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Market Update

Freight Market Update: August 23, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of August 23, 2022.

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North America Freight Market Update Live | Thursday, August 25 @ 8:30 am PT / 11:30 am ET

European Freight Market Update Live | Tuesday, September 6 @ 16:00 CEST / 15:00 BST

Ocean Freight Market Update

Asia → North America (TPEB)

  • Rates continue their downtrend, along with volume and demand. The standard cyclical peak season appears to be pushed off, yet Transpacific Eastbound (TPEB) volume is projected to decline through the end of the year due to over-ordering and low demand. Despite more favorable rates, the percentage of blank sailings, port congestion and US intermodal delays continue to affect schedule reliability.
  • 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)

  • In a clear reversal of trends, U.S. East Coast (USEC) ports are now handling more cargo than the U.S. West Coast (USWC) ports. Historically USWC handles 40% more volume than USEC but at the moment we are seeing the demand shifting and this is also the cause for the current congestion in some ports (Savannah, Newark, Houston).
  • Rates: Stable at high levels. No sign of steep rate decline in the near future. Some drop on FAK levels out of Turkey as some capacity is freeing up.
  • Space: Still very tight on the USEC with some space open for direct routing to the USWC.
  • 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.

Indian Subcontinent → North America

  • The Indian Subcontinent market remains strong even as rates begin to creep lower—carriers continue to be bullish on this trade lane.
  • Rates: largely unchanged across key port pairings but remain elevated from pre-covid levels.
  • Capacity/Space: Space is available across most lanes at standard (non-premium) rates. Some service level issues are arising due to USEC port congestion and ongoing disruptions in the EU.
  • 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 on the horizon.

North America → Asia

  • 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 changes in posted earliest return dates and vessel cut-offs at the port. For USWC, arrivals and available capacity for LA is generally open whereas Oakland and Seattle are more fluid.
  • Rates: No GRI’s announced for September.
  • 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 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 persist in Europe due to local labor actions at baseports in Germany, the Netherlands, and the UK. 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 continue their booking stop for shipments to Ukraine, Russia, and Belarus.
  • Rates: There is one GRI announced so far for September targeting US Gulf origins.
  • 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. The work-stoppage at the port of Felixstowe will present further challenges on schedule-reliability. 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: Demand in the market is low, but the overall market is stable. TPEB rates remain the same while Far East Westbound (FEWB) rates have dropped from the week prior. With terminal handling operations in Frankfurt improving, carriers have started increasing the flight frequency to that hub.
  • S. China: The market demand remains soft for both TPEB and FEWB lanes and rates are stable. Shenzhen - Hong Kong (SZX-HKG) cross border operations are improving with transit times for affected shipments expected to be prolonged by 1-3 days. For the FEWB tradelane, demand is expected to increase as we head out of summer.
  • Taiwan: The market is stable and rates have dropped slightly compared to the week prior. Carriers are willing to provide more discounts for dense and loose cargo.
  • Korea: The market ex-Korea remains slack and is likely to continue through the rest of the month. Some additional capacity to LAX has been added in the market.
  • SE Asia: Demand ex-Thailand and ex-Malaysia continues to be soft with rates maintaining at similar levels. TPEB demand ex-Vietnam is beginning to pick up as we approach the month’s end, partly driven by the weeklong public holiday during the first week of September. FEWB demand on the other hand, remains stable.

Europe

  • Demand remains at a stable low in Europe. Peak season is expected to start from mid-September.
  • Sufficient transatlantic capacity ex European hubs due to high frequency passenger flights. Rates are still low as fuel prices have decreased slightly.
  • Ground handling disruptions may still affect the main European hubs.
  • Impact of disruption is more evident on the passenger rather than cargo side of the market.
  • Start planning in advance for the peak season in order to secure more favorable rates and uplift possibilities.

Americas

  • Export demand remains steady from all markets.
  • 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.
  • 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.
  • Air Canada has announced they are gearing up to add additional flights out of all major gateways. These flights are likely to include both passenger and freighter options.

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

CBP Reports Record Number of WRO Detentions

On August 19, U.S. Customs and Border Protection (CBP) released its latest trade statistics through June 30. In the first three quarters of FY 2022, CBP detained 2,010 shipments under withhold release orders, already exceeding the 1,469 WRO detentions reported for FY 2021.

U.S. and Taiwan Set To Begin Formal Trade Negotiations

On August 17, the USTR announced the commencement of formal negotiations for the U.S.-Taiwan Initiative on 21st Century Trade with the release of the negotiating mandate. The first round of negotiations are expected to begin this fall.

BIS Adds Seven Entities to Entity List

The Bureau of Industry and Security (BIS) announced the addition of seven Chinese entities to its Entity list, effective August 24. The entities are named for acquiring, or attempting to acquire, technology to aid the Chinese military. For these seven entities added to the Entity List, BIS imposes a license requirement for all items subject to the Export Administration Regulations, to be reviewed under a policy of presumption of denial.

Factory Output news

  • Mainland China: The exports of automobiles reached a new monthly record in July, up to 67 percent year-on-year. Source
  • Taiwan: Foxconn sees electric vehicles (EVs) as its next core business. Source
  • Vietnam: Apple supplier to make Apple Watches and MacBooks in Vietnam for the first time. Source
  • India: Heavy rainfall in Northern India had inundated hundreds of villages, flooded roads and destroyed bridges in some parts of Himachal Pradesh and Uttarakhand states. Orange alert has also been issued in the state of Himachal Pradesh for 12 hours. Source
  • Bangladesh: Tea workers continued to protest over the weekend demanding a raise which is equivalent to USD $3 a day up from the current USD $1.2. Source

Freight Market News

Strike at UK’s Biggest Port Adds to Supply Chain Chaos

Bloomberg reports that about 2,000 dock workers have begun an eight-day strike at the Port of Felixstowe, the UK’s biggest gateway for containerized imports and exports. Despite recent easing of congestion, the strike will likely reverse this progress and increase container dwell times, as estimated by Flexport Research.

Drought and Power Shortages in China Impact Factories

The Loadstar reports that recent power shortages and power rationing, caused by a record heatwave and drought, has caused China’s critical factories to close for a number of days. In Sichuan, factories were ordered to shut for six days, despite the province being a key manufacturing region for the battery and semiconductor industries.

Flexport Research Updates

Local Labor, Global Impact - U.K. Port Strike and Supply Chains

A strike by port workers at Felixstowe in the U.K. is just one of several such labor disruptions facing supply chains in 2022. Felixstowe is the largest container port in the U.K and the impact of a proposed 8-day strike will have implications for both local supply chains—particularly in apparel—and global logistics networks. If the proposed time-limited strike occurs, it could take several weeks for the port to recover and the impact on global logistics networks to unwind.

Weekly Economic Report: Europe’s Power Problem

European gas and electricity prices for delivery during the coming winter have risen by 40% since the start of July. The market is pricing in supply interruption risks. Should supplies fail, the consequences will be felt in higher producer price inflation.

Also a 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 ↑ @ 10.9 days, FEWB ↓ @ 8.8 days.

Ocean Timeliness Indicator: TPEB ↓ @ 86 days, FEWB ~ @ 91 days.

Logistics Pressure Matrix

  • US: In the latest update we find retail sales are continuing to expand, but may be flattered by congestion. Data for warehouse and ocean costs as well as for ocean shipping times continue to suggest reduced pressure on logistics networks. ]
  • EU: In the latest update we find that the time taken for the first stage of ocean shipping, from Asia to Europe, has fallen to the lowest since December 2020. Shipping rates on similar routes have dipped to the lowest since July 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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