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Market Update

Freight Market Update: November 1, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 1, 2022.

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Is Supply Chain Visibility the Key to 2023 Success? | Thurs, November 10 @16:00 CET / 15:00 GMT

Ocean Freight Market Update

Asia → North America (TPEB)

  • Carriers are testing out the waters for Transpacific Eastbound (TPEB) PSS/GRI:
    • U.S.: TPEB ocean rates appear to be approaching their floor with recent November and December peak season surcharge (PSS) and general rate increase (GRI) announcements from the carriers. Although carrier reliability is up YoY, port and rail congestion is still seen at the major US gateways. Most notable at Houston for vessel dwell (17-20 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). However, yard capacity is still between 85%-95% for both Canada WC gateways.
  • 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)

  • Demand has somewhat recovered but remains slow. 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: Generally open space despite the impact of blank sailings and vessel delays.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Europe → North America (TAWB)

  • Capacity is increasing for Mediterranean loops with additional ships entering the market.
  • Rates: Indexes are showing a stable situation as rates didn’t fall any further compared to a couple of weeks ago as congestion on the U.S. East Coast (USEC) is still impacting rates.
  • Space: There are some openings to the USEC due to the additional capacity added in October and November. For the U.S. West Coast (USWC) as congestion improves a bit more space is also available on selected loops.
  • Capacity/Equipment: Equipment availability remains the biggest challenge for all EU origins, particularly in the Mediterranean region. Low empty stacks at inland depots, prioritize pick up from the Port of Loading.
  • Recommendation: Book 4 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.

Indian Subcontinent → North America

  • Rates continue to drop following the overall TPEB rate trend. However, it is important to note that Indian Subcontinent (ISC) pricing is still holding strong and above pre-covid levels for some key ISC > North America port pairings.
  • Rates: Steadily decreasing across the market. Rate reductions are happening at a higher frequency, as well.
  • Capacity/Space: Space is available across most lanes at standard (non-premium) rates. Decreases in port congestion globally are effectively increasing capacity. Blank sailings are being seen on shared TPEB services, but overall not a large amount removed capacity to USEC.
  • Equipment: Continuing to add pressure to carriers ability to release shipments. ICDs and smaller out-ports are the most challenging for carriers to reposition.
  • Recommendation: Take advantage of declining rates.

North America → Asia

  • USEC ports continue to see challenges with vessel congestion at Savannah and NYC. Low schedule reliability is causing significant issues with changes in posted earliest return dates and vessel cut-offs at the port. For USWC, arrivals and available capacity for Los Angeles is generally open whereas Oakland and Seattle remain more fluid.
  • Rates: No GRI’s announced for October or November.
  • Capacity/Equipment: Chicago remains the most reliable Inland Port Intermodal (IPI) locations. Kansas City and Memphis are seeing congestion related to equipment and chassis challenges. Availability for standard equipment has not been an issue for most ports. Capacity from the U.S. Southeast to India remains constrained due to the ongoing omissions of Charleston and Savannah. Overall capacity for Indian ports requiring a transshipment service remains very tight from both the USEC and USWC.
  • Recommendation: Please place bookings 4 weeks prior to vessel Estimated Time of Departure (ETD).

North America → Europe

  • Congestion issues in North Europe are easing slightly but the situation will remain fluid until labor disputes are fully resolved.
  • All carriers continue their booking stop for shipments to Ukraine, Russia, and Belarus.
  • Rates: Showing stability at their current market price, week over week.
  • Capacity/Equipment: USEC service to Northern Europe has capacity available however Savannah has irregular challenges due to it being omitted on certain vessel strings & congestion at New York (NYC). Vessel capacity from the port of Houston has been very tight due to a significant increase in demand and delayed vessels. Only one weekly service remains available from Houston to North Europe.
  • Chicago remains the most reliable for loading at IPI. Kansas City and Memphis are seeing congestion related to equipment and chassis challenges. Availability for standard equipment has not been an issue for most ports.
  • Recommendation: Please place bookings 3 to 4 weeks in advance for East or Gulf Coast sailings and 6 weeks for Pacific.

North America Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: Demand remains low to U.S. Midwest and USEC destinations, while USWC capacity is a little tight due to an increase in ecommerce volume. Far East Westbound (FEWB) demand is also keeping steady. Rates to the U.S. Midwest and USEC have dropped slightly and rates to the USWC and FEWB destinations maintain at similar levels to last week. Air China will resume its freighter services ex-Shanghai Pudong (PVG) starting this month. Air China’s service has been suspended for several months so this will bring a large amount of additional capacity to the market.
  • S. China: TPEB rates continue to drop and charter cancellations are prevalent due to the soft market. On the other hand, FEWB rates remain stable and new charters have been added to the market. The South China market has also seen some more demand coming from e-commerce clients. For Shenzhen-Hong Kong (SZX-HKG) cross-border trucking, continue to expect 2 days of additional transit time.
  • Taiwan: The market is normal after an increase in demand due to the month’s end. Requests in the market indicate that there may be more ocean-to-air conversions in November. TPEB and FEWB rates are trending more closely together than in the past.
  • Korea: The fuel surcharge is expected to increase this month following OPEC’s decision to reduce oil production by two million barrels.
  • SE Asia: The overall export markets in Southeast Asia continue to be soft. Due to strong demand at certain transit ports (CAN, TPE, etc.), rate levels have not decreased.

Europe

  • Demand out of Europe is stagnant.
  • There is ample capacity available in the market. Expect capacity to drop and rates to rise slightly as passenger flight frequency decreases due to winter flight schedules being introduced as of November.
  • Possible handling strikes at London Heathrow (LHR) and Paris Charles de Gaulle (CDG) might affect operations in the upcoming weeks.
  • Watch out for upcoming holidays, which might create bottlenecks in the air and on the ground in a further softening market.

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.
  • Air Canada has announced beginning Oct. 1st, they will operate 2 non-stop freighters per week from St. John’s (YYT) to Frankfort (FRA). As well as 3 non-stop freighters per week from YYT to Madrid (MAD).
  • There is a bit of a shortage of trucking capacity, as well as congestion at the airports, which is leading to a longer than normal dwell time for inbound cargo. This has been slowly improving and is expected to clear up in Q1.

Trucking & Intermodal

UK/Europe

  • Due to inflation/soaring costs to operate trucking/barge/rail the GRI for 2023 is expected to be around 10-15% (excluding fuel surcharge). Dropping volumes will not affect this, as this is based on cost to operate and truck carriers barely have any margins.
  • Capacity is still fragile despite declining container volumes caused by a continuous shortage of drivers and delayed delivery of newly ordered trucks.
  • Increase of trucking carriers looking into alternative fuels like Hydrotreated Vegetable Oil (HVO), electric, and hydrogen to decrease CO2 footprint.

Regional Highlight

Our first branded Flexport truck in operation in the Netherlands (running on HVO).

Americas

Import/Export Market Trends

  • Congestion continues at Canadian ports and rail ramps. Yard utilization at Vancouver remains high at >90%.
  • Chassis shortages continue in Memphis and Dallas where we are seeing >29 and >10 days terminal dwells respectively—most inland markets are constrained.
  • Savannah, Houston, and Oakland are seeing increased congestion and 10+ day vessel waiting times due to volume, labor, and congestion.
  • Highway Diesel fuel prices have increased again MoM in most markets, with Canada seeing the largest increases—West Coast continuing to drop but all markets are over $1.40 YoY.
    • East Coast ($5.40/gallon), Midwest ($5.33/gallon), and Gulf coast ($4.97/gallon)
    • West Coast ($5.81/gallon), California ($6.626/gallon) and Rocky Mountain ($3.30/gallon)
    • British Columbia, Quebec and Ontario $6.33/gallon (~$8.61 CAD/gallon)

US Domestic Trucking Market Trends

  • Tender rejections have fallen to a new cycle low of 5.05% which was last seen in March 2020.
  • Trucking carriers are only rejecting 3% of contract loads outbound from Los Angeles and 4.5% of loads outbound from Chicago.
  • Spot rates fell hard in the first half of 2022, but national averages have been somewhat range-bound since mid-August.
  • Contract rates are currently at $2.70, which is down about 25 cents from its mid-June peak.
  • Load-to-Truck ratios are down ~20% QoQ, which is the key barometer for supply/demand in the marketplace.
  • Tender volumes from customers are down 40% QoQ.

Customs and Compliance News

Customs Delays New Regional Data Element, Then Delays Again

In an October 27 CSMS message, CBP announced updates to the October ACE Development and Deployment Schedule. Changes included a delayed launch date for the new UFLPA Region Alert, initially slated for this month, to December 15, 2022. Deployment of the Region Alert will make the postal code a mandatory data element for all customs entries with a country of origin of China and for MID creation or updates. Following concerns from the trade, CBP released another update of the ACE Development and Deployment Schedule on November 1. The target date for the UFLPA Region Alert deployment is now listed as “TBD.”

Trusted Trader Programs to be Recognized Between EU and Canada

On October 28, Canada announced the signing of a Mutual Recognition Agreement with the European Union (EU) to recognize each other's trusted trader programs. Members of Canada’s Partners in Protection (PIP) and the EU’s Authorized Economic Operator program (AEO) will enjoy the benefits of having their goods treated as low risk and cleared by Customs authorities faster at both EU and Canadian borders.

Freight Market News

China Manufacturing Continues to Slow

As Beijing’s zero-Covid policy causes more supply chain disruption, the country’s manufacturing sector has shrunk for the third month in a row. According to The Loadstar, this is exacerbated by the softening in overseas demand and has resulted in a decline in both output and new orders.

US Diesel Prices Soar and Not Expected to Slow Down

According to CNBC, diesel prices have increased by 33% for November deliveries, and are expected to continue increasing. This is prompted by the declining diesel reserves, which are the lowest since 1951, a drought on the Mississippi River prompting more rail and trucking, and a potential rail trike leading to a surge in prices.

Flexport Research Updates

Introducing The Flexport Consumption Forecast

Using Flexport’s proprietary supply chain data combined with the U.S. Bureau of Economic Analysis’s Personal Consumption Expenditure, the Flexport Research team has introduced an industry-first forecast of what U.S. consumption could look like in the coming three months. The Flexport Consumption Forecast provides insights as the unusual economic effects of the pandemic linger on and reliable past consumption patterns are set aside by shoppers.

Weekly Economic Report: Growth is Cool

While the latest US GDP numbers seemed to show an economy perking up after two negative quarters, the key underlying trends are those of an economy slowing down.

A quick reminder: the weekly economic report is now its own newsletter! You can sign up here to have these insights delivered directly to your inbox each week.

Air Timeliness Indicator: TPEB ~ @ 9.5 days, FEWB ↓ @ 9.3 days.

Ocean Timeliness Indicator: TPEB ~ @ 82 days, FEWB ↓ @ 89 days.

Freight Market Update is a complimentary service from Flexport, the modern freight forwarder. If you're not already a subscriber, we invite you to subscribe here.

Please note that the information in our publications is compiled from a variety of sources based on the information we have to date. This information is provided to our community for informational purposes only, and we do not accept any liability or responsibility for reliance on the information contained herein.

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