US freight market round-up

There was no pre-CNY transpacific rush this year and with China re-opening, factories are expected to open again in the second half of February, which is why carriers have tried to maintain rates. The CNY has given US ports a respite and most are now clear, with hardly any ships waiting outside West Coast ports and very few off the East Coast and Gulf.

Asia

The traditional ex-Asia space and volume crunch around Chinese New Year was extremely muted and market capacity remained higher than previous years, so we expect blank sailings to continue, as the lines attempt to stabilise rates.

Maersk’s 2022 Q4 volumes were down 14% on 2021 and it announced on Monday the “temporary suspension” of its TP20 transpacific loop, while OOCL’s North American liftings were down 16% over the year.

Despite US retail sales performing well in 2022, amidst higher inflation, global economic turmoil is adding to the uncertainty as to how strong demand from Asia will be in the second half of this year, with the lines struggling to balance transpacific capacity, if demand does not pick up in the summer-fall peak season. 

In the current transpacific environment in which spot rates and demand have fallen dramatically, the focus is now on cutting additional fees, such as detention charges for the late return of equipment, which can add hundreds of dollars to the total transportation cost. 

Shippers want more free storage days and the container shipping lines say (off-the-record) that they’re willing to be flexible on detention if they receive compensatory freight rates.

The container shipping lines claim that their problems have been amplified because their operational and administration costs increased significantly during the pandemic, and while freight rates have been dropping, the carriers’ per-unit costs have increased. On the eastbound transpacific trade-lane the lines claim units costs are up by >40% due to vessel backlogs and inland bottlenecks that add delays and costs to the supply chain, rising prices for bunker and diesel fuel, and administrative costs.

Detention charges normally kick in after four or five days and the daily costs for chassis, which the lines lease from intermodal equipment providers, vary depending upon the contractual relationship they have with the equipment lessor. Other costs are more nebulous, such as the potential revenue that is lost when the equipment sits idle at a warehouse for days or weeks. 

Carriers tend to be more bullish about demurrage charges, which are levied by the terminals when inbound loaded containers are left on the docks after their free days.

Transatlantic

The number of blank sailings from Europe to the U.S. has been minimal despite demand and rates softening and capacity is set to increase as MSC and Maersk are adding more vessels in the Mediterranean loops in the next few weeks.

Falling volumes has assisted the easing of congestion in U.S. East Coast (USEC) and U.S. West Coast (USWC) ports, with equipment availability getting better as congestion eases. 

Low empty stacks at inland depots are becoming established in some areas, but we still recommend equipment pick-up from the Port of Loading if possible and early shipment booking.

From the U.S. to Europe there is plenty of USEC capacity available, but services from Gulf and USWC ports remain tight and the market is stable. Gulf Coast to Europe services continue to have medium to high utilisation levels, though this is softening with the reintroduction of capacity.

ILWU

During the nine-month-long impasse in negotiations, between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) dockworkers have engaged in unofficial actions at ports in Southern California, Northern California, and the Pacific Northwest that, although limited in scope and duration, have nonetheless caused disruptions in cargo handling. 

Shippers will continue to route cargo away from the West Coast, until the PMA and ILWU reach a contract settlement.  

Since last Autumn, Los Angeles-Long Beach and the Northwest Seaport Alliance of Seattle and Tacoma have registered year-over-year declines in imports from Asia, while imports through major East and Gulf coast ports have increased.

Air

Capacity from Asia continues to outstrip demand, which export demand from the U.S. remains steady to all markets, with airports running at a normal pace.

Capacity is opening up further, especially into Europe and rates remain stable week over week.

We negotiate long-term and FAK contracts with shipping lines across all three alliances to secure space and rates, so that we can provide the best alternatives and options, whatever the situation.

We have avoided huge detention and demurrage costs over the last few years for our customers, through slick entry to and from the USA markets and utilising our own facilities, or partner container yards, to limit the impact.

To learn how we can support your trade with the United States, or to learn more about our ocean and air solutions, please EMAIL our Chief Commercial Officer, Andy Smith.