates rising slightly by 1% from the previous week to $2.51 per kilogram.
• Public Holiday Impact: The week’s tonnage fall was largely due to public holidays like China’s Labor Day, which affected multiple regions including Europe, Asia, and Africa. Adjusting for Japan’s Golden Week and post-peak flower shipments, the global decline would moderate from -12% to -9%.
• Regional Rate and Tonnage Trends: Year-on-year analysis shows substantial growth in tonnages and rates, particularly from the MESA region to Europe, with significant rate increases also seen from India and Dubai to Europe, reflecting continued strong demand and regional supply chain disruptions.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

 

 

Flexport Ocean Timeliness Indicator

Ocean Timeliness Indicators Increase Across All Major Trade Lanes

Week to May 13, 2024
This week, the OTI for all major trade lanes increased with China to Northern Europe increasing to 62 days due to routing around the Cape of Good Hope, the OTI for China to the U.S. West Coast increasing to 36 days, and the OTI for China to the U.S. East Coast increasing to 52 days.

Trends to Watch

[Ocean – TPEB]

• The shipping year began on May 1 with a strong General Rate Increase. This increase in the spot shipping rates was due to strong U.S. import demand and the renewal of long-term fixed contracts, resulting in vessels sailing at or near capacity.
• The Panama Canal Authority announced another increase in daily transits. Shipping lines, however, remain cautious about re-deploying capacity through the canal as demand for ships on westbound (via Cape of Good Hope) transits remain high and vessel weight restrictions remain in place.
• We are keeping an eye on the Canadian railroad contract negotiations. The railway union has announced a possible strike beginning on May 22. A strike would impact all rail services within Canada on both Canadian National and CPKCS railways.

[Ocean – FEWB]

• The Red Sea situation continues to be chaotic with vessels rerouting via the Cape of Good Hope, impacting on-time performance and schedule reliability. Vessels on the water are still at risk of drone attacks. Vessels routed via the Mediterranean Sea might be impacted. We’re closely working with liners for any further deployment updates.
• Bookings remain strong after the Chinese Labor Holiday. Another round of GRI (General Rate Increase) for the second half of May is scheduled for $1000 per 40-foot container. Shippers are pushing cargo for earlier departure to avoid further freight cost increases. For now, vessels are projected full through Week 21 (the last week of May). Week 22 is also filling up. It is highly recommended to place bookings four weeks in advance if possible.
• More equipment shortages were reported by CMA/Evergreen/Hapag Lloyd/Yangming/HMM. Foreseeing the situation will be tough through May until empty containers are fully recovered. It is highly recommended to pick up containers right after the container yard opens, or as soon as EIR (Equipment Interchange Receipt) is available to print per carrier local practice. Don’t wait till the last minute!

[Ocean – FCL U.S. Exports]

• Capacity is available for base-port to base-port moves to Asia, North Europe and Mediterranean ports of discharge.
• Some inland rail locations are spotty on equipment related to global disruption of container flows. When booking to load at an inland rail point, shippers are encouraged to submit bookings 3-4 weeks in advance of CRD (cargo ready date).

[Air – Global] (Data Source: WorldACD)

• Air cargo tonnages from Central & South America (CSA) surged in the final week of April, primarily driven by the upcoming Mother’s Day in North America and other regions. This surge was notably fueled by flower growers, retailers, and logistics providers shipping in flowers ahead of the celebrations.
• According to the latest weekly figures from WorldACD Market Data, total worldwide tonnages rose by a further 5% in week 17 (22-28 April), following a 4% increase in week 16. This growth trend helped offset previous declines experienced in the preceding weeks due to various holiday periods like Easter and Eid.
• Average worldwide air cargo rates slightly dropped by 1% to US$2.47 per kilo in week 17, dipping fractionally below the level observed in the equivalent week last year (US$2.52). However, rates still remain notably higher compared to pre-COVID levels, showing a 37% increase compared to April 2019.
• Analysis by WorldACD indicates that outbound tonnages from CSA to North America rose by 48% on a 2-week comparison basis, primarily driven by the demand for flowers ahead of Mother’s Day. This surge in export traffic from CSA accounted for around 30% of the worldwide growth recorded in week 17.
• Pricing patterns also saw significant shifts, with rates from CSA to North America experiencing a 12% rise, contributing to a 6% overall increase in total air export rates from CSA. Additionally, Asia Pacific outbound rates increased by 7% year-on-year, while rates from MESA to Europe soared by 42%, attributed to strong demand and supply disruptions in container shipping.
• Certain Asia-Europe sea-air hubs, notably Dubai, have been experiencing exceptionally high air cargo demand to Europe since the beginning of the year, largely due to disruptions in Asia-Europe container shipping. Despite slight fluctuations due to holiday periods and other disruptions, demand for air cargo from these hubs remains robust, indicating ongoing challenges in sea freight reliability.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

 

 

 

Flexport Ocean Timeliness Indicator

Ocean Timeliness Indicators Decrease for China to Europe but increase for China to U.S. West and East Coasts

Week to May 9, 2024
This week, the OTI for China to Northern Europe increased to 61 days, due to routing around the Cape of Good Hope and the OTI for China to the U.S. West Coast increased to 35 days. The OTI for China to the U.S. East Coast remained stagnant at 51 days.

Trends to Watch

[Ocean – FEWB]

• Asia-Europe: The Red Sea situation continues to impact freight market development. Vessels continue to reroute via the Cape of Good Hope and vessel schedules continue to fluctuate, impacting on-time performance & reliability.
• After the Day 8 product reshuffle of Ocean Alliance and THE Alliance blank sailings, market capacity dropped by 10-13% and spaces are getting tight for 2H April. Vessel utilization is good and claimed at more than 95%, with roll pool being built up for the Labor Day Holiday.
• Carriers are still implementing GRIs (General Rate Increases) to keep rates from dropping further. Some carriers recently announced rates at a $4000/40’ level for 2H April. Per the current market, demand is not overwhelming and vessels are mostly full due to blank sailings, so GRIs may not hold.
• For historical updates on the Red Sea situation, read more in Global Ocean Carriers Halt Red Sea Transits – What to Expect.

[Air – Global] (Data Source: WorldACD/Accenture)

• Global air cargo rates increased throughout March, reaching within -7% of the previous year’s levels and recovering to Q4 peak levels, driven by strong demand from Asia and the Middle East.
• Average global rates rose to $2.48 per kilo in week 13, following consistent weekly increases, with the gap from the previous year narrowing from -19% in early 2023 to -7% by the end of March.
• The recovery to Q4 peak levels is attributed to rate increases from Asia Pacific and Middle East & South Asia (MESA), fueled by cross-border e-commerce demand and disruptions in container shipping.
• Global air cargo tonnages in March were up +6% year on year, with a slowdown in growth compared to the January-February period, and tonnages for weeks 12 and 13 were down -3% compared to the preceding two weeks.
• Tonnages from key Asia-Europe sea-air hubs like Dubai and Colombo remain elevated due to disruptions in container shipping, with Dubai-Europe and Colombo-Europe tonnages up significantly year on year.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

 

 

Flexport Ocean Timeliness Indicator

Ocean Timeliness Indicators for China to US West Coast Decreases, While China to US East Coast and China to Europe Increase

Week to April 8, 2024
This week, the OTI for China to Northern Europe increased slightly to 67 days due to continued re-routings from the Suez Canal around the Cape of Good Hope. The OTI for China to the US East Coast also increased significantly to 69 days as some carriers route westward around Cape of Good Hope. Most have decided to use the Panama Canal despite continued slot restrictions. We do not expect the Baltimore situation to impact the China to East Coast OTI overall. The OTI for China to the US West Coast continued to decrease this week to 32 days.

 

 

Source from Flexport.com

Trends to Watch

[Ocean – FEWB]

• Asia-Europe: The Red Sea situation continues to impact freight market development. Vessels continue rerouting via the Cape of Good Hope and vessel schedules continue fluctuating.
• Demand remains flat but is picking up. The Economic Sentiment Indicator for the Eurozone in March stood at 96.3, surpassing both the previous value and market expectations. With Labor Day approaching, there will be a long holiday in Mainland China. Production may be impacted, so expect bookings to increase in late April and slow down in the first week of May.
• General Rate Increases (GRI) were implemented by carriers to keep rates from dropping further. After a 9-week continuous drop, the latest Shanghai Containerized Freight Index (SCFI) increased by $51/TEU for week 14. Most of the carriers successfully pushed for a GRI in the 1st half of April. With most vessels projected to be full, expect another round of GRI for the 2nd half of April, as there are around 2 million TEU of new capacity for delivery in the coming months. Most of the capacities are mega ships where Asia-Europe trade will be the primary option. Expect GRI to be on and off in the coming months until all new ships are available.

[Air – Global] (Data Source: WorldACD/Accenture)

• Air cargo rates have increased globally, particularly from Asia Pacific and Middle East & South Asia (MESA), driven by disruptions in container shipping and a high demand for cross-border e-commerce shipments, with average global rates up by around +3% in week 12 to $2.45.
• Despite a slight decrease in global tonnages (-2%) in week 12 compared to the previous week, there was a +1% increase in tonnages and a +6% increase in average rates over the last two weeks compared to the prior period, with notable rate increases from MESA (+10%) and Asia Pacific (+7%).
• Year-on-year data shows significant improvements in demand, with global tonnages up by +8%, led by rises from MESA (+15%) and Asia Pacific (+12%), amid continued disruptions in Asia-Europe container shipping and strong e-commerce demand.
• Air cargo capacity has significantly increased over the last year (+9% globally), especially from Asia Pacific (+19%) and Central & South America (+12%), while average rates remain above pre-COVID levels, despite a year-on-year decrease.
• Notable regional highlights include a surge in demand and rates from MESA, with YoY tonnage up +15% and rates up +29% in weeks 11 and 12, and significant increases in air freight traffic from the Eastern Mediterranean to MESA due to container shipping disruptions, with Athens and Istanbul experiencing notable growth in tonnages to Dubai.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times

 

 

Flexport Ocean Timeliness Indicator

Ocean Timeliness Indicators for China to U.S. West Coast Decrease, While China to U.S. East Coast Increases.

Week to April 1, 2024

This week, the OTI for China to Northern Europe remained steady at 65 days due to carrier re-routings from the Suez Canal around the Cape of Good Hope. The OTI for China to the U.S. East Coast also remains elevated significantly to 62 days as some carriers route westward around Cape of Good Hope. Most have decided to use the Panama Canal despite continued slot restrictions. The OTI for China to the U.S. West Coast decreased to 36 days after a previous increase.

 

Trends to Watch

[Ocean – FEWB]

• For Asia-Europe trade, re-routing via Cape of Good Hope continues. Over the weekend, a Chinese-owned oil tanker called Huang Pu was attacked. Carriers are investigating the Indian Ocean status as well to determine if it’s safe for transport.
• Ocean Alliance (CMA CGM Group, COSCO Shipping, Evergreen, and OOCL) Day 8 Product Update effective April 2024:
  • Restructure of all Asia to North Europe loops via Good Hope.
  • Offering 6 loops from Asia to North Europe with the widest coverage and largest capacity on the trade.
  • Suspension of FAL7 loop and Pusan call on FAL1. Pusan, Nansha, Hong Kong, and Ho Chi Minh will continue to be served with a dedicated mainliner/feeder to connect with our 6 loops sailing to North Europe with improved frequency and reliability.
  • The Tangier call will be switched from FAL3 to FAL1. Dunkirk will become the first call on FAL3, offering the French customers best-in-class service with two direct fast services: FAL1 into Le Havre and FAL3 into Dunkirk.
  • New FAL1 rotation: Ningbo, Shanghai, Yantian, Singapore, Tangier, Le Havre, Hamburg, Gdansk, Rotterdam, Port Kelang, Ningbo.
  • New FAL3 rotation: Qingdao, Shanghai, Ningbo, Yantian, Singapore, Dunkirk, Rotterdam, Southampton, Antwerp, Le Havre, Algeciras, Singapore, Qingdao.
• Carriers are preparing to implement General Rate Increases (GRI) for April by $400-600 per FEU. While demand remains flat at the moment, more discussion is ongoing about current offerings and long-term deal finalizations, especially if the current Red Sea surcharges are upheld by carriers.
• For historical updates on the Red Sea situation, read more in Global Ocean Carriers Halt Red Sea Transits – What to Expect.

[Ocean – FEWB]

• Receiving for laden Exports at POL USBAL is closed until further notice.
• Contingency options for U.S. Exporters who would traditionally use USBAL:
  • If moving cargo to North Europe, use POLs NYC, PHL, and Norfolk.
  • If moving to the MED, Middle East, ISC, or Africa, use POLs NYC and Norfolk.
  • If moving to Asia and you want to route all water service, use POLs NYC and Norfolk.
  • If moving to Asia and you want to avoid USEC altogether, FTL and transload to a USWC port or CHI.

Please reach out to your account representative for details on any impacts to your shipments.

Francis Scott Key Bridge Collision and Collapse – What to Expect

At about 1:30 am ET on Tuesday, March 26, the Francis Scott Key Bridge in Baltimore, MD collapsed after being struck by a container ship. The ship, named DALI, is about 300-meters long and 94,000 tonnes. The vessel is operated on charter by Maersk on the 2M Alliance service between Asia and the US East Coast.

The DALI was traveling from Baltimore to Colombo, Sri Lanka when, according to local reports and videos, the ship lost power prior to hitting a structural pillar of the bridge. The bridge collapsed instantaneously. Local authorities are treating the situation as a mass casualty incident; our thoughts are with those impacted.

While it’s still early, we anticipate considerable downstream impacts to the Port of Baltimore, US East Coast ports, and regional rail and trucking networks.

Immediate Impact of Bridge Collision and Collapse
As of March 26, there were more than 40 ships, including cargo ships, currently inside the Port of Baltimore or on the Patapsco River west of the Francis Scott Key Bridge that were unable to leave the area. The impact to cargo depends on exactly where it is and the approach the Port of Baltimore takes in the evolving situation. Cargo already discharged from vessels should be able to be picked up from port. Cargo not yet discharged from vessels will likely experience discharge delays based on port operations. And cargo on trapped vessels that are planned to be unloaded at other East Coast ports will be subject to the direction taken by the vessel operator. There’s potential to redistribute the cargo to other ports via truck or rail, but this would require a coordinated effort from the vessel operators and the Port of Baltimore.

Container vessels with Baltimore in their rotation – 107, as of the incident – will likely head to surrounding ports like Norfolk or New York/New Jersey and discharge cargo there. Norfolk and New York/New Jersey are typical port calls for vessels that head to Baltimore, so while the direct vessel schedules should be able to adapt to the situation, the positioning of cargo on the vessels will likely cause discharge delays and importers will have to navigate different options such as long distance drayage or transloading to deliver the cargo to the final destination.

The collapse of the bridge implies that water access to the container terminals, along with various other terminals at the port in Baltimore, will be temporarily blocked.

Downstream Effects to Neighboring Ports
While the Port of Baltimore is one of the smaller ports by containerized freight volume on the US East Coast, handling roughly 800k TEUs in 2023, compared to neighboring ports like the Port of New York and New Jersey at 5.1 million TEUs in 2023 and the Port of Norfolk at 2.4 million TEUs in 2023, it’s an essential port with specialized infrastructure to handle bulk commodities in a major manufacturing corridor.

To put it into context, if the cargo originally destined for the Port of Baltimore is redistributed exclusively among the Ports of NY/NJ and Norfolk, throughput at these ports would increase by just under 10%. The moderate volume increase is less of a concern, as the bigger question is whether the truck and rail systems can quickly adapt to handle this sudden 10% surge in cargo volume.

A major unknown as of now is how long it will take for the waterway to be cleared and Port of Baltimore operations to return to normal. The resolution timeline will determine the magnitude of downstream impacts to port and inland operations on the East Coast.

The Takeaway
This is an evolving situation. It’s too early to tell how rates to the US East Coast could be impacted, if ocean carriers will establish temporary booking stops to Baltimore, or if shippers will elect to re-route to alternate US East Coast ports or even the US West Coast as point of entry. Flexport is in contact with all ocean carriers that call Baltimore and will continue to provide updates.

Before making changes to your shipments, such as electing to re-route cargo, reach out to your dedicated Flexport account manager to discuss all your options. Flexport can help you design a routing to balance cost and speed, based on the current advice for your trade lane.

North America Vessel Dwell Times

 

Source from Flexport.com

Trends to Watch

[Air – Global] (Data Source: WorldACD/Accenture)

• Dubai to Europe air cargo tonnages have seen a substantial increase, with a +205% rise compared to last year and a +7% increase from the previous week, driven by disruptions in Asia-Europe container shipping while overall global demand stabilized.
• Key Asia-Europe sea-air hubs, including Dubai, Colombo, and Bangkok, have experienced significant air cargo demand to Europe since early 2023, with Dubai-Europe tonnages more than doubling year-on-year due to the Red Sea situation.
• While Bangkok to Europe demand continues to rise, with a +33% year-on-year increase in week 10, Colombo to Europe demand shows signs of softening, with a growth of +20% compared to +35% the previous week.
• Globally, air cargo tonnages stabilized with a slight increase in average rates to $2.32 per kilo in week 10, following a post-Lunar New Year recovery in demand, particularly from the Asia Pacific region.
• Worldwide air cargo capacity is up by +9% year-on-year, with significant increases from Asia Pacific and Central & South America, while average rates remain above pre-COVID levels, indicating a robust recovery in the sector.

[Ocean – FEWB]

• Asia-North Europe: For Asia-Europe trade, most vessels continue to reroute via the Cape of Good Hope. Some carriers are investigating the possibility of routing back to the Suez Canal, but so far no further announcements. The news indicates that vessels in the Indian Ocean and the Cape of Good Hope may also be impacted by the situation. We’re closely monitoring and following up with carriers.
• After Maersk & Hapag Lloyd announced the Gemini Cooperation commencing in 2025, Ocean Alliance (CMA CGM Group, COSCO Shipping, Evergreen, and OOCL) confirmed the renewal of The Ocean Alliance partnership for another 5 years. Following the renewal, effective April 2024, there will be some service adjustments. Details to follow once we learn more. So far, the new deployment plan shared by Ocean Alliance for Asia to Europe would be:
  • 6 services between Asia and Northern Europe.
  • 4 services between Asia and the Mediterranean.
• The floating market rate keeps dropping. Some carriers are preparing to implement GRI for April by $600-800 per FEU. While demand remains flat at the moment, more discussion is ongoing about current offerings and long-term finalizations, especially if the current Red Sea Surcharges will be upheld by carriers.

North America Vessel Dwell Times

 

TPM24 Takeaways

There is no better chance to learn about the state of the industry than the annual Transpacific Maritime (TPM) Conference. TPM ‘24 took place between March 3-6 at the Long Beach Convention Center. Flexport’s team was on site to chat with, and learn from, our customers and carrier partners—both current and potential. Here are our top insights for the coming year.

• Uncertainties Persist. The supply chain is getting more complex every day. The situation in the Red Sea was top of mind at TPM, as well as Panama Canal restrictions, and ILA contract negotiations. Uncertainty drives anxiety. As a global logistics platform, we can help de-risk the supply chain for our customers and give actionable, data-driven advice on how to manage your procurement decisions in 2024 and beyond.
• Diversifying means protection. In previous years, shippers and service providers would get into a meeting room and already know exactly what the rates would be. Everyone would sign the contract, and the following year, sign the same contract again. That’s no longer the case. With this market’s persistent uncertainty over the past few years, customers are starting to embrace how diversifying their carrier and forwarder portfolio can foster more agility. For example, larger customers are willing to embrace different routings to ensure disruptions don’t impact their business too strongly. Shippers are also looking for unique ways to keep their business moving, and really understanding how forwarders and brokers can create opportunities and solutions for better protection when moving supplies globally.
• Technology and visibility are the future. Customers are excited about technology and modernization. Current and potential customers had a lot of questions about integrations, and almost every shipper we spoke with is looking for real-time, accurate shipment and SKU-level visibility. Everyone is data-hungry and looking for solid solutions. Having visibility into your goods is not just critical for managing an efficient, modern supply chain; visibility helps shippers — Flexport’s customers — improve the customer experience for their own customers, too. Visibility is foundational to managing customer expectations as consumers want to know when they’ll receive their goods, and if they’re delayed, why.
• Relationships matter. Shippers are looking for partners. After the last few years and the tumultuous supply chain we’ve experienced, now more than ever people are looking for good relationships and the ability to talk to someone they trust. There are a lot of questions about the future, and customers are looking for great advice on how to navigate tumultuous waters together. Many of our customers are asking how we handled the disruptions in the past and how we thought outside of the box. It’s important to be nimble and agile with a purpose to provide efficient solutions.

The Year Ahead
After TPM, rates get locked and RFP season goes into full gear. To ensure you feel confident about forecasts for the year ahead before launching your RFPs, don’t hesitate to reach out to your Flexport account managers and our teams to discuss strategies for Fixed/Floating, and BCO/NVO volume contracts.

Trends to Watch

[Air – Global] (Data Source: WorldACD/Accenture)

• Overall Growth in Demand: The first two months of the year saw a +13% increase in worldwide air cargo demand compared to the same period last year, driven by strong performance from Middle East & South Asia (MESA) origins and recovery from the Lunar New Year (LNY) seasonal dip.
• February’s Performance: Preliminary figures for February indicate an +8% year-on-year increase in air cargo tonnages, with a +4% increase when adjusting for the leap year day. This follows a +17% increase in January, showcasing a consistent upward trend despite the complications of comparing months due to LNY variances.
• Post-LNY Recovery: Three weeks after the later Lunar New Year in 2024, demand had largely rebounded from the post-LNY dip, especially in the key Asia Pacific region, mirroring patterns from 2023 but with somewhat stronger demand in 2024.
• Regional Dynamics: Strong rebounds were observed in intra-Asia Pacific traffic, up by +44% in Weeks 8 and 9 compared with Weeks 6 and 7, and significant year-on-year growth in tonnages from MESA in the same weeks (+22%), reflecting continued disruption in sea-air shipping routes due to the situation in the Red Sea.
• Global Pricing and Capacity Trends: Despite a global average rate decline of -16% compared to last year, rates from MESA are up +13%, indicating a regional anomaly. Global air cargo capacity is up by +9% over last year, with notable increases from Asia Pacific and Central & South America, highlighting an overall growth in the air cargo industry above pre-COVID levels.
• Average global rates remain above pre-COVID levels (+27% compared to February 2019).

[Ocean – FEWB]

• Asia-North Europe: The Red Sea situation continuously impacts freight market developments. Some vessels continue to reroute via the Cape of Good Hope, and some carriers are investigating the situation and re-routing back via the Suez Canal. More to follow as information becomes available.
• Demand is flat, and carriers are further adjusting rates for more fresh cargo in 2H March. Carriers are still upholding PSS/Contingency Surcharges due to rerouting vessels, however, more questions about the actual additional cost are being brought up and further adjustments are expected in April.
• Carriers are actively investigating demand & supply. We’re seeing vessels open for booking till last minute, which may reflect the oversupply situation. If soft demand continues from Week 12 onwards, we expect there could be more blank sailings announced soon.
• For historical updates on the Red Sea situation, read more in Global Ocean Carriers Halt Red Sea Transits – What to Expect.

North America Vessel Dwell Times

 

Trends to Watch

[Air – Global] (Data Source: WorldACD/Accenture)

• Global air cargo tonnages increased in the last full week of February following the typical dip during the Lunar New Year (LNY), with significant surges in tonnages at key Asia-Europe sea-air hubs (Dubai, Colombo, Bangkok) due to disruptions in container shipping in the Red Sea.
• Dubai-Europe air cargo traffic in week 8 saw a more than double increase (+146%) compared to the same period last year, with recent weeks showing a +140% year-on-year (YoY) rise. Colombo-Europe and Bangkok-Europe also experienced significant YoY tonnage increases, indicating strong demand for air cargo as an alternative to disrupted sea routes.
• The sustained high demand for air cargo through these hubs into March is uncertain, but week 8 showed no signs of waning, contributing to a +9% week-on-week rise in global air cargo tonnages, partially recovering from previous drops during LNY.
• A broader two week comparison highlights the impact of LNY and Valentine’s Day on demand, with significant tonnage decreases from Asia Pacific and Central & South America, but a notable rise from the Middle East & South Asia region. Global average prices fell by -6% due to these fluctuations, despite a price rise from the Middle East & South Asia.
• Year-on-year data reveals a -4% decrease in worldwide tonnages for weeks 7 and 8, with a significant drop ex-Asia Pacific but a notable increase ex-Middle East & South Asia. Average global rates remain above pre-COVID levels, though they have decreased compared to the previous year, with worldwide air cargo capacity significantly up (+8%).

[Ocean – FEWB]

• The Red Sea Crisis is continuously impacting freight market development. With most of the vessels routed via the Cape of Good Hope, carriers believe the supply will still be balanced with demand in a mid-run. The Lunar New Year (LNY) soft demand is temporary, however, equipment is in better shape (mainly because of LNY slow recovery). Carriers are also investigating the situation and re-routing back via the Suez Canal. More details to follow as information is made available.
• Demand remains flat post LNY. Carriers are further adjusting rates to cater fresh cargo in 1H March. PSS/Contingency Surcharges are still being upheld by carriers due to the reroute, however, more questions about the actual additional cost are being brought up and we expect there will be adjustments in March.
• Ocean Alliance continuously announced voided plans for March. With 2M’s Winter Program ending, carriers are actively investigating the demand & supply. If soft demand continues from Week 12 onwards, we expect there may be more blank sailings announced.
• To mitigate the disruption of operational challenges (sailing schedule adjustments, vessel downsizes, equipment shortages, rollover, etc.), shippers can consider premium services offered by liners with higher costs. This approach will help guarantee space and equipment and shorten delays.

North America Vessel Dwell Times

 

Source from Flexport.com

Trends to Watch

[Air – Global] (Data Source: WorldACD/Accenture)

• Strong Surge in Tonnages at Asia-Europe Sea-Air Hubs: Recent weeks have seen a notable increase in air cargo volumes at key Asia-Europe sea-air hubs such as Dubai, Colombo, and Bangkok, driven by shippers seeking alternatives to container shipping disruptions due to attacks on ships in the Red Sea. This surge is attributed to the need to replenish European stocks affected by longer container ship voyages around the Cape of Good Hope.
• Significant Year-on-Year Growth: Analysis highlights a year-on-year increase in air cargo tonnages to Europe from Dubai (+71%), Colombo (+61%), and Bangkok (+58%) in the first seven weeks of 2024, significantly outpacing growth at other hubs like Singapore and Doha.
• Impact of Lunar New Year Timing: The later occurrence of Lunar New Year (LNY) in 2024 complicates week-by-week comparisons but underscores a clear pattern of increased tonnages from these hubs to Europe. Despite this, the impact on pricing remains uncertain due to various factors, including market-wide declines from the previous year.
• Seasonal Demand Fluctuations: Post-LNY, a traditional decline in demand from Asia Pacific is observed, affecting global air cargo tonnages and rates. However, there’s a structural improvement in demand compared to the previous year, with specific regions like the Middle East & South Asia experiencing tonnage and rate increases, likely reflecting the shift from ocean freight to sea-air solutions.
• Global Air Cargo Trends: Overall, despite a slight year-on-year decrease in worldwide tonnages for weeks 6 and 7, structural improvements in demand levels are evident. Notably, worldwide air cargo capacity has increased, with significant rises from Asia Pacific and Middle East & South Asia, indicating a robust recovery and adaptation within the air cargo industry to ongoing logistical challenges.

[Ocean – ISC to North America]

• Rates: Reduced down after the 2H February GRI. Carriers had initially posted a March 1st GRI of $1000/container, but as of this week have postponed it until 2H March. Without any changes to the market it is likely the GRI will be canceled entirely.
• Space: Vessels delayed getting to destination and back to origin are resulting in a lack of capacity. The short term disruption is expected to be more challenging, while longer term we expect some normalization due to new builds, faster vessel speeds, and implementation of idle capacity.
• Equipment: Although equipment availability is carrier-specific for each port of loading, the overall situation is challenging. This is especially true at inland container depots and smaller/less connected ports.

[Ocean – FEWB]

• Red Sea: This remains unresolved as most vessels continue to reroute via the Cape of Good Hope, adding 2-4 weeks of transit time (round trip). Vessel schedules will continue to fluctuate as a result, and regional equipment shortages will occur in some Asian ports.
• Demand: Demand has softened as expected after the LNY holiday. Bookings have slowed down in week 9; we expect them to pick up from week 11 onwards. As roll pools have been created in the past few weeks, vessel utilization is positive at the moment, and carriers are continuing to assess capacity and rates.
• Capacity: All alliances implemented massive blank sailings pre-LNY for weeks 8 and 9, which cut about 30+% of capacity on average. After the LNY holiday, Ocean Alliance announced two more void plans for March. If demand remains flat, there might be more blank sailings to be announced. Occasional space constraints due to smaller vessel deployment and schedule re-shuffling due to current re-routing will also impact the available capacity each week.
• Rate Development: As the Red Sea situation continues to impact capacity and equipment, carriers are upholding rates via GRI / PSS / Contingency Charges, however there’s pressure and questions about the amount of additional costs of re-routing via Cape of Good Hope. Expectations are that the Peak Season quantums will be mitigated or even be dropped in March. Rates are expected to go down as of March 1 and continue to decline going forward due to low demand.

Please reach out to your account representative for details on any impacts to your shipments.

North America Vessel Dwell Times