Competitive Edge

April 6th, 2022

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Ocean Freight Market Update

Headlines

  • On March 31, the U.S. Senate passed by a voice vote the Ocean Shipping Reform Act. This bipartisan bill aims at alleviating shipping backlogs and improving supply chain woes.
  • With Shanghai extending its lockdown, Seatrade Maritime News reports the world’s largest container port has deferred to using river and sea transport to bring cargo to its terminals. This comes as restrictions on road transport and requirements for truck drivers to have negative COVID tests – see below for additional updates. 
  • For the 19th straight month, container volume at the Port of Savannah was higher on a monthly basis compared with the prior year, according to the Georgia Ports Authority and Freight Waves.

UPDATE: Notable U.S./Canada Port Congestion – as of 04/05/22

  • Vancouver: 55 Backlogged Vessels
  • Houston: 52 Backlogged Vessels
  • Los Angeles/Long Beach: 45 Backlogged Vessels
  • Norfolk/Newport News: 40 Backlogged Vessels
  • New York/Newark: 26 Backlogged Vessels
  • Charleston: 20 Backlogged Vessels
  • Savannah: 18 Backlogged Vessels
  • Note: This does not include port-bound vessels waiting at ports of origin

IMPORT: Asia to North America (TPEB)

Recent Developments:

  • COVID-related lockdowns in Shanghai continue to stir up disruptions for suppliers and port operations. Road restrictions and preliminary COVID testing requirements has hindered the movement of cargo via trucking to and from port grounds.
  • Fuel charges for TPEB lanes have increased.
    • No changes to bookings or blank sailings from carriers yet, however shippers should be prepared for possibilities given the present circumstances.
  • The usual suspects—severe congestion, deteriorating schedule integrity, port omissions, and blank sailings—remain contributors to an uncertain market.
  • The market has softened, given the usual lapses in post-CNY demand, however, it remains uncertain among forecasts for how long this softening is expected to last.

Rates: Rate levels remain elevated. Premium market remains strong. Carriers have announced a GRI, effective April 1, for all Canada and U.S. destinations.

Space: Space remains critical and is expected to stay tight.

Capacity/Equipment: Capacity remains severely under. Equipment deficits remain critical.

TIPS: Book at least 4 weeks prior to CRD. Strongly consider premium service and be flexible as it comes to equipment and routing. Additionally, be in contact with suppliers to check up on any COVID-related developments that can affect production.

IMPORT: Europe to North America (TAWB)

Recent Developments:

  • USEC congestion remains pronounced at Charleston, New York/Newark, and Norfolk/Newport News. Savannah has also seen a steady increase in waiting vessels offshore.
    • Port of Charleston has seen delays of 14 or more days.
  • Coupled with congestion, extended wait times are a contributing factor to significant service disruptions at USEC ports.
  • USWC ports, notably Long Beach/Los Angeles, remain heavily congested with wait times only slightly improving—still averaging around 35 days.
  • MSC has announced its Scan Baltic service providing direct connection from Baltic ports, such as Goteborg, to the USEC.
    • In return, this will help alleviate a significantly congested Antwerp hub that would otherwise be the transshipment port for these Baltic lanes.

Rates: Rates levels remain high and are expected to increase during Q2 with GRIs and PSSs.

Space: Space is critical for USEC and USWC.

Capacity/Equipment: Capacity remains tight for both North Europe and Mediterranean services. Equipment availability at ports, however shortages remain at inland terminals.

TIPS: Book 5 or more weeks prior to CRD. Strongly consider premium service for higher reliability and no-roll guarantees.

EXPORT: North America to Asia

Recent Developments:

  • Diminishing schedule integrity is contributing to void sailings, delays, vessel cut-offs at ports, and challenging post earliest return dates.
  • For USEC, Port of Savannah operations are continuing to enjoy improvements.
  • The Port of Charleston remains to be notably congested and at risk for omissions.
  • Vessel arrivals remain fluid for USWC POLs.

Rates: GRI activity (limited) announced into April and early May.  

Capacity: Available capacity remains fluid for USWC POLs.

Equipment: IPI origins remain adversely affected by deficits on containers and chassis. Standard equipment availability has not been an issue, but special equipment remains elusive.

TIPS: Book 4 to 6 weeks prior to CRD to secure equipment and vessel space.


Freight News

Latest updates on...the Shanghai lockdown, the USWC labor longshore union situation, and the Ocean Shipping Reform Act

The Shanghai Lockdown: As of now, the Shanghai lockdown has been extended indefinitely with the majority of residents unable to leave their homes. The biggest issue with this lockdown for those in the supply chain is the lack of trucking capacity and the closure of factories and warehouses – which has prompted ocean freight to be diverted to Ningbo, Qingdao and Tianjin as the top alternative ports, The Loadstar reports. As of Wednesday morning local time in Shanghai, there were 53 container ships at anchor, the Journal of Commerce reports. 

In addition, air cargo at the Shanghai Pudong Airport has been extremely difficult as many airlines have announced flight cancellations, The Loadstar reports.

The USWC labor longshore union situation: The contract talks between the International Longshore and Warehouse Union (ILWU) and USWC employers are set to begin May 12th, the Journal of Commerce (JOC) reported the two sides announced. The current contract is set to expire on July 1st, with automation predicted to be a key issue in the talks.

The Ocean Shipping Reform Act: The Senate has passed the Ocean Shipping Reform Act and it is likely the President will sign it into law. The Bill is meant to help facilitate the flow of freight at the country’s ports. Specifically, the Bill would require carriers to issue certain reports to the Federal Maritime Commission (FMC) each quarter and would authorize the FMC to self-initiate certain investigations partly related to late fees, amongst other provisions, Transport Topics reports.  

Congestion at USEC ports have caused the trans-Atlantic trade to be hampered

Both dreary on time vessel performance, U.S. consumer demand continuing to increase import volumes, and full container terminals in Northern Europe and the U.S. East Coast have contributed to the congestion at USEC ports which has caused the trans-Atlantic trade to be hampered.

U.S. imports from North Europe in February grew a little over 11 percent (141,482 TEU) year over year, according to the Journal of Commerce. This comes after U.S. retail sales in January increased almost 5 percent year over year, the JOC reports.

Port delays have impacted schedule reliability on the westbound trans-Atlantic down to a record low of nearly 15 percent in February, the JOC reports. In addition, yard density is rising in the heart of North Europe and will continue to do for some time. Experts are anticipating the Mediterranean-U.S. East Coast market to improve, but it will be slow process because of the congestion at the USEC ports.

Blog Of The Week

The Evolution of Drayage in the Supply Chain Throughout the Pandemic

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