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Market Update

Freight Market Update: November 29, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 29, 2022.

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Upcoming webinars:

North America Freight Market Update Live | Thurs, December 8 @ 9:00 am PT / 12:00 pm ET

The State of Trade: Reflecting on 2022, Looking Ahead to 2023 | Tues, December 13 @ 9:00 am PT / 12:00 pm 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) market experiences major drops in demand:
    • U.S.: TPEB demand continues to fall for nearly all gateways, substantially below volume levels seen pre-pandemic. Although carrier reliability is showing improvement, the fluctuation of physical vessel counts in the market continues to remain volatile as carriers work to find methods to deal with overcapacity, mainly through blank sailings.
    • 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).
  • 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 continues to be weak going into December with no sign of improvement. Rates are still following a downward trend. Space is readily available but schedule reliability is affected by port congestion and delays.
  • Rates: Ongoing pressure on spot rates due to low demand.
  • Capacity/Equipment: Space is generally open with few blank sailings.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Europe → North America (TAWB)

  • Overall capacity hasn’t further increased in November but we would expect more vessels to be shifted to the Transatlantic Westbound (TAWB) market in Q1 2023.
  • Rates: Adjustments downward on Freight All-Kind (FAK) rates have been published by most of the carriers. Mainly Peak Season Surcharge (PSS) has been adjusted.
  • Space: Due to the easing of congestion, space on the U.S. East Coast (USEC) and U.S. West Coast (USWC) is becoming more available but still not wide open as on other trades.
  • Capacity/Equipment: Equipment availability remains a challenge for all EU origins, particularly in the Mediterranean region. Low empty stacks at inland depots are getting better in some specific areas but prioritize pick up from the Port of Loading if possible.
  • Recommendation: Book 4 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.

Indian Subcontinent → North America

  • Indian Subcontinent Pricing and Capacity continues to benefit shippers as rates drop and vessel space remains available.
  • Rates: dropping on most services further continuing the trend that started this past summer.
  • Space: available on all services. Carriers indicate vessels sailing at ~85% utilization or less on some services.
  • Capacity/Equipment: Capacity is available, but equipment will continue to remain an issue across the Indian Subcontinent.
  • Recommendation: Be open to procuring equipment from wet ports vs Inland container depots as equipment deficits are felt in many areas.

North America → Asia

  • Capacity, Congestion, and Equipment have all improved amid a continued drop in market demand, but rates have not fluctuated much.
  • All services to APAC have low capacity utilization levels with no space constraints.
  • Congestion has been cleared out across most North American container yards with improved operations as a result of less demand.
  • Congestion does persist in limited pockets around the Gulf and South East Coast.
  • The rail performance in a few key markets: Chicago, Dallas, and Kansas city, has also seen improvement.
  • The looming railroad and ILWU contracts negotiations will play a huge role in dictating the operations and congestion at container yards across the continent.
  • Rates - the floating market rates are not fluctuating anywhere near as rapidly on the outbound trades as much as the inbound trades. Rates are trending slightly downwards MoM and QoQ on certain lanes from coastal ports (USEC, USWC) to Asia base ports in China, Japan, Taiwan, S. Korea. Other lanes are displaying stability in rate levels.
  • Space - open and manageable with Cargo Read Date (CRD) to Estimated Time of Departure (ETD) lead times improving from Q3 to Q4 significantly from 3-4 weeks to ~2 weeks across most lanes.
  • Capacity/Equipment - no major capacity changes in the market with very limited blank sailings as carriers prep for Lunar New Year. No major equipment hurdles to highlight in the US. Certain inland US markets in the Midwest have a balance on equipment availability while the coastal US ports have an abundance of availability.
  • Recommendation - book 2-3 weeks prior to CRD on all coastal to Asia base port lanes, and book 3-4 weeks prior to CRD on all inland to Asia base and feeder port lanes.

North America → Europe

  • Capacity, Congestion, and Equipment have all improved amid a continued drop in market demand, but rates have not fluctuated much.
  • Most USEC to N. Europe (NEU) and Mediterranean (MED) services have low to medium capacity utilization levels with very limited space constraints.
  • Gulf Coast to NEU and MED services continue to have very high (over 100%) utilization levels as the market in Q3 and early Q4.
  • The USWC to NEU, MED services are still VERY limited in options and therefore utilization levels are artificially high. There is no positive outlook for the rest of Q4 and into Q1 for additional capacity on these lanes.
  • Rates - the floating market rates are not fluctuating anywhere near as rapidly on the Transatlantic Eastbound (TAEB) trade as they are on other global trades. Rates are trending slightly downward MoM and QoQ on certain lanes.
  • Space - Space is manageable with a slight improvement on CRD to ETD lead times from Q3 to Q4 significantly from 3-4 weeks to 2-3 weeks across most lanes.
  • Capacity/Equipment - carriers have reintroduced port calls in Savannah and Charleston on USEC to NEU services with a return to a regular, weekly schedule which will have an impact on space and rates into Q1. Carriers on the OCEAN alliances have introduced a new Gulf service to the MED which officially launched last week. There is no outlook for carriers to add capacity OR remove capacity on the WC to NEU, MED services. No major equipment hurdles to highlight in the US. Certain inland US markets in the Midwest have a balance on equipment availability while the coastal US ports have an abundance of availability.
  • Recommendation - book 2-3 weeks prior to CRD on all EC to NEU, MED lanes, book 3-4 weeks prior to CRD on all Gulf to NEU, MED lanes, book 4-5 weeks prior to CRD for all PSW to NEU lanes.

North America Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: Due to low demand in the market commercial flights have been canceled to reduce the supply imbalance. Rate levels have also dropped from the previous week, however, the low demand trend is expected to continue.
  • S. China: Market rates remain at similar levels to last week. The Covid outbreak in the Guangzhou area continues to affect manufacturing operations, resulting in cargo output delays.
  • Taiwan: There is a slight peak before the month’s end, particularly to LAX and FEWB destinations.
  • Korea: The market remains soft for the month's end. The rate gap between TPEB and FEWB lanes continues to decrease with TPEB rates only 15% higher than FEWB rates, compared to a rate gap of 58% from the previous year.
  • SE Asia: The overall export markets in Southeast Asia continue to be soft with rates either maintaining or dropping slightly from last week. In Vietnam, some factories have begun laying off staff or updating work schedules to rotations in order to save costs.

Europe

  • Overall, demand levels out of Europe remain constant and below expected levels for this time of the year, with small spikes on certain main port pairs like AMS-JFK.
  • Capacity available in the market has decreased to usual Q4 levels, but it remains sufficient to meet current demand. Lead days are expected to increase depending on demand spikes into major US hubs.
  • Terminal congestion in Amsterdam (AMS) and London Heathrow (LHR) might lead to delays.
  • Watch out for the upcoming holiday season, which might create bottlenecks both in the air and on the ground.

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.

Trucking & Intermodal

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.
  • There is an increase of trucking carriers looking into alternative fuels (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

Expanded Forced Labor Enforcement Benefits for CTPAT Members

On November 18, U.S. Customs and Border Protection (CBP) announced three new forced labor benefits for CTPAT Trade Compliance members. The new member benefits include: (1) priority review of admissibility packages for shipments detained due to forced labor; (2) the ability to hold intact shipments that would normally be subject to redelivery due to forced labor ties; and (3) allowance to move goods detained due to a Withhold Release Order to a bonded facility while under review. These benefits are provided in exchange for compliance with the recently updated Trade Compliance program forced labor requirements.

Dominican Sugar Imports Subject of New Forced Labor Order

Under a new withhold release order (WRO), effective November 23, U.S. Customs and Border Protection will detain imports of raw sugar and sugar-based products produced in the Dominican Republic by Central Romana Corporation Limited. The order is based on information that reasonably indicates the use of forced labor in Central Romana Corporation’s operations. The WRO follows the recent addition of sugarcane from the Dominican Republic to the U.S. Department of Labor’s List of Goods Produced by Child or Forced Labor.

Section 301 Exclusions for COVID-Related Goods Extended

The Office of the U.S. Trade Representative (USTR) has announced that it will extend 81 COVID-related product exclusions in the China Section 301 investigation. The exclusions, previously set to expire on November 30, have been extended through February 28, 2023. In the interim, USTR is continuing to accept public comments through January 17, 2023, as a part of its review of all Section 301 tariffs on imports from China. For more information on how to submit comments, please reach out to advisory@flexport.com.

Freight Market News

Railway Strike Threatens More Economic Disruption On December 9th

According to Forbes, an impending railway strike could cripple the United States economy and be particularly debilitating given the strike’s holiday season timing. Many are now calling for Congress to use legislative power and apply the Taft-Hartley Act to force railroad workers back on the job and into a new contract.

Shipping stocks in the crosshairs with protests in China

According to FreightWaves, COVID restrictions and continued struggles to fully reopen production in China are taking a toll on the shipping industry. Shipping stocks, especially ocean shipping stocks, have taken a tumble in recent days after hopes of increasing business from China were halted. Shares of crude-tanker owners Nordic American Tankers (NYSE: NAT) and Euronav (NYSE: EURN), shares of crude- and product-tanker owners International Seaways (NYSE: INSW), and shares of Frontline (NYSE: FRO) all fell over 4% on Monday.

Flexport Research Updates

Weekly Economic Report: Trade Growth

For a large collection of major economies, goods trade dipped from Q2 to Q3. The dip comes after a two-year stretch of trade growth that differed markedly from the decade before and that took trade values to new heights.

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 ↑ @ 8.4 days, FEWB ↓ @ 10.3 days.

Ocean Timeliness Indicator: TPEB - @ 75 days, FEWB ↑ @ 85 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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