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Market Update

Freight Market Update: November 15, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 15, 2022.

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North America Freight Market Update Live | Thurs, November 17 @ 8:30 am PT / 11:30 am ET

Flexport Platform Demo | Weds, December 14 @ 12:00 pm PT / 3:00 pm ET

Ocean Freight Market Update

Asia → North America (TPEB)

  • Transpacific Eastbound (TPEB) demand and rates continue their downward trend for November:
    • U.S.: Rates continue to fall for all gateways, nearing rate levels seen pre-pandemic. Although carrier reliability is up YoY and overall TPEB capacity is continuing to grow, some port and rail congestion is still seen at the major US gateways, most notably at Houston as 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 vessel count but a deterioration in berthing delays (29 days). However, yard capacity is still between 85%-95% for both Canada West Coast (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 remains slow through the first half of November and rates are further declining. Space is readily available but schedule reliability is affected. Port congestion in Europe continues to cause delays and late return of vessels to Asia.
  • Rates: Ongoing pressure on spot rates due to low demand.
  • Capacity/Equipment: Space is generally open despite the impact of blank sailings and vessel delays.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Europe → North America (TAWB)

  • Demand is dropping for imports to the U.S. while capacity to the U.S. East Coast (USEC) continues to pose issues. Situation on German ports is getting better with fewer vessels now waiting for a berth window.
  • Rates: No major drops reported in the market despite demand going down and capacity increasing. There have been some small adjustments downwards but the market is far from a free fall.
  • Space: There are some openings to the USEC due to the additional capacity added in October and November. Space into the U.S. West Coast (USWC) is available on select loops as congestion continues to improve.
  • 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 Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: Demand is low to the U.S. while demand to EU destinations has dropped from last week. Charter flights in the market are getting canceled due to the weak demand and both TPEB and far East Westbound (FEWB) rates have decreased from the week prior.
  • S. China: TPEB rates have decreased from last week due to low demand in the market, while FEWB rates remain the same. Some TPEB charters continue to be canceled while FEWB charters are being added in the market. Due to a Covid outbreak in the Guangzhou area, some manufacturing operations have been affected, resulting in cargo output delays.
  • Taiwan: The overall market is slack. Some TPEB market charters have been canceled due to the low demand, while on the FEWB lane China Airlines will update their flight schedule to operate 2 freighters per week to AMS starting at the end of the month. Carriers also announced Fuel Surcharge (FSC) decreases from 56TWD to 54TWD effective November 16th.
  • Korea: The market continues to soften amidst rumors of an unlikely late peak season.
  • SE Asia: The overall export markets in Southeast Asia continue to be soft if not decreasing in demand.

Europe

  • Demand out of Europe has slightly increased into some major North American hubs. Overall demand levels remain low for this time of the year.
  • Capacity available in the market is sufficient to meet demand levels.
  • Ground Handlers DNATA and Menzies are still expected to strike at London Heathrow (LHR) between 18-21 November—leading to disrupted cargo operations, flight cancellations, and delays.

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.
  • There is a bit of a shortage on trucking capacity, as well as congestion at airports, which is leading to a longer-than-normal dwell time for inbound cargo. This situation 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.

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

CBP to Release New UFLPA Resources

During a keynote at the Apparel Importers and Trade Transportation Conference on November 10, CBP Executive Assistant Commissioner for Trade AnnMarie Highsmith announced that CBP will be providing “additional resources” to assist importers with forced labor compliance, set to be released November 16. Highsmith also confirmed that CBP will begin publishing forced labor detention statistics broken down by industry, number of entries, and entry values in early 2023.

Section 301 Comment Period Opens November 15

On November 15, the Office of the United States Trade Representative (USTR) opened the online portal for the submission of public comments regarding the renewal of Section 301 tariffs on China. The comments will cover all four Lists of goods. If you are interested in submitting comments on the impact of the Section 301 tariffs, please reach out to Flexport’s Trade Advisory team at advisory@flexport.com.

CBP Commissioner Resigns

CBP Commissioner Chris Magnus resigned on November 12 after serving only 11 months in the role. Deputy CBP Commissioner Troy Miller will manage the agency again until another presidential appointee can be confirmed.

Freight Market News

Air Cargo Continues To Pull Back Amidst Declining Demand

According to FreightWaves, the International Air Transport Association (IATA) published data showing a 10.7% decrease in cargo demand in September, as compared to 2021. This percentage represents a declining YoY trend. In addition to weakening consumer demand, the conflict in Ukraine, labor shortages, and inflation have contributed to this decline in the air market.

Third Rail union Rejects Proposed Contract

According to CNN, a third railroad union has rejected a potential labor deal, increasing the potential for a rail strike in early December. To prevent a strike, Congress can move to extend the cooling-off period during which unions cannot strike, or impose a contract on union members.

Flexport Research Updates

Weekly Economic Report: Evolving CPI

While the headline US CPI number fell a bit in October, all the major components are still above the Fed’s target rate of inflation. On closer inspection, there was little in the latest report to convince the Fed to back off from its rate increases.

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Air Timeliness Indicator: TPEB ~ 9.5 days, FEWB ~ 9.9 days.

Ocean Timeliness Indicator: TPEB ↓ @ 79 days, FEWB ↓ @ 83 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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