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Market Update

Freight Market Update: May 24, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of May 24, 2022.

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European Freight Market Update Live | Tue, May 31 @ 16:00 CEST / 15:00 BST

North America Freight Market Update Live | Thurs, June 2 @ 8:30 am PT / 11:30 am ET

Ocean Freight Market Update

Asia → North America (TPEB)

  • __Space is available on TPEB as demand levels remain suppressed__—a trend which is influenced by many factors such as the ongoing impacts of Covid on Shanghai, inventory levels appearing higher than in many months, and global economic developments. International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) labor negotiations continue, as all stakeholders anxiously await news of agreements being reached. For cargo ready now, importers might consider taking advantage of currently available space and softer floating market rates.
  • Rates: Levels remain elevated relative to the pre-Covid market with softening in many major pockets, especially into U.S. west coast (USWC) ports.
  • Space: Mostly open, except in pockets.
  • Capacity/Equipment: Open, except in pockets.
  • Recommendation: Book at least 2 weeks prior to cargo ready date (CRD). Consider premium options where needed. Be flexible in regard to equipment and routings. Check closely with suppliers to understand any Covid-related impacts or changes to production outputs and forecasts.

Asia → Europe (FEWB)

  • Demand is picking up, but congestion is still having a widespread impact on capacity deployed on this route. Shanghai is slowly opening following a lockdown of almost 2 months. The third quarter is expected to be strong with a summer peak. However, there are many uncertainties on a macro level such as the Ukraine conflict, high inflation across Europe, and lower consumer confidence.
  • Rates: Rates are expected to increase in June due to tighter space.
  • Capacity/Equipment: Overall space is starting to fill up again. Serious congestion in European ports is causing sailings to return to Asia late, resulting in additional delays and blank sailings.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Europe → North America (TAWB)

  • There is clear improvement on the congestion at both U.S. east coast (USEC) and USWC, with vessel waiting time dropping sharply.
  • Rates: Expect rates to remain on the high side even in June.
  • Space: Tight for both USEC and USWC due to ongoing (improved) congestion and continuing strong demand. Some ad hoc space is opening for USWC on specific services.
  • Capacity/Equipment: Capacity remains tight for both North Europe and Mediterranean services. Better equipment availability at port. Shortages remain at inland depots.
  • Recommendation: Book 4 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.

Indian Subcontinent → North America

  • ISC Market remains stable for 2H May, and this trend is expected to continue into 1H June.
  • Rates: Rates are expected to hold for 1H June.
  • Space: Demand has cooled from the previous months.
  • Capacity/Equipment: Although demand has softened, equipment may still be an issue at smaller ports and Inland container depots (ICD).
  • Recommendation: Load via wet port and avoid Inland container depots when possible. ICDs are a chokepoint for containers which often leads to delays in shipping order release.

North America → Asia

  • Vessel arrivals and available capacity remain fluid for all USWC ports. More blank sailings due to the vessel backlog in Shanghai can be expected. The USEC continues to see challenges with vessel congestion and some vessel strings omitting Charleston and Savannah entirely. Erratic vessel schedules continue to cause significant challenges with posted earliest return dates and vessel cut-offs at the port.
  • Rates: Limited general rate increase (GRI) activity was announced for June.
  • Capacity/Equipment: Deficits on containers and chassis continue to plague Inland Port Intermodal (IPI) origins. Availability for standard equipment at ports has not been an issue for most ports but a large number of carriers have advised of continuing shortages on 40s at the port of Oakland.
  • Recommendation: Please place bookings 4 weeks prior to vessel Estimated Time of Departure (ETD).

North America → Europe

  • Significant congestion and vessel delays in Europe remain in addition to the ongoing schedule issues for New York, Charleston, and Savannah. The port of Houston is also experiencing capacity constraints due to schedule delays and port congestion with one service being reduced from weekly to biweekly. USWC service to Europe is extremely tight due to void sailings and skipped ports caused by systematic delays. The suspension of Pacific Northwest coverage for North Europe may be lifted in July if the operational situation permits. USWC coverage for Mediterranean ports will see capacity reduced with one of the ocean carriers phasing out its service. All carriers have issued a booking stop for shipments to Ukraine, Russia, and Belarus.
  • Rates: No GRI announced for June.
  • Capacity/Equipment: Deficits are still plaguing IPI origins. Availability for standard equipment at ports has not been an issue, but 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.

North America Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: Covid cases continue to drop and the region has gradually allowed more businesses to reopen. Production is still recovering at a slower pace as there are still some prevention and control requirements in place. Transpacific eastbound (TPEB) rates remain the same as the week prior while far east westbound (FEWB) rates have increased slightly.
  • S. China: Ex-South China the market remains soft. Terminal backlogs are clearing up however due to the ongoing lockdown situation in North China, market demand and supply continue to be unstable.
  • Taiwan: The market is quite stable with demand expected to pick up slightly before the month’s end. Carriers announced further fuel increases starting June 1st. Some factories have seen decreases in production due to rising Covid cases and a lack of raw materials.
  • Korea: The market continues to be slow however volume is expected to increase by the end of the month. Rates have remained stable.
  • SE Asia: Ex-Malaysia the market continues to be soft in large part due to a lack of raw materials. The air market in Thailand is still quiet but seeing slight improvements. Most Covid restrictions are also being lifted with self-quarantine no longer required for close contact with confirmed cases. Demand and rate levels out of Vietnam are stable compared to last week. Carriers are currently offering incentivized rates for loose cartons.

Europe

  • Demand remains stable however the latest market updates show high levels of inventory storage. This suggests a decrease in demand to be expected in the coming months, however the situation remains uncertain.
  • Rates are starting to decrease on all lanes. Jet fuel pricing is also starting to decrease, however, slight fuel uncertainty persists.
  • Freighter capacity is improving with better rates and lead times, booking to uplift window is approx 6-10 days.
  • Build pallets below 160CM increase the possibilities of better uplift and rates based on passenger capacity.
  • Deferred routings via secondary hubs are still providing cheaper rates overall.
  • Dover crossing congestion is improving, however, it is still very unstable overall. Advice to uplift direct into the UK instead of using EU hubs for the rest of May/June.
  • For all trade lanes, continue to place bookings early to secure the best uplift options/routings.

Americas

  • Demand remains high, especially into Europe. Capacity is manageable and has already surpassed 2019 pre-covid levels.
  • Origin dwell times of 3 days have been reported in some cases.
  • Capacity is slowly opening into Shanghai Pudong (PVG) but under express rates in most cases.
  • Early bookings are highly recommended.
  • Los Angeles, Chicago, and New York (LAX/ORD/JFK) ground-handlers are dealing with high volume considering the heavy export throughput.
  • Rates have slightly softened compared to previous weeks, especially into LATAM and Europe. The main reason is the additional belly capacity added into the Transatlantic lane.

Trucking & Intermodal

Americas

  • US Import/Export Trucking
    • Market Trends
      • Trucking capacity in major N. American markets is starting to open up as import volumes decrease across the country. The lockdowns we have seen over the past weeks across major China cities like Shanghai, Guangzhou, and Beijing, will reduce even more the inbound volume US ports receive in May.
      • Inland markets' trucking capacity also remains high, driven by the lack of offered IPI bookings.
      • The cartage market is beginning to soften due to the air market, and carriers are seeking volume. This softening is providing Flexport trucking an opportunity to evaluate the carriers in each market and start strategically allocating volume to carriers. The goal is to have specific partners assigned to different aspects of cartage in preparation for peak. Rather than having one carrier handle all cartage in a market, we will specify partners for airline transfers (intact vs loose) and for local pickups and deliveries.
  • US Domestic Trucking
    • FTL Demand continues to soften due to stocked inventories, consumer spending slowdown, recent inflation, and global conflict. Tender volumes are down 20%+ YoY in April and the market has shifted in favor of the shippers.
    • Tender rejection rates have fallen to 10.43%. This reflects a 50% decrease since early March and a 60% decrease YoY.
    • After peaking in early March, Diesel prices remain at record highs hovering over $5/gallon. Fuel continues to be a much more taxing operating expense for fleets both on loaded and empty miles.
    • Spot market rates have plummeted by as much as 20-25% YTD, whereas Contract rates remain steady with moderate increases. The spot market acts as a leading indicator for where rates are headed due to the transactional nature, while contract rates are not as fluid since they’re tied to longer-term agreements.
    • Forecasting freight demand remains a challenge as COVID shutdowns in China and the war in Ukraine both present unknown risks to future availability and demand for certain commodities or materials.

Customs and Compliance News

President Biden Unveils New Trade Initiative for Pacific Allies On May 23, 2022, President Joe Biden announced a new economic initiative called the Indo-Pacific Economic Framework (IPEF), with twelve initial participant countries. The IPEF differs from a previous iteration, the Trans-Pacific Partnership (TPP), in that it neglects to encourage greater market access across countries via lowering tariffs. The new initiative focuses on supply chain and trade resiliency, environmental and social concerns, and anti-corruption efforts.

Factory Output news

  • Taiwan: Exports are expected to grow for the 26th month in a row, despite the global economic downturn. Source
  • Vietnam: New guidelines on trade remedies in the Regional Comprehensive Economic Partnership (RCEP) issued by the Vietnam Ministry of Industry and Trade. Source
  • Cambodia: A new initiative has been launched to promote safe working conditions for factory workers. Source
  • Thailand: China's lockdown resulted in a sharp slowdown in export from China to Thailand, having an adverse effect on the Thai manufacturing sector. Source
  • Indonesia: Tesla to build a battery and electric vehicle plant in Central Java. Source
  • Philippines: Many are pressing for the construction of the Davao-Samal bridge which is a vital link for trade that can help to reduce transport costs. Source
  • Bangladesh: The readymade garment (RMG), clean energy, and float glass industry to get a boost as 3 Chinese companies submit proposals to invest and set up factories. Source

Freight Market News

Transit times may be a better metric than the number of ships queued at port. A new report published jointly by Windward and Sea-Intelligence (as reported by The Loadstar) indicats that port congestion may not be the best metric to track for an overall view of the state of ocean freight. Rather, the study authors suggest watching total transit time as this takes into account additional factors and tactics being employed by streamlines to help avoid sitting idle offshore.

U.S. parcel volumes continue their upward trend. Freightwaves reports on a new study by Pitney Bowles that tracks the growing volume of parcels being handled nationwide. While the big 4 continue to dominate (UPS, FedEx, USPS, Amazon) there is also a trend for retailers looking to diversify their carrier base by expanding partnerships with the growing number of smaller 3PLs entering the market.

Flexport Research Updates

Weekly Economic Report: Great British Belt Tightening Rising inflation and interest rates are suppressing consumer confidence and cutting into retail sales on both sides of the Atlantic. U.K. consumer confidence hit the lowest since the early 1970s and retail sales have trended downwards for eight straight months as of April.

Air Timeliness Indicator The Air Timeliness Indicator measures the amount of time taken to move airfreight along two major trade lanes from the point of consolidation to arrival at final destination. The latest indicator saw the Transpacific Eastbound lane (TPEB) remain unchanged at 11.4 days for the four weeks leading to May 22. For the Far-East Westbound lane (FEWB), there was only a small decrease to 10.8 days. Air times may reflect seasonal shifts working their way out of the system as importers switch to summer goods.

Ocean Timeliness Indicator The Ocean Timeliness Indicator similarly measures transit time for ocean freight along the same two trade lanes. In the past week, the TPEB fell to 102 days, reaching the lowest since November levels following a decline from seasonal highs. The FEWB fell by 3 days to 105 days, likely as the result of improved cargo-ready to origin port departure times.

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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