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

 

Trends to Watch

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

• China’s Inbound Tonnage Decline: In the week leading up to the Lunar New Year, China experienced a significant drop in inbound air cargo tonnages by 15% week-over-week, contributing to a global tonnage fall of 12%. This was against a backdrop of only a 2% decline in China’s outbound tonnages, indicating a sharp contrast in trade dynamics as the holiday approached.
• Stable to Rising Average Global Rates: Despite the drop in tonnages, average global air cargo rates remained steady and even saw a slight increase during week 6, mirroring trends from the previous year. This suggests resilience in pricing amid fluctuating volumes.
• Intra-Asia Pacific Market Slowdown: A notable 17% fall in intra-Asia Pacific traffic largely drove a 3% global tonnage decline, highlighting the region’s quick response to the Lunar New Year compared to long-haul markets. Conversely, tonnages from Asia Pacific to certain regions like Central & South America increased, demonstrating varied market reactions.
• Year-on-Year Tonnage and Capacity Increase: Comparatively, weeks 5 and 6 saw a 10% increase in worldwide tonnages year-on-year, with significant rises from Asia Pacific and Middle East & South Asia origins. This was accompanied by a substantial 16% increase in global air cargo capacity, indicating an overall growth in the air cargo sector from last year.
  Pricing Trends and Pre-Covid Comparison: Despite a year-on-year drop in average worldwide rates by 14%, the gap is narrowing, and rates remain significantly above pre-Covid levels (34% increase compared to February 2019), suggesting a sustained recovery and adaptation in the air cargo market post-pandemic.

[Ocean – ISC to North America]

• Rates: Increased due to 2H February General Rate Increases (GRIs), but as of week 8 are starting to mitigate. Overall levels still remain significantly inflated compared to November levels at +250% to United States East Coast (USEC) BP and +90% to United States West Coast (USWC) BP.
• Space: Vessels delayed in 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.

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

North America Vessel Dwell Times

 

Source from Flexport.com

Trends to Watch

[Ocean – TAWB]

• Various rate indices are starting to show levels jumping by around $500 per TEU as of Feb. 1. This was expected due to carriers introducing surcharges related to the Red Sea situation (Contingency Surcharges, Emergency Surcharges, PSS, etc.).
• Rates are expected to increase further in March due to equipment becoming limited in most parts of Europe (mainly south of Germany, Poland, and Western Mediterranean areas).
• Capacity remains relatively stable even though we have seen blank sailings and vessels redeployed on other trade lanes in order to help with the Red Sea situation.
• Panama Canal drought issues had minimal impact on container vessels transiting in January year-over-year.

[U.S. Exports]

• Inland rail yards and export loading points are dealing with increasingly spotty equipment (EQ) levels. Please place bookings four weeks in advance of Cargo Ready Date (CRD). If that’s not achievable, consider loading trucks and transload at a coastal port to avoid ongoing EQ concerns.
• For shipments loading at a coastal port, please book an additional 2-3 weeks or more ahead of CRD to ensure loading is optimized to avoid blank sailings and ensure equipment is available in a timely manner.
• For Transatlantic Eastbound, capacity is available from base port to base port.

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

• Increased Rates from China: Air cargo rates from China to North America and Europe surged by more than 14% and more than 8%, respectively, in the week before Lunar New Year, although still below early December peaks.
• Impact of Red Sea Disruptions: Disruptions in container shipping in the Red Sea may have contributed to the rate surge, prompting some sea freight from China to Europe to convert to sea-air shipments.
• Strong Traffic Demand: There is strong ongoing air cargo demand from China to both Europe and North America, despite current disruptions and the seasonal impact of the Lunar New Year.
• Rising Global Demand and Rates: Global air cargo demand and rates have continued to rise due to Lunar New Year, with significant year-on-year tonnage increases supported by strong ecommerce traffic.
• Substantial Yearly Increases: Worldwide tonnages saw a more than 25% increase in weeks 4 and 5 compared to the previous year, with significant rises from Asia Pacific, the Middle East, and South Asia, partly due to the conversion of sea freight to sea-air shipments.
• Rates trend at over 32% compared to Feb 2019.

[LATAM North Bound]

• The Port of Navegantes in Brazil is undergoing civil works to adapt pier infrastructure for the upcoming two years, which started on Jan. 5, 2024. This will be done in two phases. While one side will be under construction, the other will continue to operate normally. The work will begin on the east side, and when this stage is completed, it will move to the west side.
• While the port is currently operating without restrictions, we will likely see operational challenges and higher wait times for all services through Navegantes during this period. Some shippers may choose to switch to nearby ports (Itapoá and Paranaguá).
• CMA announced they will be switching to Imbituba on their BRASEX service. MSC, on the other hand, is committed to serving customers ex Navegantes. MSC has two main services from Brazil and will optimize these services to service USEC, USGC, and USWC/ CA.

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

North America Vessel Dwell Times

 

This Week In News

Major Delays In Cross-Border Cargo Flow After Glitch In Mexican Customs System
A series of persistent glitches in Mexico’s National Customs Agency (ANAM) computer system severely disrupted freight movements across the U.S. border and caused delays at ports and airports. The glitches, occurring over several days, affected the agency’s ability to process import and export documents electronically, prompting ANAM to operate in “contingency” mode.

Upcoming Indo-Pacific Trade Deal Adds To U.S. Supply Chain Priorities
The Indo-Pacific Economic Framework for Prosperity (IPEF) supply chain agreement is set to go into effect on Feb. 24, to strengthen supply chain resilience among Pacific Ocean trading countries. Signed by partner countries such as the U.S., Australia, and Japan, the agreement emphasizes data sharing, warehousing near ports, and collaboration on policy best practices to build resilient and inclusive supply chains.

Despite Dim Outlook, January Imports Grew At Fastest Pace In 7 Years
Despite geopolitical tensions and challenges at the Suez and Panama Canals, U.S. imports surged unexpectedly in January, rising 7.9% from December and 9.9% year-over-year, according to Descartes. This growth, driven by a rush of Chinese imports ahead of the Lunar New Year, saw West Coast ports benefiting the most, with Long Beach and Los Angeles experiencing significant increases.

 

Source from Flexport.com

Trends to Watch

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

• From January 1-28, 2024, global international air cargo capacity increased by 10% compared to 2019.
• Over the last four weeks, global international air cargo capacity decreased by 4% compared to the four weeks prior.
• Air cargo capacity out of China and Hong Kong around Lunar New Year is expected to drop by 30-40% this year, in line with previous years.
• Yields for Transpacific and Asia-Europe routes have increased in the last weeks of January due to the Red Sea crisis and the anticipation of the Lunar New Year, even though average yields for January 2024 remain lower than those of January 2023.
• A consistent rise in air freight volumes has been observed over recent months, significantly fueled by strong e-commerce activity originating from the Asia Pacific region since the last quarter of the previous year, alongside a noticeable shift of some goods from sea freight to air and combined sea-air transport, attributed to recent disturbances in container shipping operations in the Red Sea.

[U.S. Exports]

• Inland rail yards and export loading points are seeing less, or increasingly spotty, equipment levels. Customers are advised to place bookings 3-4 weeks in advance of cargo ready date (CRD). If that’s not achievable, consider truck and transload to load at a coastal port to avoid ongoing equipment concerns.

[Ocean – FEWB]

• Asia-North Europe: the Red Sea crisis continues to impact freight market development. CMA CGM suspended Red Sea transits again until further notice due to security risks.
• With vessel delays back to Asia, equipment is getting tight prior to Lunar New Year departures. Most carriers are arranging container repositioning to get shipments moved as planned. We highly recommend shippers be flexible and accept container substitution to avoid further delay as well as arrange empty pick-up as early as possible. Carriers are offering extended origin free time to mitigate Lunar New Year impact.
• Demand is expected to remain flat for the second half of February. Carriers are further adjusting rates down to cater fresh cargo from the first half of February, preparing for rollpool to fill second half of February vessels. Even though massive void plans have been announced (WK08/09 cut by 30% in average), Ocean Alliance announced seven more voids, with three planned for February departure and the rest in March. We foresee more void plans will be released soon by the other two alliances.
• To mitigate the disruption of operational challenges (sailing schedule adjustment, vessel downsized, equipment shortages, rollover, etc.), shippers can explore premium services offered by liners with higher cost to get guaranteed space and equipment and to shorten delays.
• Asia-Med: Following North Europe, MED floating rates remained on the higher side. They are trending slightly lower from Week 06 onwards in a push to get more cargo to fill up ships before Lunar New Year and also rollpool preparation for 2H February onwards due to the weak demand and holidays in Asia.

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

North America Vessel Dwell Times

 

 

Source from Flexport.com

Trends to Watch

[Air – Global](Data Source: WorldACD)

• January’s worldwide air cargo demand showed a significant increase compared to last year. This rise in demand was seen across all main global regions except for ex-North America traffic.
• Due to disruptions in the Red Sea, some cargo owners are moving Asia-Europe cargo from sea to air or sea-air (e.g. air to ocean conversions). This shift, combined with the effects of the later Lunar New Year in 2024 (February 10) and typical mid-January seasonal trends, contribute to the increase in air cargo demand.
• Despite major disruptions in international container shipping and a tripling of ocean freight spot rates from Asia to Europe, global air cargo rates remain relatively stable. However, ex-Asia Pacific air cargo rates had already risen in late 2023 due to seasonal and product-related demand factors.
• Forwarders are preparing for challenges in the next few weeks, including port delays and cargo build-up in Europe, as the booking window for air freight is closing ahead of the Lunar New Year. This situation may lead to increased reliance on air cargo.
• Comparing weeks 2 and 3 of 2024 with the same period last year, there’s a 6% increase in overall global demand, with notable increases from the Middle East and South Asia, Africa, and Asia Pacific. Average worldwide rates are 22% lower than last year but remain above pre-COVID levels. Air cargo capacity has also seen a significant year-over-year increase.

[Indian Subcontinent to North America – Ocean]

• Ocean freight rates continue to increase into the first half of February as Red Sea disruptions show no sign of mitigation. Vessels that were delayed getting to their destination, and then back to origin, due to diversions around the Cape of Good Hope have created capacity shortages. This short-term disruption is expected to be more challenging, while we expect some normalization in the longer term.
• Container deficits are carrier-specific, but recently there has been an increase in equipment issues being reported across many major wet ports and inland container depots.
• There are several service updates to report, including MSC’s removals of INDUSA (India → USEC) service which is resulting in a capacity crunch on their remaining INDUS EXPRESS service. MSC has also removed the direct Karachi, Pakistan port call which had just been rolled out in late December. OOCL/COSCO removed AWES/ISE service (Mundra → BOS/NY/ORF) due to operational cost increases from Cape of Good Hope diversions. By removing this service there is no longer a direct connection from India to Boston.

[TAWB – Ocean]

• Demand remains stable with no peak expected to occur in February. Carriers are still managing capacity based on the latest Red Sea developments. We expect capacity to be down by an average of 15-20%.
• Rates are expected to increase in February as several Red Sea-related surcharges go into effect on February 1. Indexes are expected to show the same in the next couple of weeks.
• The equipment situation in Europe is tightening (mainly in Germany and various locations in Eastern Europe). This is a direct consequence of transit time increases caused by the Red Sea situation.
• On-time performance decreased from 72% in July 2023 to 50% in December 2023 (based on Sea Intelligence data). This is quite normal during winter months as it is mainly caused by weather-related issues.

[FEWB – Ocean]

• The Red Sea crisis continues to impact freight market development. Vessels traveling back to Asia continue to face delays. Moreover, carriers have started announcing a lack of equipment availability ports ex-South China and some outports in Asia. Shippers should remain flexible and accept container substitutions to avoid further delays. Demand remains flat for the second half of February as the Lunar New Year approaches. As a result, carriers are adjusting rates to cater to fresh cargo from the first half of February and to prepare for roll pool to fill vessels in the second half of February, despite massive void plans (weeks 8 and 9 are expected to see a 30% decrease on average). To mitigate the disruption of operational challenges (sailing schedule adjustments, vessel downsizes, equipment shortages, rollover, etc.), shippers should explore premium services offered by liners with higher costs. This approach will help guarantee space and equipment and shorten delays.
• In other news, although the German rail strikes ended on January 29, there’s now a protest by German farmers blocking access to key ports which is impacting road transportation and imports/exports.
• Following North Europe, MED floating rates remain on the higher side despite trending slightly lower from week 6 onwards to fill up ships before the Lunar New Year. Additionally, roll pool preparation is now expected to take place in the second half of February onwards due to weak demand and holidays in Asia.

North America Vessel Dwell Times

Source from Flexport.com

Trends to Watch

• [Air – Global] Air cargo volumes are rebounding in early 2024, surpassing previous years’ trends. Global air cargo tonnages witnessed a strong recovery in the second week of January 2024, rising by 24% compared to the previous week, countering the typical end-of-year slowdown. This rebound is notably more pronounced than the same period in the previous year, with a marked increase in cargo from Asia Pacific and Middle East & South Asia to Europe, potentially influenced by shipping disruptions in the Red Sea. Despite an overall 7% decrease in global tonnages compared to the preceding two weeks, Middle East & South Asia saw a 2% rise, while major intercontinental lanes experienced significant declines. Year-on-year data shows a global increase in demand by 2%, with a notable 6% surge ex-Asia Pacific, despite lower rates that remain 24% below the levels from the same time last year but 31% above pre-COVID levels. The increase in tonnages to Europe from Asia Pacific and Middle East & South Asia did not lead to higher average prices, indicating a complex interplay between demand, capacity, and pricing in the global air cargo market.
• [FEWB – Ocean] Asia-North Europe: The Red Sea Crisis continuously impacts freight market developments. Rates remain on the higher side. Over the past few weeks, demand has been strong and with Lunar New Year approaching, a slowdown in demand in Asia has ocean carriers reducing freight rates. Two more void plans announced by carriers led WK08/09 capacity to be cut by more than 25% on average. As a result of vessels rerouting via the Cape of Good Hope, vessels and containers face longer transit times. Expect a shortage of empty containers in Asia in the coming weeks, especially outports. To mitigate the disruption of operational challenges (sailing schedule adjustment, vessel downsized, equipment shortages, rollover, etc.), shippers can explore premium services offered by liners with higher cost to get guaranteed space and equipment and to shorten delays. German Rail Strike: There’s another strike on the German railway infrastructure of DB InfraGO AG. From January 23, 2024 6:00 PM CET to January 29, 2024, the entire traffic on the German infrastructure will be affected. The end of the strike is announced for January 29, 2024, at 6:00 PM CET. Please stay close to the situation and plan delivery if any. Asia-Med: Following North Europe, MED floating rates remained on the higher side. Rates started trending slightly lower in WK04 in a push to get more cargo to fill up ships before Lunar New Year and also rollpool preparation for WK07 onwards due to the weak demand and holidays in Asia.

North America Vessel Dwell Times

 

Trends to Watch

• [TAWB – Ocean] Market demand has remained relatively stable in January with no spikes expected until March at the earliest. While the total vessel filling factor is still not at 100%, it has slightly increased as a direct result of the winter blank sailing program and some carrier capacity cuts. Overall capacity remains high despite an anticipated 20% decrease on average for January and February due to blank sailings. We expect carriers to pull more capacity in the coming weeks to help with the Red Sea situation. We’ve already seen members of the Ocean Alliance and 2M (Maersk and MSC) doing this. As a direct impact of the Red Sea situation, rates for vessels traveling on Transatlantic routes have started to increase, and are expected to increase further in February when most carriers announce GRI/PSS and emergency surcharges. In other news, equipment shortages have started to impact Austria and some areas of South Germany as reported by a few shipping lines. The full impact is likely to be seen at later stages and will also depend on the outcome of the current German railway situation.
• [FEWB – Ocean] Asia-North Europe: Market demand is moving up for the second half of January and all ships are filling up, will roll pool by carriers in progress for the coming weeks. Week 3 spot rates slightly increased due to the Lunar New Year rush and week 4 spot rates are stabilizing at high pre-Lunar New Year levels. As the Red Sea crisis continues, it’s now estimated for a vessel to take 2-4 weeks (round trip) depending on the destination. As a direct impact, Ocean Alliance and 2M announced 15+ void plans for February with more to be expected from THE Alliance soon. Equipment shortages can be expected in the coming weeks if the situation remains the same. German Strike: The strike ended on January 12 but no agreement was reached. We expect there will be another round of strikes as a result. No immediate impact is expected. Gemini Cooperation: Maersk and Hapag Lloyd announced an official cooperation agreement that will start in January 2025. More to follow on the actions of additional carriers.
• [MED Trade] Following North Europe, MED spot rates for the second half of January are increasing in week 3. Week 4 spot rates are expected to be slightly lower as carriers are pushing cargo to fill up ships before the Lunar New Year.
• [U.S. Exports] As the Red Sea situation continues, U.S. exporters shipping globally can expect equipment shortages due to mislocated containers. We highly recommend booking shipments 4+ weeks in advance to ensure Expected Quantity (EQ) can be secured.
• [Air – Global] The first week of 2024 saw a continued decline in worldwide air cargo tonnages, following a typical slump in the latter half of December. Preliminary data for week one shows a 6% week-over-week drop in global air cargo tonnages, with significant declines noted particularly in shipments from the Asia Pacific to North America and the Middle East & South Asia, and within the Asia Pacific region. This year’s decline in tonnages during the first week contrasts with the stability observed in the same period of 2023, potentially influenced by the inclusion of January 1, a holiday, in this year’s week one calculation. On a two-week comparison basis, the total tonnage for the last two weeks of 2023 and the first week of 2024 was down 28%, with average rates dropping by 5% and capacity decreasing by 8%. Despite these declines, global tonnages for the same period were around 3% higher year-over-year, with worldwide average rates currently 19% below last year’s levels but still 30% above pre-COVID levels, according to World ACD.

North America Vessel Dwell Times

 

Source from Flexport.com