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Market Update

Freight Market Update: December 6, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of December 6, 2022.

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Upcoming webinars:

North America Freight Market Update Live | Thurs, December 8 @ 9:00 am PT / 12:00 pm ET

The State of Trade: Reflecting on 2022, Looking Ahead to 2023 | Tues, December 13 @ 9:00 am PT / 12:00 pm ET

European Freight Market Update Live | Tues, December 13 @ 16:00 CET / 15:00 GMT

Flexport Platform Demo | Weds, December 14 @ 12:00 pm PT / 3:00 pm ET

Logistics Rewired: Ocean Market Predictions for 2023 | Thurs, December 15 @ 9:30 am PT / 12:30 pm ET

Ocean Freight Market Update

Asia → North America (TPEB)

  • Routine blank sailings expected as carriers’ solution to excess market capacity:
    • U.S.: TPEB rates to the East and Gulf Coasts continue to soften. Carriers plan more blank sailings for Q1 2023, most notably out of Vietnam. The goal is to curb both excess capacity and continue to improve schedule reliability.
    • Canada: Market and rate conditions are similar to the U.S. Vancouver saw an improvement on vessel waiting (2 vessels) as well as improvements to the berthing delays (20 days). The low TPEB demand has played a role in clearing some port and rail congestion, which is down from its peak in the summer months.
  • 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 upcoming blank sailings in mind.

Asia → Europe (FEWB)

  • There has been a positive increase in demand and booking intake from week 48. This combined with a higher amount of blank sailings in the coming period will result in tighter space in the lead up to pre-Lunar New Year. Rates are still under pressure but not going down as much anymore due to a more balanced supply and demand situation.
  • Rates: There is continued pressure on rates.
  • Capacity/Equipment: Space is generally open with few blank sailings.
  • Recommendation: Allow flexibility when planning your shipments due to anticipated congestion and delays.

Europe → North America (TAWB)

  • Capacity increases by almost 40% in WK49 and WK51 as the new larger vessels entered the NEUR to USEC market. Additional capacity will be added by Evergreen on the same loop (TAT2) next week with the Tampa Triumph (14000 TEU ship), the largest vessel ever deployed on this trade lane.
  • Rates: Adjustments downward on Freight All-Kind (FAK) rates have been published by most of the carriers. Mainly Peak Season Surcharge (PSS) has been adjusted. Expect the downward trend to continue in the new year as well.
  • Space: Due to the easing of congestion, space on the U.S. East Coast (USEC) and U.S. West Coast (USWC) is becoming more available but still not wide open as on other trades.
  • Capacity/Equipment: Equipment availability is getting better as congestion eases up. Low empty stacks at inland depots are also getting better in some specific areas, but prioritize pick-up from the Port of Loading if possible.
  • Recommendation: Book 3-4 or more weeks prior to CRD. Request premium service for higher reliability and no-roll.

Indian Subcontinent → North America

  • Indian Subcontinent Pricing and Capacity continues to benefit shippers as rates drop and vessel space remains available.
  • Rates: dropping on most services further continuing the trend that started this past summer.
  • Space: available on all services. Carriers indicate vessels sailing at ~85% utilization or less on some services.
  • Capacity/Equipment: Capacity is available, but equipment will continue to remain an issue across the Indian Subcontinent.
  • Recommendation: Be open to procuring equipment from wet ports vs Inland container depots as equipment deficits are felt in many areas.

North America → Asia

  • Capacity, Congestion, and Equipment have all improved amid a continued drop in market demand, but rates have not fluctuated much.
  • All services to APAC have low capacity utilization levels with no space constraints.
  • Congestion has been cleared out across most North American container yards with improved operations as a result of less demand.
  • Congestion does persist in limited pockets around the Gulf and South East Coast.
  • The rail performance in a few key markets: Chicago, Dallas, and Kansas city, has also seen improvement.
  • Rates - the floating market rates are not fluctuating anywhere near as rapidly on the outbound trades as much as the inbound trades. Rates are trending slightly downwards MoM and QoQ on certain lanes from coastal ports (USEC, USWC) to Asia base ports in China, Japan, Taiwan, S. Korea. Other lanes are displaying stability in rate levels.
  • Space - open and manageable with Cargo Read Date (CRD) to Estimated Time of Departure (ETD) lead times improving from Q3 to Q4 significantly from 3-4 weeks to ~2 weeks across most lanes.
  • Capacity/Equipment - no major capacity changes in the market with very limited blank sailings as carriers prep for Lunar New Year. No major equipment hurdles to highlight in the US. Certain inland US markets in the Midwest have a balance on equipment availability while the coastal US ports have an abundance of availability.
  • Recommendation - book 2-3 weeks prior to CRD on all coastal to Asia base port lanes, and book 3-4 weeks prior to CRD on all inland to Asia base and feeder port lanes.

North America → Europe

  • Capacity, Congestion, and Equipment have all improved amid a continued drop in market demand, but rates have not fluctuated much.
  • Most USEC to N. Europe (NEU) and Mediterranean (MED) services have low to medium capacity utilization levels with very limited space constraints.
  • Gulf Coast to NEU and MED services continue to have very high (over 100%) utilization levels as the market in Q3 and early Q4.
  • The USWC to NEU, MED services are still VERY limited in options and therefore utilization levels are artificially high. There is no positive outlook for the rest of Q4 and into Q1 for additional capacity on these lanes.
  • Rates - the floating market rates are not fluctuating anywhere near as rapidly on the Transatlantic Eastbound (TAEB) trade as they are on other global trades. Rates are trending slightly downward MoM and QoQ on certain lanes.
  • Space - Space is manageable with a slight improvement on CRD to ETD lead times from Q3 to Q4 significantly from 3-4 weeks to 2-3 weeks across most lanes.
  • Capacity/Equipment - carriers have reintroduced port calls in Savannah and Charleston on USEC to NEU services with a return to a regular, weekly schedule which will have an impact on space and rates into Q1. Carriers on the OCEAN alliances have introduced a new Gulf service to the MED which officially launched last week. There is no outlook for carriers to add capacity OR remove capacity on the WC to NEU, MED services. No major equipment hurdles to highlight in the US. Certain inland US markets in the Midwest have a balance on equipment availability while the coastal US ports have an abundance of availability.
  • Recommendation - book 2-3 weeks prior to CRD on all EC to NEU, MED lanes, book 3-4 weeks prior to CRD on all Gulf to NEU, MED lanes, book 4-5 weeks prior to CRD for all PSW to NEU lanes.

North America Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: Demand has picked up slightly, and rates have also increased. However, this is expected to be a short-term surge, and demand will likely decrease before the Christmas holiday.
  • S. China: An increase in demand for both TPEB and FEWB destinations has resulted in rates increasing as well. With the Guangzhou area still affected by Covid restrictions, shipment output remains at low levels.
  • Taiwan: The market is normal with the exception of LAX capacity, which is seeing constraints through the weekend.
  • Korea: The market remains soft as we move into December.
  • SE Asia: The overall export markets in Southeast Asia continue to be soft with rates dropping slightly from last week.

Europe

  • Overall, demand levels out of Europe remain constant and below expected levels for this time of the year.
  • Capacity available in the market has decreased to usual Q4 levels, but it remains sufficient to meet current demand. Lead days are expected to increase depending on demand spikes into major US hubs.
  • Terminal congestion in Amsterdam (AMS) and London Heathrow (LHR) expected to cause delays for imports.
  • Watch out for the current holiday season, which might create bottlenecks both in the air and on the ground.

Americas

  • Export demand remains steady from all markets.
  • US airports are running at a normal pace.
  • Capacity is opening up further, especially into Europe.
  • Rates remain stable week over week.

Trucking & Intermodal

Europe

  • Due to inflation/soaring costs to operate trucking/barge/rail the GRI for 2023 is expected to be around 10-15% (excluding fuel surcharge). Dropping volumes will not affect this, as this is based on cost to operate and truck carriers barely have any margins.
  • Capacity is still fragile despite declining container volumes caused by a continuous shortage of drivers and delayed delivery of newly ordered trucks.
  • There is an increase of trucking carriers looking into alternative fuels (HVO, electric and hydrogen) to decrease CO2 footprint.

Americas

Import/Export Market Trends

  • Congestion continues at Canadian ports and rail ramps. Yard utilization at Vancouver remains high; this congestion is partially due to ongoing congestion in Toronto and Montreal.
  • Memphis, Dallas, and Chicago continue to see excessive rail dwell times and congestion, > 14 days.
  • Savannah, Houston, and Oakland are seeing increased congestion, vessel bunching, and multiple vessels at anchor.
  • Highway Diesel have dropped month over month across the board.
    • East Coast ($5.336/gallon), Midwest ($5.108/gallon), and Gulf coast ($4.699/gallon)
    • West Coast ($5.666/gallon), California ($6.006/gallon), and Rocky Mountain ($5.392/gallon)
    • British Columbia, Quebec, and Ontario $5.875/gallon (~$7.980 CAD/gallon)

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US Domestic Trucking Market Trends

  • Truckload demand remains strong despite the headline-grabbing talks of a freight recession. All reputable and representative truckload demand indicators point to volumes being up year-over-year, not down.
  • Dry van capacity tightened slightly as expected, although the number of carriers posting their equipment in search of loads is now 24% higher than last year, a sign that spot market capacity remains oversupplied as we passed the Thanksgiving peak.
  • The national average linehaul rate of $1.77/mile is $0.28/mile lower than the top 50 dry van lanes based on the volume of loads moved, which averaged $2.05/mile last week.
  • Spot truckload rates have fallen more than 40% since a January high.

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Customs and Compliance News

USTR Continues to Accept Section 301 Public Comments

On November 15, the Office of the United States Trade Representative (USTR) opened the online portal for the submission of public comments regarding the renewal of Section 301 tariffs on China. The comments will cover all four lists of goods. The public docket will remain open for submissions until January 17, 2023. If you are interested in submitting comments on the impact of the Section 301 tariffs, please reach out to Flexport’s Trade Advisory team at advisory@flexport.com.

COAC Holds Quarterly Public Meeting

The Commercial Customs Operations Advisory Committee (COAC) will hold its final quarterly public meeting of 2022 on December 7. The COAC will hear from the current subcommittees on a wide range of issues. The public meeting materials, including issue papers, white papers, and recommendations are available for review here. Flexport is represented on the COAC by Tom Gould, Vice President of Global Customs & Trade.

Freight Market News

A Strike, Averted

According to the New York Times, the rail strike has officially been averted for now with President Biden signing Congress’ labor agreement. The agreement passed by Congress provided rail workers with 24% raises over 5 years, an additional personal day, and caps on healthcare costs. The end result prevented major economic instability that could have cost the United States economy $2 billion per day.

Flexport Research Updates

Weekly Economic Report: What Slowdown?

This week’s data on U.S. October personal income and outlays showed little sign of an economic slowdown. Real personal consumption expenditures were up by 0.5%, and real disposable personal income was up by 0.4% for the month. If the U.S. economy is contracting, it’s not yet showing up in consumption numbers.

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 ↑ @ 8.7 days, FEWB ↑ @ 10.4 days.

Ocean Timeliness Indicator: TPEB ↓ @ 74 days, FEWB ↓ @ 80 days.

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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