Freight Market Update: March 8, 2022
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of December 21, 2021.
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North America Freight Market Update Live: Thurs, March 10 @ 8:30 am PST | 11:30 am EST
Ocean Freight Market Update
Asia → North America (TPEB)
- Market and operational challenges persist as new challenges develop on TPEB and elsewhere. Congestion, equipment imbalances, sliding vessel schedules, port omissions, and blank sailings all continue to cause strain and increased freight costs. The Russia/Ukraine conflict has already caused crude oil prices to increase, driving up bunker fuel prices, and downstream to shippers, bunker surcharges. The moving market remains primarily at premium levels. FAK space is also still limited, as vessel capacity overall remains insufficient.
- Rates Rate levels remain elevated and the premium market is strong.
- Space Critical
- Capacity/Equipment Critical/Severe Undercapacity
- Recommendation Book at least 3-4 weeks prior to CRD. Consider premium options. Be flexible in regard to equipment and routings.
Asia → Europe (FEWB)
- Market has not fully recovered after the Lunar New Year. There is available space on FAK and spot across all alliances. However, restrictions remain in place for long-term named account deals based on strict policies from carriers. Space is impacted by blank sailings, especially with a huge drop in deployed capacity in week 12. Schedule reliability is very low with many vessel shiftings and changes.
- Rates Rates remain at a high level but have decreased gradually going into March due to a slower than expected volume recovery.
- Space Tight 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)
- Congestion at USEC ports is not improving with new delays at all major ports and waiting times going from 3 to 12 days. USWC waiting time is also not improving with the number of vessels waiting outside the port now going up again. Hamburg CTA terminal facing issues due to recent bad weather which is causing delays in export containers and also in equipment availability at the terminal.
- Rates Ocean levels continue to raise with PSS and GRI increase announced for March and April rates.
- 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
- Port omissions hitting key USEC services as congestion remains a challenge at Charleston, Savannah, Norfolk, and New York.
- Rates trending upwards for 2H March. Premium rate levels should be expected for small Indian ports and Bangladesh as demand exceeds vessel/equipment supply.
- 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. Recommendation is to move on premium services. Space to the USEC will be difficult into Savannah, Charleston, and New York until April as bunched vessels off the coast of USEC are resulting in longer turn-around time back to origin and port of discharge omissions. This leaves a gap of sailings for the most consistent services typically relied upon for ISC to the USEC.
- 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.
- Recommendation remains to load via wet port instead of using ICDs to avoid delays and accessorial fees.
North America → Asia
- Vessel arrivals and available capacity remain fluid for USWC POLs. Rail availability over the USWC is limited as carriers are strictly adhering to allocations. USEC situation sees Savannah operations improving however port omissions continue for the South Atlantic affecting both Savannah and Charleston ports. Erratic vessel schedules continue to create void sailings and delays in schedules creating significant challenges with posted earliest return dates and vessel cut-offs at the port.
- Rates Limited GRI activity announced for March and April. One carrier that had announced an April 1 GRI has formally withdrawn it from the market
- 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 weeks prior to vessel ETD.
North America → Europe
- There is available capacity on the TAEB trade from the US East and Gulf Coasts but schedule issues persist for New York, Charleston, and Savannah. US West Coast service to Europe is extremely tight due to void sailings and skipped ports caused by systematic delays. Seattle's port of call remains suspended indefinitely and direct service from Vancouver will be suspended in April as well. All carriers have issued a booking stop for shipments to Ukraine, Russia, and Belarus.
- Rates One GRI anticipated for Mediterranean destinations for March.
- 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.
- Recommendation 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 TPEB market has picked up quickly with rates levels increasing quite a bit compared to the prior week. Test kits continue to be a hot commodity and we expect to see a peak at the quarter-end. For FEWB, due to the ongoing Russia-Ukraine conflict and ensuing air territory closures, many flights remain canceled and capacity continues to be severely impacted. As a result, rates have greatly increased and standard service is starting to see at least five days lead time from booking to uplift. As the conflict continues we expect capacity to further tighten and rates to maintain upward trends.
- S. China: TPEB demand ex-South China surged last Friday as the cross-border trucking constraints persisted. FEWB rates have increased as demand begins to pick up and the market sees capacity shortages due to the Russia-Ukraine conflict. In comparison, the overall HKG market remains soft as a result of the cross-border situation.
- Taiwan: TPEB demand is continuing to pick up with space to SFO and ATL especially tight. FEWB capacity is anticipated to become more congested as several airlines have had to update their routings to avoid certain air territories, resulting in longer flight times and aircraft payload decreases.
- SE Asia: The market ex-Vietnam and Thailand remains soft with carriers reducing rates and requesting volume. There are still no signs of when the market is expected to pick back up.
- Demand modest, a slight increase in comparison to last week. Bigger projects remain on the market as the Transatlantic ocean market is suffering from disruption/congestion.
- Rates at a stable high. Where we are seeing the biggest increases are in the fuel surcharges. The IATA Jet Fuel Index is at record high levels, and airlines will pass through the cost.
- Russian airlines are still banned from EU/US airspace. This is causing a decrease in freighter capacity on the TAWB.
- Deferred routings are still providing a viable routing option if already tight lead times can take it. We also see cheaper options on the market to secondary hubs where airlines have regular passenger flights.
- Limited congestion at EU terminals.
- Demand is increasing, especially into central EU. Dwell times of 4-6 days have been reported.
- Aid and Relief efforts have increased significantly which has reduced the available capacity. Early bookings are highly suggested.
- LAX/ORD/JFK ground-handlers are dealing with high volume considering the heavy export throughput. Rates to Asia, LATAM, and Europe have increased further.
- Rates to Asia, LATAM, and Europe have increased slightly.
- Most terminals provide reduced free time for storage and have earlier close-outs for exports to accommodate throughput times and screening requirements.
Trucking & Intermodal
- Mainland CN <> HK Cross Border Trucking Operations Still Facing Severe Challenges: Positive COVID cases are still increasing in cross-border truckers. Previous transloading warehouses with area codes for cross-border operations have been paused by the government and new transloading stations with area codes have been appointed to use gradually. Each district in Shenzhen will have specific transloading stations to handle cross-border cargoes. But these stations only have a limited appointment quota each day.
- Rates: Eligible cross-border trucker shortage continues to influence the whole market. Market rate remains high and will not lower in the near term.
- Capacity: The whole market capacity is still very tight, only around 10~20% of normal time. Barge service continues to run to support cross-border operations. But the capacity is limited and transit time is quite long due to continuing COVID impact.
Customs and Compliance News
CBP Places On Hold Plans for New CTPAT Applicant Information
CBP has issued a federal register notice updating a previous notice seeking comments from the Trade community on collecting additional information CTPAT applicants. In the most recent notice, CBP has stated their intention to pause the proposed updates without mentioning what information CBP sought to add to current CTPAT applications. One important clarification CBP mentioned was the CTPAT program is available for "U.S. and nonresident Canadian importers only."
Congress Aligned on Legislative Action on Russia’s U.S. Trade Ties
Across the chambers of Congress, Democratic and Republican leaders on essential committees are on the same page in responding to Russia’s invasion of Ukraine with punitive action addressing U.S.-Russia trade. House Speaker Nancy Pelosi (D-CA) wrote to fellow House Democrats stating that pending legislation “would ban the import of Russian oil and energy products into the United States, repeal normal trade relations with Russia and Belarus, and take the first step to deny Russia access to the World Trade Organization. We would also empower the Executive branch to raise tariffs on Russian imports.” Neither the House nor the Senate has scheduled any votes addressing trade action against Russia.
Factory Output News
- Taiwan Feb export is expected to continue to grow for the 20th consecutive month Source
- Vietnam Panasonic expands Vietnam factory in response to the surge in demand Source
- Thailand Honda and Sony have announced a joint venture to produce EVs for delivery in 2025, boosting EV production capacity in Thailand Source
- Malaysia Farm Fresh set to IPO in March and part of the proceeds will go to establishing a new manufacturing hub in Malaysia Source
- Singapore Slower growth in the manufacturing sector seen in February due to geopolitical uncertainties. Increased concerns due to cost pressures from supply disruption and inflation Source
- Philippines the manufacturing sector reached a 3-year peak as demand and production increased Source
- India Wheat exports have touched a record 6.6million tonnes due to the aftermath of the Russia-Ukraine conflict. The figure is expected to hit 7 million tonnes by the end of March Source
Freight Market News
Hong Kong’s air cargo market hit by pandemic Record-high Covid numbers in Hong Kong has greatly impacted air freight market due to the severe cut to trucking capacity. The Loadstar reports that forwarders estimate a 70% reduction in truck capacity, which has resulted in cargo unable to reach HKG airport in time for flights.
Ship fuel prices skyrocket following Russia invasion Prior to the invasion, the price of ship fuel had been on the rise and since, they have hit unprecedented numbers as reported by FreightWaves. The container shipping lines will pass along the higher fuel costs to cargo shippers, as seen in the quarterly bunker adjustment factors (BAFs) and emergency bunker surcharges.
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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.