Freight Market Update: February 15, 2022
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 16, 2021.
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European Freight Market Update Live: February 22 at 16:00 CET / 15:00 GMT
Ocean Freight Market Update
Asia → North America (TPEB)
- Timelines and indications for returns to pre-Covid normalcy on TPEB remain uncertain amongst industry experts. Current pockets of severe congestion, backlogs of cargo awaiting departure at origin, and high floating market rates all suggest that relief to current strains is not yet here. Many retailers are working to replenish inventories prior to what would be the traditional peak season at the end of the summer. All TPEB players are also preparing for potential disruptions that may result from existing ILWU labor contracts expiring this June.
- Rates Rate levels remain elevated and the premium market is strong.
- Space Critical
- Capacity/Equipment Critical/Severe Undercapacity
- Recommendation Book at least 4 weeks prior to CRD. Consider premium options and carrier IPIs through the PSW gateway. Be flexible in regard to equipment and routings.
Asia → Europe (FEWB)
- We are in the post Lunar New Year period where volumes are only gradually recovering. However, space and equipment continue to be tight due to the pre-LNY rolling pool that carriers built up and because of a high amount of blank sailings coming up in weeks 8, 9 and 10. These are not only the planned blank sailings but also ad hoc ones due to schedule delays. Schedule reliability is very low and there are still many vessels shifting from the LNY period.
- Rates Rates remain at a high level for the post-CNY period mostly with extensions until the end of February.
- Space Critical 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)
- Schedule reliability in 2021 was 50% below the average performance over the past 8 years. In 2021 carriers added only 2.5% of capacity in the Transatlantic Westbound trade compared to 2020 to make up for the space lost to congestion vs. 31% and 10% of additional capacity in the TPEB and FEWB trades respectively.
- Congestion spreading to USEC ports. Carriers currently report the longest vessel wait times in Charleston and Miami, followed by Norfolk and Houston, while the situation in New York is manageable. LA/LGB situation is slowly improving on both yards and waiting outside the port.
- Rates Ocean levels continue to remain high with further increases expected as from beginning of March.
- 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 6 or more weeks prior to CRD. Request premium service for higher reliability and no-roll guarantees.
Indian Subcontinent → North America
- New wave of port omissions hitting USEC services. Recently announced omissions on the INDAMEX service for Savannah and Charleston are expected to last for one full service rotation or until April 7th.
- Rates remain through February at high levels
- 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 or look for alternative routing to USEC and transload to final destination.
- Space to the USEC will be difficult from mid to end of February as bunched vessels off the coast of USEC are resulting in longer turn-around time back to origin. This leaves a gap of sailings for the most consistent services typically relied upon for ISC-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: A few GRI’s are being implemented for mid-February specific to transshipment ports as well as Oceania destinations.
- 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 to 6 weeks in advance to secure your equipment and vessel space.
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 port of call remains suspended indefinitely.
- Rates There is one small GRI announced for February for the US East Coast.
- 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.
- 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 market continues to be weak post LNY with production recovering at a slow pace. Rates are maintaining at relatively low levels and we expect demand to remain slow for the week.
- S. China: Covid continues to be a key issue in South China. Some TPEB flights remain canceled and overall demand is soft with rates dropping. FEWB rates also continue to drop as demand is still slow to recover.
- Taiwan: The market is slowly picking up but capacity is still available. Rates have decreased slightly for this week but are expected to increase next month.
- SE Asia: Ex-Vietnam TPEB demand is weak and rate levels continue to decrease. Many factories have only just returned to work this week so demand is expected to be slow as production ramps up.
- Demand has increased slightly this week, bigger projects are on the market ex Europe, as shippers look to move cargo via air to meet tight lead times.
- Whereas capacity has squeezed the rate levels in previous weeks, the capacity is unchanged. Rates have increased into all US destinations because of increased demand for air freight.
- 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.
- No terminal congestion reported across EU hubs.
- Advice remains in place ex-EU: continue to place bookings early for optimal rates and solutions.
- Demand to Asia, Europe and Latam remains stable in most cases. Demand to AMS/FRA in particular has increased and large shipments could experience longer than normal transit time.
- Capacity is manageable and airlines are back on schedule.
- LAX/ORD/JFK terminal ground-handlers are busy, but are not facing the impairing backlogs from the past months, which has a positive effect on the export side.
- Larger shipments from major outbound gateways can take 2 to 3 days from booking to uplift.
- Most terminals provide reduced free time for storage, and have earlier close-outs for exports to accommodate throughput times and screening requirements.
- Rates to Latam, Europe and Asia have not experienced significant changes, but fuel has slightly increased.
Customs and Compliance News
CBP Provides Clarification on Diverted Cargo Coming from Canada
CBP has advised importers on their ports’ strategy to ensure maximum flexibility due to the ongoing Canadian “Freedom Convoy” protests along the U.S.-Canadian border. CBP advised that “when cargo is diverted to alternate ports of entry, U.S. CBP Officers (CBPO) should accept the diversion in the Automated Cargo Environment (ACE),” despite a possible port mismatch and if CBP identifies no other compliance issues. Importers should contact their brokers to ensure transparency and compliance, as the current situation is everchanging.
Factory Output News
- Taiwan January export value is estimated to be close to US$40 billion, which is 16.7% higher than Jan 2021 export. Source
- Vietnam Apple was the fastest growing brand in Vietnam with 119% growth YoY and 299% growth QoQ in Q4 2021. Source
- Vietnam is expected to be the world’s new production hub. Source
- Thailand exports expected to grow by 5% in Q1. Source
- Malaysia expects short term revenue from growth from the Middle East region. Source
- Indonesia Astra International and Hongkong Land, two of Asia’s largest listed companies, are building warehouses in Indonesia to satisfy the exponential e-commerce growth. Source
Freight Market News
Canadian Government Responds to Trucker Protest NPR reports that on Monday, February 14, Prime Minister Justin Trudeau declared a national emergency following the trucker protests and blockades across Canada. Protests have significantly increased transit time for drivers and slowed down operation of carriers, and North American automakers have curtailed production.
Spot Rates Show Signs of Softening According to The Loadstar, spot rates have started to soften, following Lunar New Year, on the Asia <> North Europe trade lane. The possibility for slight improvement on rates threatens the growing number of ad-hoc carriers, who offer several sailings a week from China to North Europe and have secured a foothold in the market with faster transits and space guarantees.
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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.