North America Freight Market Update Live

The below transcript has been generated by an AI system and may contain inaccuracies, errors, or omissions. While efforts have been made to ensure the accuracy of the content, the AI-generated transcript should not be considered fully reliable or definitive record.

David Grinevald

Well, hello, everyone, and thank you for attending today's freight market update. My name is David Grunewald.

I am the air freight director here at Flexport. We have a great webinar for you today.

But before we begin, a few quick housekeeping notes. On your screen, you will see a sidebar to the right of the main stage where you can submit questions.

At the end of the presentation, we will host a q and a and answer a few audience questions, so be sure to get your question in early. In the same sidebar, you will see a tab labeled docs.

This is where you can download a copy of today's slide and find other helpful resources to navigate the market, and we also have a link to register for next week's tariff trends webinar. Alright.

Quick legal note. Please keep in mind that all the information provided in this session is based on the situation at this current time and may not be customized to your specific business requirements. We always recommend reaching out to a Flexport expert to discuss your particular situation.

Joining me today are my colleagues, Jack Sheehan, director of ocean freight at Flexport, and Kyle Beaulieu, who is the head of, Ocean, Americas here at Flexport. On today's agenda, we're going to start with an operations update, then Kyle will, go into the TPEB update, and I will cover the air freight update before we move into the q and a.

So without further ado, I will welcome Jack on stage to cover the operations update.

Jack Sheehan

Alright. Great.

Thank you, David. Okay. Let's hop into the operations update for today.

Alright. We are gonna start, in Middle East and then make our way east, just because we have a lot of happenings in Asia, that are impacting the situation in The US. So start with the Middle East.

Essentially, this the situation has not gotten better over the past month. It's actually gotten a bit worse.

Attacks are continuing throughout the region. Just this past weekend, The US reportedly destroyed five Iranian oil tankers, in retaliation for an attack an Iranian attack on US naval ships.

Iran subsequently responded, with an intent to expand the exclusion zone that they have around the Strait Of Hormuz, which essentially means that any vessels that pass within that zone would be subject to Iranian military intervention. So still an extremely tense situation in The Middle East that is impacting vessel strings and services across really all global trades.

So we will keep you posted as that situation progresses. Then moving a bit east to India, we've talked a lot about India in the past couple of months, but space is still extremely tight and capacity is still extremely constrained.

So space is largely booked through September, and is probably going to stay that way, we think, through the Diwali holiday, which is in early November. Generally, there's a bit of a peak ahead of that holiday, and so we're seeing, you know, cargo demand increase even further as, you know, space has already been tight for the past few weeks or sorry, few months.

There's also a new situation as of September 1. So there was a change of rules for the, empty equipment storage, in and around the Mundra Port facility that is likely to, exacerbate the congestion that we're seeing in the area.

Essentially, empty equipment previously was able to be stored at off port locations, and now that has changed as of September 1 to, empty equipment only being allowed to be stored actually within the the port, special economic zone, essentially to increase supply chain safety and security standards. So there were you know, when the news came out, there was some pushback, from truckers, from the operators of these empty equipment depots around, you know, the port area.

So that is definitely a situation that we are watching, as it develops. If you have, you know, urgent shipments that need to get out, definitely reach out to your Flexport team, because it does vary a bit on the lane level, but expect space to remain tight for probably the next two months there.

Then moving over to China, Shanghai and Ningbo are still digging themselves out from the impacts of the typhoons, that they experienced in the second half of August. So both ports are still pretty seriously congested.

Shanghai has birth delays of up to nine days. As of yesterday, there were a 174 vessels waiting to birth in Shanghai.

And in Ningbo, slightly better at six days with a 125 vessels waiting to birth. There's no official timeline for when these, you know, this congestion will be, rectified, but our best estimate is probably at the end of you know, by the end of September assuming that there are no, you know, further typhoons or weather impacts, that would impede the the current twenty four seven port operations.

K. Now moving to The US, so starting with LA and Long Beach. The Port Of LA and Long Beach has been obviously handling all of the, you know, sort of early peak volume on the Transpacific that's been coming in over the past couple of months.

Carriers are now warning that, we might see increased port and rail dwell delays. It's been ticking up over the past few months.

So, drainage containers the the dwell for drainage containers in the local LA market increased from, a little under three days to a little over three days in July and is further increased in August. And rail dwell increased from about five and a half days in June to six and a half days in July.

And just within Flexport's own shipments, we're seeing that, you know, rail dwell continue to tick up, particularly for a couple inland locations. So Chicago, Columbus, Denver, and Dallas are particularly, impacted with Columbus currently as of this week, being at about nine days of rail dwell delay.

So that is from the time the container gets, drained from the port to the rail ramp to when it actually departs, on the rail. Another thing to note about LA that I don't have on the slide, but I think is worth noting, is September 22, there is MSC has a 23,000 TEU vessel that is calling the Port Of LA, on their Sentosa service.

They will have at least one more vessel of that size, that we'll call in the following weeks. And, right, these are these mega max vessels that are really the largest that the ports have ever managed.

And so that will be something to watch really of, you know, what impact that has on both port operations and the local drayage market, because, obviously, that will be a huge influx of volume coming into the region. Panama Canal.

So we have some slight good news on the Panama Canal. So the Panama Canal Authority has indefinitely postponed any further draft restrictions that were meant to take effect in, at September 15, so into the second half of August or second half of September.

The current draft is at 48 feet. It was meant to go down to 47 and a half feet.

That will not happen as we will hold indefinitely at the current 48 foot level. The daily transit appointments will drop from 34 appointments, today to 32 appointments on September 15.

But that two appointment reduction is happening on the Panamax Locks within, the canal, and those locks are, for vessels that are smaller than 5,000 TEU. So, as far as Transpacific, that likely will not have a, you know, huge impact on the trade just because, like I was just mentioning, some vessels on the Transpacific are over 20,000 TEUs.

Those 5,000 TEU vessels, will, you know, likely have a larger impact on the North America to South America trades where the vessels are generally a bit smaller. So unlikely to have a a major impact on TBEB, but definitely if you have cargo into or out of Latin America, you might see some further delays on your vessels passing through the canal.

And then finally, to round it out, East Coast has been relatively quiet from an operational standpoint. Space is definitely still tight, but just one thing to call out is that Charleston, the Wanda Welch terminal in Charleston has been experience experiencing birth delays of up to eighteen hours, which when you compare it to, you know, the six to nine days in China, it doesn't sound so bad.

But in the Charleston market, that's a a significant delay. So that's what we've got on the operational impacts, and now I will pass it over to Kyle Bullio to talk about the Transpacific market.

Kyle Beaulieu

Okay. Thank you, Jack. I'm realizing here between Jack updates Jack's update and mine, we shouldn't have a lone vessel here.

So if you really learn via images, you know, add a bunch more vessels, to the screen, and it'll represent some of the congestion, that we're seeing out there and the sort of market impact. So, first up, on TPEB supply.

So total deployment remains strong. If you joined us for the last couple FMUs, the good news here is that carriers continue to deploy as many ships as they can, and deployment remains operationally at full capacity. So the standard 10 to 15% of services do continue to blank each week due to vessel rotations or lack of vessels.

This has become the norm. We've talked about this previously. The bigger issue right now is port emissions, due to congestion buildup and the typhoons in Asia.

So Shanghai, Ningbo, Qingdao, Yantian, they've all seen the largest impact by emissions, and they're with a across a mix of services, they're skipping them weekly through September. Now these are major ports, that need to get volume out before Golden Week, so these skips are meaningful.

And the port emissions don't only impact you if you're leaving from those ports. If you have a feeder service in one of those ports, then your cargo could be waiting longer as well while it sits at one of those transshipment humps, and that's where you could see a week, maybe even two weeks of delay, depending on the the transshipment and how those feeders connect to those those larger ports.

There are a few XLs in the market in the second half of September. They're mostly to the PSW, but due to port emissions, they really are supplementing space more than they're adding true capacity.

So they are very helpful. They are needed in the market, but, you know, just because not all capacity is reaching those ports, it's not really adding on top of what you'd be used to normally. Now looking ahead to Golden Week, thus far, there are far lower number of blanks announced in historical norms.

So deployment will adjust downwards from what you see here as we get closer, but demand and supply bottlenecks are strong enough to encourage deployment above the dip that we saw in 2025. Now I'm gonna talk a little bit more, about the supply side here, and then impact to some of the congestion that Jack mentioned, and this kinda was looking a little bit further afield.

So the congestion that we're seeing in Asia and Panama will come to The US as these delays will have ripple effects. So if you're reading the headlines, and we have some of them here, they tell the story of today.

So Sea Intelligence notes a sharp drop in transit reliability has already occurred, with the single single largest single month drop in scheduled reliability since COVID in January 2021. JOC has noted the drop in capacity as carriers have had to admit ports, which we were just speaking to, and the Lodestar has noted birthing delays at Shanghai Ningbo have hit up to ten days.

Now this isn't all these headlines aren't specific to TPEB, but TPEB is being impacted here. And they do tell the story of the impact of departures and the transit time timeliness we've already seen, but after this cargo departs, it won't be the end of the story.

So the congestion will hit, The US. So it's starting to hit The US West Coast as Jack alluded to in September, and all ports it'll hit all ports really in The US in q four.

So LA Long Beach is already experiencing those high container dwell times and rail connection challenges, that Jack spoke to, and that is due to both high demand and vessels starting to get out of sync. But late vessels will start to overlap with those that emit ports altogether, and normal vessel terminal windows will be missed, and there will be congestion.

Now meanwhile, in transit, for those of you shipping to The US East Coast, the Panama delays in vessel rerouting will impact US East Coast Gulf arrivals. So we have gotten some good news on the Panama, but there have been vessels that have been delayed a week or longer transiting the Panama Canal.

And some carriers are trying to avoid further buildups there by actively rerouting some vessels around the Cape Of Good Hope. And when they do that, that could sometimes add ten to fourteen days in transit just for that.

Now here's an example of some strings in the Premier Alliance. So in this ex in these examples, 25% of the vessels are going via Cape Of Good Hope, while 75 go via Panama.

Now these are services that normally all go on the same weekly schedule on the same route, something that's a little bit more predictable. Now this active management is helping to avoid a further bunching via Panama, and it keeps cargo moving, so it's really a good thing.

But downstream, though, there will be some more trade offs as vessel berthing delays will occur, on The US East Coast or Gulf due to misaligned schedules. And so all of this is really to say that supply situation today, isn't as simple as whether or not there's a vessel in Asia.

So schedule reliability is expected to get worse before it gets better, and it will take some time to clean up the compounding impacts of these different events, throughout the world. Now in this next slide, we're gonna talk a bit little bit about what has happened on the rate side.

So, the market overall, especially in TPEB, has remained resilient. So demand has continued at a high clip, and as we've talked about in the first couple slides, supply has been impacted.

So for TVEV, the market has continued its upward trend, with September 1 GRIs pushing rates higher to the highest levels that we've seen this year. And The US East Coast has actually now eclipsed the the two year high on the trade, and then The US West Coast isn't far behind.

Now other markets globally are still continuing to see increases as well. So aged to LatAm has also reached two year market highs on sci fi.

And not shown here, but one that we've talked to quite a bit in previous FMUs, the IEC to North America trade has also continued upwards in September as the market there booms and supply remains constrained. If you're shipping on forests westbound, so Asia to to Europe, that trade has been an outlier from Asia, and it saw the peak settle a little bit earlier than The Americas has, so rates there have started to soften in July started started softening in July.

As far as far as the outlook goes, so still do to be determined whether there'll be another GRI for the second half of September. There have been some announced, but there is a last push on the demand side for sure before golden week, and there is enough disruption in the market that levels are not expected to soften by the end of the month.

So last year, we saw the market starting to wind down by now. It sort of trickled into golden week.

There wasn't a real big push before golden week, but that's not gonna be the case this year. So the conditions that we're seeing today, will continue into golden week.

And some of the supply constraints we've talked about, they will continue beyond golden week. The question as we get into q four, sort of the October, November period, is how demand will look at that period and how all these supply disruptions balance out with that.

So that's it from the ocean side, and I'll turn it over now to David, for an air update.

David Grinevald

Thank you, Kyle. Alright.

So let's take a look at what the air freight market has had in store for us, this month. Overall, if we look at the market, the worldwide air cargo tonnage rose 5% year over year in August, which is, very similar to what we had seen in July and shows that, there is a sustained demand for air freight in the market right now with every major origin region posting anywhere between 45% growth.

And this is in spite of, a strong decrease in ecommerce volume, which is something that we'll look at in the next couple of slides. The worldwide average rates, are actually clearly decelerating.

They were plus 37% year over year in May. They are only plus 22% year over year in August.

So even though they are still much higher than they were last year at the same time, they're clearly decelerating. The worldwide average spot rate in August was about $3.36 per kg, which, again, is 28% higher than the same time last year, but is down 1% versus July and down about 9% versus the April, June average.

Now if we look at the capacity, the capacity also grew, about 2% year over year in August, which is really keeping pace with demand rather than trailing it. The the one special case is probably Hong Kong to Europe, which is something that we did touch upon in previous FMU where the tonnage fell 30 year over year in August, which is clearly tied to the European Union's July 1 end of the de minimis exemption on low value import.

However, this Hong Kong to Europe decline is bottoming out. The volume rose for a second straight week into the week of August twenty fourth to thirtieth, which is a clear recovery from their late July's low point.

The worldwide rate premium over last year has narrowed for four straight month, like I said, from 37% in May to 22% in August, even as the spot pricing itself has only eased slightly from its second quarter, average. Now we're gonna take a look at the situation in The Gulf and the way that it is affecting the air freight market.

As most of you know, The US Iran ceasefire was signed on April 8, and then broke down on June seventy. Broke down in July, sorry, with renewed military activity around the Strait Of Hormuz.

The European Union, Aviation Safety Agency has now extended its conflict zone guidance for the Persian Gulf and the Gulf Of Oman through September 30, which is effectively keeping carriers out of the airspaces of Bahrain, Kuwait, Doha, and The Emirates. There is a separate EASA guidance that continues to advise against flying over Iran, Iraq, and Lebanon.

We have been looking since the beginning of the crisis at the Gulf Airline Recovery Index, which in essence is showing us how, the main airlines from the The Middle East are recovering in terms of capacity. What we're seeing is that in the last week of August, this capacity remained 9% below its pre conflict level with The Gulf specific capacity still down 16%.

Specifically, Israel airspace has reopened with controlled restriction and is operating at partial capacity following an updating security assessment. For those of you who want to have more constant updates than our monthly FMU, just know that Flexport has, the latest on global air freight operation on our Middle East escalation blog.

Alright. A big part of the story is the jet fuel, which has been very much impacted by the situation in The Middle East. The high point, was hit in mid April, when the barrel was above $200, at that time.

It has since then when it's since then, it went down a lot, but, the renewed hostilities in the region have now placed it at about a $156 per barrel. What is interesting to look at is to see how the airlines have been reacting to this in terms of surcharges.

So the way that we've been showing this for the past couple of months is we've put in in green the, the airlines that are reducing their, fuel surcharges. In red, the ones that are increasing it.

And whatever you see in black on that table here, are the, surcharges that are remaining stable. So, if you if you take a look here, you'll see that most of them are keeping the surcharges stable for now.

A few of them are decreasing, and only one of the panel that we are choosing to display here, have actually increased. The, the carrier full surcharge rose, after the February outbreak, and they do remain elevated on most of the Asia Pacific and Middle Eastern route.

But what we've seen is is carriers sort of of taking a moment before they decide to increase them once again. What we are seeing, however, from some airlines, specifically Air France, our war risk surcharge still being applied, and at times, actually being increased.

What we want to give as a piece of advice for, air freight shippers is to treat the current fuel surcharge level as a floor and not a ceiling, while the conflict remains unresolved. Okay.

So for those of you who ship air on a regular basis, you know that we should be entering peak season right now. The reality is that we're not seeing one as starkly as we could have expected.

Obviously, there are strong regional differences. What we are seeing is that most analysts report little shippers' interest in peak season charters, which are usually a good, testimony of the strengths of a peak season.

The year over year demand growth should hold through September, partly because last year's volume were unusually low, not necessarily because underlying demand is accelerating. And last but not least, our sort of of traffic light assessment of the different regions.

I just said that there was a a strong regional divide, which you can see pretty clearly here. The Mainland China, whether it's it's, out of Shanghai or out of Hong Kong, has been pretty open as a market, pretty soft market out of those two origin.

Other origins like Taiwan and Vietnam are much more tense. There has been the new product released by Apple right now, which makes the Vietnam market extremely busy and congested.

And Taiwan, as those of you who follow those FMU lives know, is one of the main origin for AI hardware, which has made the market consistently busy. I do see that we only have a couple of minutes left, and I want us to have enough time to answer some of your questions.

So with that said, I'm going to invite Kyle and Jack back on stage so that we can start taking some of the questions we received in the q and a section. Alright.

So first one, I think, was for you, Jack. I'll let you read the question and then go ahead and answer it.

Jack Sheehan

Yeah. Sure. Okay. So the question is, is it generally better to try to use smaller West Coast ports like Tacoma or Oakland if you're trying to get to inland destinations like Cincinnati, Ohio or Salt Lake City, Utah? It seems like there are less train departures, but the congestion is generally better.

How should we approach something like this? Does our foreign office always need to be just need to be looking at this constantly?

I would say it is it depends on the situation. It depends on the the cargo and the urgency of that cargo.

Generally, I would say if a shipment has an SO release, to probably just leave it as is, because while there are while there is, you know, congestion in LA and, in on the the rail transfers, ultimately, if you're going to be switching a routing to a different right, sailing in different routing, you're likely going to see have some sort of a delay at origin just making that switch. That being said, if it's, you know, for an end customer where you have chargebacks and, you know, you need to be more certain about the delivery date, definitely talk to your Flexport team, see what options are out there for changing routings.

Also, you know, consider cutting the shipment at the West Coast port and transloading it and trucking it. That obviously can be an expensive solution, so I would say reserve that for truly your, you know, hottest POs that have things like chargebacks, launch, POs, create something where there's a a true business impact to missing, an estimated delivery date.

David Grinevald

Alright. I think we had a question on The US China port fees for you, Kyle.

Kyle Beaulieu

Yeah. One we haven't talked about in a while.

It's a good question. So have we heard any update regarding The US China port fees, and is that set to expire or that is set to expire in 11/09? So there actually hasn't been a lot of news on this.

So right now, the sort of standard that was set before that it was paused for a year, and then all the, levels, that were gonna go up previously, would go into effect after that expires. So not a lot there.

What we saw last time, though, was The US announced first, and for, like, almost eleven months or so, there was wasn't necessarily a response. And then in the last couple weeks, there was a levels in an agreement.

So, I would expect that as we get closer to the state, there some will more will be in the news. But, there's a lot lot happening in the world, and I think this will, become more of an issue as it comes becomes closer.

Jack, we had a question here on are there direct service options from Ho Chi Minh to the West Coast and every or is everything going from Vietnam to a large report in China or Korea first?

Jack Sheehan

Yeah. Okay.

So I will plug, a great Flexport tool here, which is Flexport Atlas. You can just go to atlas.flexport.com to access this.

What you'll find is a sort of a Google Earth, like a map of the world where you can input, any two port combinations or rail combinations, and see the available services. To directly answer this question, there are direct services from Ho Chi Minh, to LA, Tacoma, I believe Vancouver as well, but Atlas will be able to show you all of that, and you just it it will show you when you search the two ports.

It will give you all the available services, and it will say if they're direct or if they have transfers.

Kyle Beaulieu

Yeah. Maybe, one thing, I know we're a little bit over, but to add some additional context there, if you're worried about shipping out these regions.

So, you know, I mentioned the big ports. Right?

The Shanghai, Ningbo, Yantian, Tsingtao that are having the port emissions. Well, Vietnam is immune from those.

So, a number of those services that are going either to US West Coast or US East Coast, carriers are emitting maybe the maybe Vietnam and then calling the Shanghai Ningbo. So they still have to make sure that they get the cargo out.

So, what they're doing is kind of trading off. So in some services, they might load more out of those ports and then, you know, omit Yantian or Shanghai, whatever it might be in the next one.

But for the next vessel, they might be emitting v Vietnam and then, calling the those ports. So, there are some port emission issues.

So even if it is a direct service to US West Coast, it doesn't mean that, right now it's getting the weekly service, with the active port emissions that are happening out there. I think, we'll we'll wrap up there, given given our time constraint.

So we do have a few more questions that have come in. So after this, we will, try to reach out, with a Flexport representative to to answer those questions.

David Grinevald

Alright. Well, then that concludes today's webinar. Thank you all for the great questions.

We will also email everyone a link to the recording and the slides tomorrow morning. Thank you again, and have a great day.