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Market Update

Freight Market Update: October 4, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of October 4, 2022.

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North America Freight Market Update Live | Thurs, October 6 @ 8:30 am PT / 11:30 am ET

Webinar “Prepare for 2023: To Plan for the Unexpected” | Weds, October 12, 16:00 CEST / 15:00 BST.

Ocean Freight Market Update

Asia → North America (TPEB)

  • Golden Week capacity cuts mirror the drop in Transpacific Eastbound (TPEB) demand.
    • U.S.: The major portion of the Golden Week blank sailings will be felt in Week 41 with capacity dropping to both the U.S. West Coast (USWC) and the U.S. East Coast (USEC). Port and inland conditions are stable as transit times continue to see improvements.
    • Canada: Market and rate conditions mirror the U.S. on TPEB. Substantial delays persist for vessels berthing at Vancouver and Prince Rupert, although both continue to see incremental improvements.
  • Rates: Remain soft on most origin-destination combinations.
  • Space: Open.
  • Capacity/Equipment: Open, except in a few pockets.
  • Recommendation: Book at least 2 weeks prior to cargo ready date (CRD) and keep in mind upcoming blank sailings.

Asia → Europe (FEWB)

  • This week is the Golden Week holidays in China. Demand remains slow and there will be a significant blank sailing program in weeks 41 and 42. Space is available, despite schedule reliability continuing to be affected by a large number of blank sailings, vessel sliding, and port omissions.
  • Serious port congestion in Europe, particularly Hamburg and Rotterdam, continues to cause delays and late return of vessels to Asia.
  • Rates: Ongoing pressure on spot rates due to low demand.
  • Capacity/Equipment: Generally open space despite the impact of blank sailings and vessel delays.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Europe → North America (TAWB)

  • Capacity is increasing. From mid-October some alliances are adding bigger vessels to the USEC loops, which is likely to put downward pressure on freight rates in the following weeks.
  • Rates: No further drops compared to previous weeks but adjustments downwards are expected from November. Most Q4 Freight All Kinds (FAK) rates are an extension of Q3 rates.
  • Space: Still very tight on the USEC with some space open for direct routing to the USWC. Some space is available out of Turkey.
  • Capacity/Equipment: Equipment availability remains the biggest challenge for all EU origins, particularly in the Mediterranean region. 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: Congestion propping up trans-Atlantic spot rates: analysts

Indian Subcontinent → North America

  • Rates from India continue to drop through the first half of October as the Indian government pushes forward with peak season charges on inland rail movements and re-implemented General Service Tax.
  • Rates: changes occurring with more velocity across the market. The largest decreases coming out of Bangladesh and Pakistan as export demand drops.
  • Capacity/Space: Space is available across most lanes at standard (non-premium) rates. Decreases in port congestion globally are effectively increasing capacity while blank sailing programs implemented by ocean carriers are pulling capacity out of the market.
  • Equipment: Smaller ports and inland container depots (ICD) will continue to have sporadic deficits based on import/export cargo mix.
  • Recommendation: Take advantage of declining rates.

North America → Asia

  • USEC ports continue to see challenges with vessel congestion and some vessel strings continuing to omit Charleston and Savannah. Ongoing erratic vessel schedules are causing significant challenges with changes in posted earliest return dates and vessel cut-offs at the port. For USWC, arrivals and available capacity for Los Angeles is generally open whereas Oakland and Seattle are more fluid.
  • Rates: No GRI’s announced for October.
  • Capacity/Equipment: Deficits on containers and chassis continue to plague Inland Port Intermodal (IPI) origins. Chicago remains the most reliable. Availability for standard equipment has not been an issue for most ports. Capacity from the U.S. Southeast to India remains constrained due to the ongoing omissions of Charleston and Savannah. Overall capacity for Indian ports requiring a transshipment service remains very tight from both the USEC and USWC.
  • Recommendation: Please place bookings 4 weeks prior to vessel Estimated Time of Departure (ETD).

North America → Europe

  • Congestion issues in North Europe, due to both the earlier labor actions at German ports and the current actions at several UK ports, are expected to persist.
  • All carriers continue their booking stop for shipments to Ukraine, Russia, and Belarus.
  • Rates: 2 carriers with the Ocean Alliance have announced nominal GRI’s for October.
  • Capacity/Equipment: USEC service to Northern Europe has capacity available however Savannah has irregular challenges due to it being omitted on certain vessel strings. 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 or Gulf Coast sailings and 6 weeks for Pacific.

North America Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: The market is quiet as China celebrates the Golden Week holiday. Some carriers have canceled flights due to low demand.
  • S. China: There are many flight cancellations due to the Golden Week holiday. Although supply has tightened, rates remain at low levels.
  • Taiwan: Market rates and the fuel surcharge have decreased this week. The overall market is still slack but there is a slight peak in demand due to the end of the month and the upcoming long holiday.
  • SE Asia: The Malaysian and Thai export markets continue to be soft with no signs of improvement. The overall Vietnam market remains stable with volume ex-Hanoi picking up slightly. Transit flights through Chinese hubs are tight due to anticipated flight cancellations during Golden Week.

Europe

  • Demand remains at a lower level and is expected to peak before Black Friday. Capacity available in the market continues to exceed current demand levels.
  • Expect capacity to drop and rates to rise as passenger flight frequency decreases in the coming months.
  • Average rates from main European hubs to North America remain stable at the moment.
  • Build a forecast for your expected growth in demand between now and Black Friday.

Americas

  • Export demand remains steady from all markets.
  • Demand to Hong Kong has seen a large increase.
  • US airports are running at a normal pace.
  • Capacity is opening up further, especially into Europe, where most carriers have increased the number of passenger flights for their summer schedules.
  • Rates remain stable week over week.
  • Air Canada has announced beginning Oct. 1st, they will operate 2 non-stop freighters per week from St. John’s (YYT) to Frankfort (FRA). As well as 3 non-stop freighters per week from YYT to Madrid (MAD).
  • There is a bit of a shortage of trucking capacity, as well as congestion at the airports, which is leading to a longer than normal dwell time for inbound cargo. This has slowly been improving and is expected to clear up in Q1.

Trucking & Intermodal

UK/Europe

  • UK trucking traffic is being impacted by extremely low water levels across the continent. This has brought inland navigation close to a full stop. Barges temporarily cannot go on the Rhine past Cologne, blocking the whole Western/South-Western part of Germany from being serviced via waterways. Low water fees apply for inland barge terminals in Germany & the Netherlands, as barges can only take half loads. This is putting pressure on Rotterdam/Antwerp capacity, as 38% of all containers move to/from Rotterdam via waterways, resulting in overbooked rail and truck options.

Americas

Import/Export Market Trends

  • Congestion continues at Canadian ports and rail ramps. Yard utilization at Vancouver and Prince Rupert is >95%. Import rail dwell in Vancouver is over 7 days, and over 14 in Prince Rupert.
  • Chassis shortages continue in inland markets: Ohio Valley, Memphis, Dallas, Chicago.
  • Ports in Florida and elsewhere in the South East have been greatly impacted by Hurricane Ian. Tampa and Jacksonville were closed at the end of September. Closings or limited operations occurred in Miami, Savannah, and Charleston.
  • LA/LB is largely improving, though still congested with imports.
  • Oakland is seeing continued delays due to import volume and labor shortage, along with high yard utilization.

US Domestic Trucking Market Trends

  • Hurricane Ian affected trucking capacity, road infrastructure, and port operations throughout the Southeast region.
  • Tender rejections by carriers has decreased by 77% YoY from 22.8% to 5.25%, 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, while contract rates fell in recent weeks after edging up for 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.

Customs and Compliance News

Department of Agriculture Increases Cotton Import Fee

Cotton import fees are set to increase 18.7% on November 28, 2022, under a direct final rule issued by the Department of Agriculture’s Agricultural Marketing Service. Assessments will be increased from $0.011136/kg to $0.013215/kg, unless significant adverse comment is received by October 28.

Department of Labor Releases 2022 Child and Forced Labor Report

On September 28, the Department of Labor released its 2022 “List of Goods Produced by Child Labor or Forced Labor.” The report identifies 158 goods from 77 countries. Among the 32 new additions are apparel from Bangladesh and thread/yarn from India for alleged forced labor. The report also includes three in-depth, supply-chain studies on lithium ion batteries, palm oil and solar panels.

CBP, DHS Officials Provide UFLPA Enforcement Statistics

In a recent Wall Street Journal interview, DHS Undersecretary Robert Silvers, head of the Forced Labor Enforcement Task Forced, reported that 1,452 cargo entries valued at $429 million have been targeted under the UFLPA as of September 20. CBP’s Eric Choy provided similar statistics to The Dispatch, adding that of the shipments detained under the UFLPA, none have been released into the U.S. market.

Factory Output news

  • Taiwan: Visa-free travel to Philippines, Malaysia, Singapore, Japan, and South Korea will resume on Sep 29th. Source
  • Vietnam: Roadmap to develop green ports in Vietnam. Source
  • Thailand: WHA Group Thailand aims to be the new digital logistics service provider. Source
  • India: China’s economic slowdown has resulted in its share of India’s exports to fall from 6.5% to 3.5%, from Jan-Aug 2021 to Jan-Aug 2022. Source
  • Sri Lanka: Lakwin Aviation has secured its AOC to provide domestic passenger and cargo flight in Sri Lanka. Source
  • Bangladesh: Hyundai is preparing an assembly plant in Bangladesh and will start assembling cars there starting at the end of 2022. Source

Freight Market News

Manufacturing Industry in Europe Continues to Slow

As the war in Ukraine continues and inflationary pressures rise, manufacturing deteriorates further across Europe according to Bloomberg. In Asia, factories paint a more mixed picture, as they display a split track of recovery in the north and south.

Large Retailers Crack Down on Fines to Suppliers

As larger retailers continue to grapple with rising inflation and inventory, they have moved to impose stricter enforcement of late-order fines on their suppliers, according to BNN Bloomberg. While the pandemic created more leeway, large retailers like Target and Walmart are now among those tightening expectations.

Flexport Research Updates

Weekly Economic Report: Prices Climb Steadily

If you’re watching inflation to predict future Fed moves, the measure you want is Trimmed Mean PCE. Newly released data for it show inflation tracking ever upwards.

A quick reminder: 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 ↓ @ 9.8 days, FEWB ↑ @ 9.7 days.

Ocean Timeliness Indicator: TPEB ↓ @ 83 days, FEWB ↓ @ 93 days.

Logistics Pressure Matrix

  • US: Key measures of demand in personal spending declined, while the level of inventories held by retailers rose. That may be taking pressure off logistics networks. The time taken for the first stage of ocean shipping is now at its fastest since December 2020, while shipping rates from Asia to North America hit their lowest since September 2021.
  • EU: Consumer and manufacturing confidence have continued to wane, while inventories are near their highest in two years. That may have led shipping rates to their lowest since mid-June 2021. Yet, the time taken for the first stage of Asia-Europe ocean shipping has started to increase once more, potentially reflecting peak season congestion.

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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