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Market Update

Freight Market Update: August 2, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of August 2, 2022.

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North America Freight Market Update Live | Thursday, August 11 @ 8:30 am PT / 11:30 am ET

European Freight Market Update Live | Tues, August 9 @ 16:00 pm CEST/ 15:00 pm BST

Ocean Freight Market Update

Asia → North America (TPEB)

  • Spot rates continue to fall with blank sailings on the rise. Blank sailings remain all too common in the market, which carriers are pairing with the low spot rates and demand. Schedule reliability among the alliances remains low and varied. On-street container dwell is elevated and inventory on terminals is reaching max capacity at some inland locations. Containers are ground stacked at the rail as a result of the insufficient chassis supply and-or rail traffic imbalances in Chicago, Dallas, Kansas City, Memphis, Denver, St Louis, Santa Teresa, and Omaha. Temporary service pauses and train metering have been enacted by the railroads.
  • Rates: Rates remain soft in many major pockets.
  • Space: Open, except in a few pockets.
  • Capacity/Equipment: Open, except in a few pockets.
  • Recommendation: Book at least 2 weeks prior to cargo ready date (CRD). For cargo ready now, importers might consider taking advantage of currently available space and softer floating market rates.

Asia → Europe (FEWB)

  • There is no peak season and demand has been slowing down. Supply is still relatively tight due to the large amount of blank sailings, vessel sliding, and port omissions. The port congestion in Europe, particularly Hamburg and Rotterdam, has reached critical levels causing further delays and late return of vessels to Asia. There are indications of power cuts in Ningbo (Zhejiang province) which would affect production output but there is still no official information available.
  • Rates: There is continued rate pressure on spot rates due to lower demand.
  • Capacity/Equipment: Space is available but it is impacted by additional blank sailings and delays due to the port congestion in Europe.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Europe → North America (TAWB)

Carried over from last week

  • Demand for August is expected to be lower due to some European factories closing from late July until mid-August. Anticipate a high return of demand beginning in September. Congestion is improving on both the East and West Coast but is still far from normality.
  • Rates: Stable at high levels. No sign of steep rate decline in the near future. Some drop on FAK levels ex Italy/Turkey and Greece.
  • Space: Still very tight with pockets of space available in August.
  • Capacity/Equipment: Equipment availability remains the biggest challenge for all EU origins, particularly in the Mediterranean area. Low empty stacks at inland depots, prioritize pick up from the Port of Loading.
  • Recommendation: Book 4 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.
  • Read more: Rising US imports keep pressure on trans-Atlantic

Indian Subcontinent → North America

  • Abnormal sailing schedules persist as carriers continue to deal with elevated congestion at U.S East Coast (USEC) ports.
  • Rates: remain at lower levels compared to peaks just a few months ago. Some key ocean carriers are bullish on demand and have already implemented rate increases on services to the USEC.
  • Capacity/Space: Available at Freight All Kinds (FAK) rate levels. Capacity to USEC is being constrained due to ongoing berthing delays in Savannah as well as on-dock issues at NY/NJ. Vessels are taking longer to return back to India for loading, which is resulting in irregular sailing schedules and port omissions.
  • Equipment: Rising equipment deficits are being reported across India, particularly in smaller ports and inland container depots (ICD)
  • Recommendation: Take advantage of declining rates. In the past carriers have implemented blank sailings to avoid underutilization. This could lead to increased rates being on the horizon.

North America → Asia

  • Vessel arrivals and available capacity remain fluid for all U.S. West Coast (USWC) ports. USEC ports continue to see challenges with vessel congestion and some vessel strings still 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: No GRI’s announced for August.
  • Capacity/Equipment: Deficits on containers and chassis continue to plague Inland Port Intermodal (IPI) origins. Chicago has been the most reliable. Availability for standard equipment has not been an issue for most ports. Capacity from the US Southeast to India remains constrained due to continuing port omissions for Charleston and Savannah. Overall capacity for India ports requiring a transshipment service remains very tight in particular from the USWC.
  • Recommendation: Please place bookings 4 weeks prior to vessel Estimated Time of Departure (ETD).

North America → Europe

  • Congestion issues persist in Europe due to local labor actions at baseports in Germany and the Netherlands. The port of Houston continues to experience significant capacity constraints due to schedule delays and port congestion with one service still reduced running from weekly to biweekly. USWC service to Europe remains extremely tight due to void sailings and skipped ports caused by systematic delays. USWC coverage for Mediterranean ports now has reduced capacity due to one string being phased out. All carriers have issued a booking stop for shipments to Ukraine, Russia, and Belarus.
  • Rates: No GRI announced for August.
  • Capacity/Equipment: USEC service to Northern Europe has capacity available. Vessel capacity from the port of Houston has been very tight due to a significant increase in demand and delayed vessels. Deficits are still plaguing many 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.

North America Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: Due to some flight cancellations on the Transpacific Eastbound (TPEB) tradelane (mainly for ORD and JFK) capacity has tightened compared to the week prior, resulting in increased rate levels. For Far East Westbound (FEWB) lanes there is still sufficient capacity and rate levels remain the same. Due to Covid and the summer season in AMS, there is a severe shortage of manpower at the cargo terminal, leading to delayed cargo recovery times by 12-36 hours.
  • S. China: The market demand remains soft for both TPEB and FEWB lanes and rates levels have decreased slightly from last week. Shenzhen - Hong Kong (SZX-HKG) cross border operations continue to be affected by Covid surges and a capacity quota reduction. Transit times for affected shipments are expected to be prolonged by 2-3 days.
  • Taiwan: The market is slack with many airlines forecasting August to be a slow month for air cargo. Spot rates have decreased by around 10% due to the soft market.
  • Korea: The market ex-Korea remains the same as the week prior with demand continuing to be very slack with no signs of picking up anytime soon.
  • SE Asia: Demand in the Southeast Asia region continues to be soft with rates maintaining at similar levels. Some carriers have also canceled some flights from Vietnam due to the low demand in the market.

Europe

  • Demand is maintaining at lower levels, in line with seasonal fluctuations, and is expected to remain constant through August.
  • There is ample capacity available to meet current demand. Freighter capacity is improving, with better rates and lead times.
  • Rate levels remain stable. Jet fuel price is decreasing and is expected to be reflected in adjusted carrier fuel surcharges in August.
  • Passenger disruption continues in major European hubs, but with no significant impact on intercontinental freight services.
  • Build pallets below 160CM to increase possibilities of better uplift options and rates on passenger aircraft capacity.
  • For all trade lanes, continue to place bookings early to secure best uplift options and routings.

Americas

  • Export demand is steady from all markets.
  • US airports are running at a normal pace.
  • Capacity is manageable into all regions. European carriers in particular have increased the number of passenger flights for their summer schedules, consequently providing additional belly capacity into the Transatlantic Eastbound (TAEB) trade lane.
  • Shipments into Europe could experience additional destination dwell time due to the labor shortages in some western European hubs.
  • Rates remain stable week over week.
  • A heavy travel season in and out of Canada is putting a strain on the infrastructure of major airports (YYZ and YVR) which is having a trickle-down effect on cargo operations. This is resulting in longer than normal dwell times for both import and export cargo.

Trucking & Intermodal

Americas

US Import/Export Trucking: Market Trends

  • Congestion continues at the Montreal and Toronto terminals and inland ramps. The volume coming into Toronto continues to surge, while the number of drivers continues to decrease, which translates into less drivers handling more volume and creating the previously mentioned congestion.
  • Chassis shortages continue to persist, notably in Chicago, NY/NJ, Memphis (95% utilization, 10+ day street dwell time) and in LA (10.4 day street dwell for 40’).
  • East coast and gulf congestion will continue through August, with vessels at anchor in New York, Norfolk, and Savannah—36 ships at the end of July awaiting berths with wait times in the 7-10 day range.
  • LA/LB and Oakland have deteriorated, in part due to AB5 strike action—Oakland is seeing 19 day terminal dwell times and LA/LB are averaging 7.9 days.
  • Highway Diesel fuel prices are dropping but remain well above the start of year
    • East Coast ($5.30/gallon), Midwest($5.24/gallon), and Gulf Coast ($4.91/gallon)
    • West Coast ($5.98/gallon), California ($6.39/gallon) and Rocky Mountain($5.39/gallon)
    • British Columbia, Quebec and Ontario (~$7.44 CAD/gallon)

US Domestic Trucking: Market Trends

  • The domestic FTL market has been suffering from the inventory glut with the highest inventory/sales ratios in history, global inflation, record high diesel fuel prices, and most recently the sharp drop in container imports.
  • Tender rejections by carriers has decreased by 67% YoY from 22.8% to 7.4%, meaning carriers are accepting more loads due to having more capacity.
  • Spot rates in the market have bottomed out to a 16-month low, down ~35% YTD. Contract rates fell in recent weeks after an increase for the past several months due to FSC schedules.
  • Load-to-Truck ratios are down ~30% YoY, which is the key barometer for supply/demand in the marketplace.
  • Tender volumes from customers are down 20% YoY.
  • Diesel prices have pulled back slightly from all-time highs as we move past the summer peak season.

Customs and Compliance News

Tariff Increase on Russian Imports Take Effect

Following the revocation of permanent normal trade relations status for imports from Russia, which increased tariffs on Russian imports, the U.S. has now raised import tariffs on more than 570 groups of Russian goods to 35 percent. The tariff increases took effect on July 27. A list of the affected goods can be found here.

USTR Comment Period for Forced Labor Strategy Closes August 5

On July 6, the United States Trade Representative (USTR) published a Notice and request for comments on the development of a focused trade strategy to combat forced labor. The strategy will identify priorities and establish an action plan for utilizing existing and potential new trade tools to combat forced labor in goods and services. Interested parties must submit written comments by August 5, 2022.

COBRA Fees to Increase in FY23

On August 1, Customs and Border Protection (CBP) announced in a Federal Register notice that it will increase Consolidated Omnibus Budget Reconciliation Act (COBRA) fees by 18.629 percent. The fee increase is intended to adjust for inflation in fiscal year 2023 (FY23). Fees affected include the merchandise processing fee, vessel arrival fees, and the customs broker permit user fee. The increased fees are effective at the start of FY23 on October 1.

FMC Announces New Enforcement Structure

On July 29, the Federal Maritime Commission (FMC) announced the restructuring of its enforcement and compliance programs through the creation of the Bureau of Enforcement, Investigations, and Compliance (BEIC), effective immediately. The new Bureau represents the consolidation of the FMC investigative and prosecutorial functions, and is intended to support the FMC’s enforcement of the Ocean Shipping Reform Act of 2022.

Factory Output news

  • Mainland China: Strong overseas demand for electric vehicles led to China’s passenger vehicle exports continuing to grow by a robust 40 percent year-on-year in Q2’22. Source
  • Taiwan: The Taiwan-based chipmaker, MediaTek announced a deal with Intel to develop digital TV and WiFi network chips. Source
  • Cambodia: The Regional Comprehensive Economic Partnership (RCEP) and Cambodia-China Free Trade Agreement FTA give Cambodia access to larger export markets. Source
  • Malaysia: Ericsson selects Malaysia as the 5G manufacturing hub in APAC. Source
  • Singapore: Swiss exports to Singapore on an upward trend. Source
  • Bangladesh: Import of garment raw materials sees a surge for the first 6 months of 2022 on the back of rising garment exports. Source

Freight Market News

Port of NY and NJ Sets Container Fee

According to FreightWaves, the Port of New York and New Jersey will implement a container fee on any long-dwelling import or export containers in anticipation of expected peak season. In addition to the tariff, the port is also setting mandatory container export levels for ocean carriers.

Contract Truckload Rates Likely To Soften Soon

Current spot rates, which have averaged around record low levels since May, indicate a strong dip in contract rates for the second half of the year, according to FreightWaves. Since March, there have been minimal movement in contract rates, despite recent signs of softening.

Flexport Research Updates

Rail’s Getting in the Way - Inland U.S. Congestion Issue

U.S. rail networks have entered a new period of congestion even as carloads carried have fallen and the freight demand outlook darkens. Employment in rail has not recovered after the pandemic and has lagged the development of volumes over the past 18 months.

Weekly Economic Report - Global Economic Gloom

One of the premier global economic forecasts just downgraded its outlook for 2022 and 2023. The revisions were large, negative, and worse for next year than this. To top it off, the balance of risks to the forecast is negative.

And now some exciting news: the weekly economic report is now its own newsletter! You can sign up here to have these insights delivered directly to your inbox each week.

Air Timeliness Indicator: TPEB ↓ @ 11.3 days, FEWB ↓ @ 9.2 days.

Ocean Timeliness Indicator: TPEB ↓ @ 94 days, FEWB ↑ @ 95 days.

Logistics Pressure Matrix

  • US: In the latest update, manufacturers import expectations increase, pandemic spending patterns persist, inventories are still filling, and trade activity remains higher than last year.

  • EU: Consumer confidence fell to its lowest on record and has now fallen every month since September. Inventories returned to above-sufficient levels for the first time since February 2021. Ocean shipping rates are now 11% below their peaks with the first stage of ocean shipping now being the fastest since May 2021. Airfreight timeliness also improved to the best since September 2021.

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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