State of Trade: Slowdowns and Seasonality - Key Indicators to Watch in 2022
January 19 at 9:00 am PST / 11:00 am EST / 5:00 pm GMT
Join our economics experts as we discuss the state of the global trade economy, which metrics matter most in 2022 and why seasonality matters so much in logistics.
Ocean Freight Market Update
Asia → North America (TPEB)
- Congestion at LA/LB continues to worsen, causing port omissions and limiting available capacity as 120+ vessels wait for their chance to berth before continuing to other destination ports or returning to origin for subsequent sailings. The congestion at LA/LB is so severe that ocean carriers are limiting bookings for local deliveries, preferring IPI cargo through the PSW gateway. Shippers with urgent cargo, or those working to replenish depleted inventories, are willing to pay premium rates for scarce space.
- Rates Rate levels remain elevated, and the premium market is strong for pre-CNY sailings, driving up premium rates. Some carriers are expected to increase rates for the second half of January, while others are extending until post-CNY.
- Space Critical
- Capacity/Equipment Critical/Severe Undercapacity
- Recommendation Book at least 4 weeks prior to CRD. Consider premium options and carrier IPIs through the PSW gateway. Be flexible in regard to equipment and routings.
Asia → Europe (FEWB)
- Space and equipment crunches continue into the new year as market demand consistently exceeds supply. Space and equipment remain very tight due to frequent blank sailings and port omissions. Carriers are overcommitted and are limiting booking acceptance or rolling shipments. With continuous vessel delays and shifts, schedule reliability is very low and delays for pre-CNY sailings will have a significant impact into the post-CNY period.
- Rates Rates have increased slightly in the first half of January and are expected to go up further in the second half of January due to the traditional pre-CNY peak season.
- Space Extremely critical space situation
- Capacity/Equipment Severe equipment shortage across all Asia origins.
- Recommendation Book at least 3 to 4 weeks prior to CRD. Consider premium options, which may be limited. Be flexible in regard to equipment.
Europe → North America (TAWB)
- Schedule reliability is expected to deteriorate as winter weather batters the North Atlantic. Port omissions and changes in port rotations will continue in the mid-term.
- Congestion at USEC ports is manageable at the moment. Some services have reinstated their Savannah call as of January 2022. USWC remains heavily congested at both LA and LB despite improvement on the quay. Some blank sailings announced by lines in February.
- Rates Ocean rate levels remain stable but still extremely elevated.
- Space Critical, especially to the USWC
- Capacity/Equipment Capacity remains tight for both North Europe and Mediterranean services. Better equipment availability at port; shortages remain at inland depots.
- Recommendation Book 5 or more weeks prior to CRD. Request premium service for higher reliability and no-roll guarantees.
Indian Subcontinent → North America
- Demand for space is increasing as we are heading into the ISC region's traditional peak from January - April. This time period is the last quarter of India’s financial calendar where we see demand rise as manufacturers look to close their books strongly to end the year.
- Rates expected to slightly increase in 2H.
- Space to the USWC is and will remain a challenge into 2022. Port omissions on services to the USWC continue to cut capacity out of the ISC.
- Space to the USEC remains steady; however, schedule delays have occurred due to terminal congestion at destination.
- Equipment remains a challenge at smaller Indian ports in the South and South-East as well as inland container depots (ICDs). Carriers are encouraging shippers use of their own origin carriage services to mitigate equipment shortages. Equipment is normalized at key ports such as Nhava Sheva and Mundra.
North America → Asia
- Vessel arrivals and available capacity remain fluid for USWC POLs. USEC capacity has been more readily available; Deteriorating schedule integrity, There continues to be void sailings and delays in schedules creating significant challenges with posted earliest return dates and vessel cut-offs at the port.
- Rates There have been a few GRI advisories posted for early February specific to transshipment ports as well as Oceania destinations.
- Equipment Deficits on containers and chassis continue to plague IPI origins. Availability for standard equipment at ports has not been an issue, but any special equipment is hard to come by.
- Recommendation Please place bookings 4 to 6 weeks in advance to secure your equipment and vessel space.
North America → Europe
- There is available capacity on the TAEB trade from the US East and Gulf Coasts. US West Coast service to Europe is extremely tight due to void sailings and skipped ports caused by systematic delays. Multiple TAEB service strings continue to omit the port of Savannah and are calling Charleston or Jacksonville instead, due to the significant congestion issues at the port of Savannah.
- Rates January rate levels to remain steady through the month.
- Equipment Deficits are still plaguing IPI origins. Availability for standard equipment at ports has not been an issue, but any special equipment is hard to come by.
- Please place bookings 3 to 4 weeks in advance for East Coast/Gulf sailings and 6 weeks for Pacific Coast sailings.
Air Freight Market Update
- N. China: The market is fairly quiet for the week, and carriers are eager for volume. However, due to Covid issues in Hong Kong, it is possible that some cargo will be routed through North China and may lead to an increase in demand in the second half of January.
- S. China: Numerous flights on the TPEB lane ex-South China were cancelled in Week 1 with possible extensions into Weeks 2 and 3 after airline crew members tested positive for Covid-19. For the FEWB market, rates have decreased this week and market capacity is relatively sufficient compared to the prior week. Destination terminal congestion has improved due to the drop in demand from the holiday period.
- Taiwan: Demand started off low in the market, but is starting to pick up before the Lunar New Year holiday. Space to SFO continues to be in high demand.
- SE Asia: Demand ex-Vietnam has dropped slightly after the holiday period with TPEB rates showing a decreasing trend. Carriers still prefer shipments with loose cartons over pallets. For Thailand, most factories resumed production this week. Demand ex-BKK is picking up but is still below volumes from the previous month. Some airlines have also slightly reduced rates from the week prior.
- Demand remains to be calm this week, and the rates have fallen slightly into all N.America destinations. We do expect the slack demand to pick up again in the coming weeks.
- No changes to capacity this week. Omicron is resulting in a few flight cancellations, but there is enough capacity in the market to meet the slack demand.
- Deferred routings where airlines have passenger capacity remain to be an attractive option at a good rate level, if there is room for a longer transit time.
- No congestion reported at key export hubs in Europe.
- Advice remains in place ex EU, continue to place bookings early for optimal rates and solutions. Consider smaller batches via air freight, as this is where rates and solutions can be best optimized.
- US export demand has slightly softened and capacity is manageable.
- LAX/ORD/JFK terminals have slightly reduced the inbound backlog cargo, which has a positive effect on the export side.
- Larger shipments from major outbound gateways can take 2 to 3 days from booking to uplift.
- The US has experienced some domestic and international flight cancellations and delays due to Omicron.
- Most terminals provide reduced free time for storage, and have earlier close-outs for exports to accommodate throughput times and screening requirements.
- Rates to Latam have decreased after the holidays and summer break, but are still at higher than normal levels. Rates into Europe and Asia are stable compared to previous weeks.
- Congestion at the European hubs is improving which is slightly reducing the average dwell time at destination.
Updates from Flexport's Customs & Compliance Team
CBP Intends to Consolidate Authority over Ports and Stations
CBP recently stated its intention to consolidate immigration ports of entry, customs ports of entry, and customs stations under one regulatory authority. Currently, the Department of Homeland Security secretary has authority over the customs ports of entry and stations, while the CBP commissioner has authority over immigration ports of entry. However, all three types use the same personnel and are generally located in very close proximity.
Factory Output News
- Taiwan exports surge 29.4% amid a global recovery and rising demand for goods from Taiwan, particularly technology and raw materials Source
- Cambodia non-gold commodity trade volume exceeds US$36 billion in January-November 2021 Source
- Thailand textile-garment industry weaves magic as export numbers surge Source
- Singapore improvement in volume of air imports, exports and transshipments in Changi Airport has reached precovid levels Source
- Pakistan textile exports lost $250 million in Dec due to Gas shortage limiting workforce in mills and factories Source
Freight Market News
Covid Delivers Blow to China Shipments FreightWaves reports on the air and sea impact in China, as the county reinforces its zero-tolerance policy toward Covid. Following a cluster of Covid cases in Tianjin, the port city has suspended pickup operations for all import containers. Covid-related labor shortages have prompted Cathay Pacific to scale back cargo flights and will likely cause shipping delays in the air cargo hub, Zhengzhou.
US Ports Begin to See Federal Funding The Loadstar reports that federal funding from President Biden’s infrastructure bill, signed in November, is continuing to flow into US ports. Recently the Port of Long Beach has received funding to improve capacity by raising the percentage of containers that leave the port by rail. Offshore wind and electricity-related projects are other priorities that will receive funding as part of the bill.
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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.