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Market Update

Freight Market Update: August 9, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of August 9, 2022.

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North America Freight Market Update Live | Thursday, August 11 @ 8:30 am PT / 11:30 am ET

European Freight Market Update Live | Tuesday, August 23 @ 16:00 CEST / 15:00 BST

Ocean Freight Market Update

Asia → North America (TPEB)

  • Spot rates continue to fall with blank sailings on the rise. Blank sailings remain all too common in the market, which carriers are pairing with the low spot rates and demand. Schedule reliability among the alliances remain low and varied. On-street container dwell is elevated and inventory on terminals is reaching max capacity at some inland locations. Containers are ground stacked at the rail as a result of the insufficient chassis supply and/or rail traffic imbalances in: Chicago, Dallas, Kansas City, Memphis, Denver, St Louis, Santa Teresa, and Omaha. Temporary service pauses and train metering have been enacted by the railroads.
  • Rates: Rates remain soft in many major pockets.
  • Space: Open, except in a few pockets.
  • Capacity/Equipment: Open, except in a few pockets.
  • Recommendation: Book at least 2 weeks prior to cargo ready date (CRD). For cargo ready now, importers might consider taking advantage of currently available space and softer floating market rates.

Asia → Europe (FEWB)

  • There is no peak season and demand has been slowing down. Supply is still relatively tight due to the large amount of blank sailings, vessel sliding, and port omissions. The port congestion in Europe, particularly Hamburg and Rotterdam, has reached critical levels causing further delays and late return of vessels to Asia. There are indications of power cuts in Ningbo (Zhejiang province) which would affect production output but there is still no official information available.
  • Rates: There is continued rate pressure on spot rates due to lower demand.
  • Capacity/Equipment: Space is available but it is impacted by additional blank sailings and delays due to the port congestion in Europe.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Europe → North America (TAWB)

  • Demand for the whole month of August is expected to be lower due to some European factories closing from late July until mid-August (majority out of the MED area). Anticipate a high return of demand beginning in September. Congestion on the U.S. West Coast (USWC) has gradually improved but we are now seeing slight worsening at some U.S. East Coast (USEC) ports.
  • Rates: Stable at high levels. No sign of steep rate decline in the near future. Some drop on FAK levels in Italy and Greece.
  • Space: Still very tight on the USEC with some space open of direct routing to the USWC.
  • 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

  • The Indian Subcontinent market remains fluid and demand remains strong as we enter the second half of August.
  • Rates: largely unchanged across key port pairings but remain elevated from pre-covid levels.
  • Capacity/Space: Space is available across most lanes at standard (non premium) rate levels. Some service level issues are arising due to USEC port congestion and disruptions in the EU.
  • Equipment: Rising equipment deficits are being reported across India, particularly in smaller ports and inland container depots (ICD).
  • Recommendation: Take advantage of declining rates. In the past carriers have implemented blank sailings to avoid underutilization. This could lead to increased rates on the horizon.

North America → Asia

  • Vessel arrivals and available capacity remain fluid for all USWC ports. USEC ports continue to see challenges with vessel congestion and some vessel strings still omitting Charleston and Savannah entirely. Erratic vessel schedules continue to cause significant challenges with posted earliest return dates and vessel cut-offs at the port.
  • Rates: No GRI’s announced for August or September.
  • Capacity/Equipment: Deficits on containers and chassis continue to plague Inland Port Intermodal (IPI) origins. Chicago has been the most reliable. Availability for standard equipment has not been an issue for most ports. Capacity from the US Southeast to India remains constrained due to continuing port omissions for Charleston and Savannah. Overall capacity for India ports requiring a transshipment service remains very tight in particular from the USWC.
  • Recommendation: Please place bookings 4 weeks prior to vessel Estimated Time of Departure (ETD).

North America → Europe

  • Congestion issues persist in Europe due to local labor actions at baseports in Germany and the Netherlands. The port of Houston continues to experience significant capacity constraints due to schedule delays and port congestion with one service still reduced running from weekly to biweekly. USWC service to Europe remains extremely tight due to void sailings and skipped ports caused by systematic delays. USWC coverage for Mediterranean ports now has reduced capacity due to one string being phased out. All carriers have issued a booking stop for shipments to Ukraine, Russia, and Belarus.
  • Rates: No GRI announced for August. There is one GRI announced so far for September targeting US Gulf origins.
  • Capacity/Equipment: USEC service to Northern Europe has capacity available. Vessel capacity from the port of Houston has been very tight due to a significant increase in demand and delayed vessels. Deficits are still plaguing many IPI origins. Availability for standard equipment at ports has not been an issue, but special equipment is hard to come by.
  • Recommendation: Please place bookings 3 to 4 weeks in advance for East Coast/Gulf sailings and 6 weeks for Pacific.

North America Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: Unlike the week prior, carriers have not announced any flight cancellations and there is sufficient capacity for both Transpacific Eastbound (TPEB) and Far East Westbound (FEWB) lanes. Overall demand in the market is quite weak, resulting in rate decreases. In the FEWB market, airlines continue to maintain lower flight frequencies to FRA due to airport handling restrictions and are offering more flights to AMS at lower rates.
  • S. China: The market demand remains soft for both TPEB and FEWB lanes and rates levels have decreased slightly from last week. Shenzhen - Hong Kong (SZX-HKG) cross border operations continue to be affected by Covid surges and a capacity quota reduction. Transit times for affected shipments are expected to be prolonged by 2-3 days.
  • Taiwan: The market continues to be soft and rates remain at similar levels to last week. In regards to the political tension in the Taiwan Strait, flights are operating as normal and there is no impact to flight schedules ex- TPE. Flights between mainland China, Hong Kong, and Taiwan were impacted, however CK and CA’s flight schedules have already resumed.
  • Korea: The market ex-Korea remains the same as the week prior with demand continuing to be very slack with no signs of it picking up anytime soon.
  • SE Asia: Demand in the Southeast Asia region continues to be soft with rates maintaining at similar levels. Some carriers continue to cancel flights from Vietnam due to the low demand in the market.

Europe

  • Demand continues to trend at lower levels and is expected to pick up slowly from mid-September.
  • Transatlantic belly capacity ex European hubs continues to be strong, helping maintain lower rate levels while fuel price remains high.
  • Ground handling operations in major European hubs have improved compared to July. Situation in FRA remains volatile, with contingency plans in place to avoid significant delays. Delays are expected at UK border crossing due to driver shortages.
  • Build pallets below 160CM to increase possibilities of better uplift options and rates on passenger aircraft capacity.
  • For all trade lanes, continue to place bookings early to secure best uplift options and routings.

Americas

  • Export demand remains steady from all markets.
  • US airports are running at a normal pace.
  • Capacity is opening up further, especially into Europe, where most carriers have increased the number of passenger flights for their summer schedules.
  • Shipments into Europe could experience additional destination dwell time due to the labor shortages in some western European hubs.
  • Rates remain stable week over week.
  • A heavy travel season in and out of Canada is putting a strain on the infrastructure of major airports (YYZ and YVR) which is having a trickle-down effect on cargo operations. This is resulting in longer than normal dwell times for both import and export cargo.

Trucking & Intermodal

Americas

US Import/Export Trucking: Market Trends

  • Congestion continues at the Montreal and Toronto terminals and inland ramps. The volume coming into Toronto continues to surge, while the number of drivers continues to decrease, which translates into less drivers handling more volume and creating the previously mentioned congestion.
  • Chassis shortages continue to persist, notably in Chicago, NY/NJ, Memphis (95% utilization, 10+ day street dwell time) and in LA (10.4 day street dwell for 40’).
  • East coast and gulf congestion will continue through August, with vessels at anchor in New York, Norfolk, and Savannah—36 ships at the end of July awaiting berths with wait times in the 7-10 day range.
  • LA/LB and Oakland have deteriorated, in part due to AB5 strike action—Oakland is seeing 19 day terminal dwell times and LA/LB are averaging 7.9 days.
  • Highway Diesel fuel prices are dropping but remain well above the start of year
    • East Coast ($5.30/gallon), Midwest($5.24/gallon), and Gulf Coast ($4.91/gallon)
    • West Coast ($5.98/gallon), California ($6.39/gallon) and Rocky Mountain($5.39/gallon)
    • British Columbia, Quebec and Ontario (~$7.44 CAD/gallon)

US Domestic Trucking: Market Trends

  • The domestic FTL market has been suffering from the inventory glut with the highest inventory/sales ratios in history, global inflation, record high diesel fuel prices, and most recently the sharp drop in container imports.
  • Tender rejections by carriers has decreased by 67% YoY from 22.8% to 7.4%, meaning carriers are accepting more loads due to having more capacity.
  • Spot rates in the market have bottomed out to a 16-month low, down ~35% YTD. Contract rates fell in recent weeks after an increase for the past several months due to FSC schedules.
  • Load-to-Truck ratios are down ~30% YoY, which is the key barometer for supply/demand in the marketplace.
  • Tender volumes from customers are down 20% YoY.
  • Diesel prices have pulled back slightly from all-time highs as we move past the summer peak season.

Customs and Compliance News

CTPAT Trade Compliance Opens to New Members, Imposes New Rules

As of August 1, U.S. Customers and Border Patrol (CBP) has reopened the application process for new members to the Customs-Trade Partnership Against Terrorism (CTPAT) Trade Compliance program, which permits importers to assume responsibility for monitoring their own compliance in exchange for certain benefits. New applicants are required to satisfy the recently released minimum security criteria, including expanded compliance obligations around forced labor. Current CTPAT Trade Compliance members must implement the new forced labor requirements by August 1, 2023.

USITC Announces Investigation into USMCA Auto Rules of Origin

On August 4, the U.S. International Trade Commission (USITC) announced a new fact-finding investigation on the USMCA automotive rules of origin. The investigation will review the origin rules’ impact on the U.S. economy and U.S. automotive production and trade competitiveness, as well as the relevancy of the rules due to changing technologies. The USITC will hold a public hearing in connection with the investigation at 9:30 a.m. on November 3, 2022. Information about how to participate in the hearing will be posted on the Commission’s website no later than September 26, 2022 here.

__CBP Announces New Public-Private Partnerships __

CBP has announced tentative selections for new partnerships that will allow approved private sector and state and local government entities to reimburse CBP for expanded services. These public-private partnerships will increase CBP’s ability to provide new or enhanced services and expand CBP’s capacity to process increased cargo volumes. Reimbursable services under this authority include customs, agricultural processing, border security services, immigration inspections and support services at ports of entry.

Factory Output news

  • Mainland China: China-Europe freight trains break new records both in the numbers of trains and volume delivered. Source
  • Vietnam: Over 100 Vietnamese int’l flights affected by China’s military drills near Taiwan. Source
  • Cambodia: The country’s first $300M tyre factory highlights production capacity. Source
  • India: Ford India’s Manufacturing plant to be sold to Tata Motors. Source
  • Bangladesh: Demand for RMGs continue to drop due to inflation as retailers are either deferring the shipments of finished products or delaying orders. Source
  • Pakistan: Maersk and Seed Ventures signs MOU to improve the quality of Pakistan’s agriculture produce and expand its export network. Source

Freight Market News

Container Shipping Spot Rates Steadily Decline

FreightWaves reports that despite demand softening, spot rates have not plunged as deeply as expected. Right now the decline is gradual—with Transpacific rates steadying in July and early August. US import demand still remains above pre-Covid levels, causing congestion at several US ports.

Air Cargo Industry Facing Looming Challenges

According to The International Air Cargo Association (TIACA) director general Glyn Hughes, the air cargo industry is expected to face a number of upcoming challenges—as reported by The Loadstar. Despite the softening in volume, a combination of high fuel prices, staff shortages, lack of capacity, and closed airspace—results of sanctions against Russia—present critical issues for the air cargo industry.

Flexport Research Updates

Revisiting Section 301 Tariffs - The State of Trade

The Biden administration may have limited opportunities and appetite to remove the tariffs, many supply chains may already be adapting to a tariffs-for-longer scenario.

Winter is Coming - Dealing with a Weak German Economy

This report reviews the key drivers of German industrial, consumer, and trade activity.

Weekly Economic Report: Hot Jobs Market

A surprisingly robust July jobs report provides evidence of continued economic strength.

Also a 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 ↓ @ 11 days, FEWB ↓ @ 9 days.

Ocean Timeliness Indicator: TPEB ↓ @ 92 days, FEWB ↑ @ 90 days.

Logistics Pressure Matrix

  • US: In the latest update, manufacturers import expectations increase, pandemic spending patterns persist, inventories are still filling, and trade activity remains higher than last year.
  • EU: Consumer confidence fell to its lowest on record and has now fallen every month since September. Inventories returned to above-sufficient levels for the first time since February 2021.

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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