Freight Market Update: November 22, 2022
Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of November 22, 2022.
European Freight Market Update Live | Tue, November 29 @ 4:00 pm CET / 3:00 pm GMT
North America Freight Market Update Live | Thurs, December 8 @ 9:00 am PT / 12:00 pm ET
Flexport Platform Demo | Weds, December 14 @ 12:00 pm PT / 3:00 pm ET
Ocean Freight Market Update
Asia → North America (TPEB)
- Transpacific Eastbound (TPEB) demand continues on a declining trend:
- U.S.: Rates continue to fall for all gateways, nearing rate levels seen pre-pandemic. Although carrier reliability is up YoY and overall TPEB capacity is continuing to grow, port and rail congestion is still seen at the major US gateways to some extent, most notably at Houston for vessel dwell (12 days) and Los Angeles/Long Beach as rail dwell (14 days).
- Canada: Market and rate conditions are similar to the U.S. Vancouver saw an improvement in the vessel count but a deterioration in berthing delays (29 days).
- 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)
- No change in the sluggish demand throughout November with a similar outlook going into early December. Rates are still following a downward trend. Space is readily available but schedule reliability is affected. Port congestion in Europe continues to cause delays and late return of vessels to Asia.
- Rates: Ongoing pressure on spot rates due to low demand.
- Capacity/Equipment: Space is generally open 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)
- Overall capacity hasn’t further increased in November but we would expect more vessels to be shifted to Transatlantic Westbound (TAWB) market in Q1 2023.
- Rates: Adjustments downward on Freight All-Kind (FAK) rates for December are expected due to less demand. So far most of the carriers have reduced their Peak Season Surcharge (PSS) amount.
- Space: There are some openings to the U.S. East Coast (USEC) due to the additional capacity added in October and November. Space into the U.S. West Coast (USWC) is available on select loops as congestion continues to improve.
- 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
- 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 Vessel Dwell Times
Air Freight Market Update
- N. China: TPEB demand is picking up slightly due to an increase in month-end shipping orders and rates have increased compared to last week. Far East Westbound (FEWB) demand and rates remain stable.
- S. China: Market rates remain at similar levels to last week. The Covid outbreak in the Guangzhou area continues to affect manufacturing operations, resulting in cargo output delays.
- Taiwan: There is a slight peak before the Thanksgiving holiday, however, overall demand is low in the market.
- Korea: The market remains soft for the Thanksgiving holiday. Additional freighter capacity to Los Angeles (LAX) has been added to the market.
- SE Asia: The overall export markets in Southeast Asia continue to be soft.
- Overall demand levels out of Europe remain low for this time of the year.
- Capacity available in the market is sufficient to meet demand levels, with slightly higher lead days into some main hubs in North America.
- Terminal congestion in Amsterdam (AMS) and London Heathrow (LHR) might lead to delays.
- Watch out for the upcoming holiday season, which might create bottlenecks both in the air and on the ground.
- 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
- 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.
- Increase of trucking carriers looking into alternative fuels like Hydrotreated Vegetable Oil (HVO), electric, and hydrogen to decrease CO2 footprint.
Import/Export Market Trends
- Congestion continues at Canadian ports and rail ramps. Yard utilization at Vancouver remains high at >90%.
- Chassis shortages continue in Memphis and Dallas where we are seeing >29 and >10 days terminal dwells respectively—most inland markets are constrained.
- Savannah, Houston, and Oakland are seeing increased congestion and 10+ day vessel waiting times due to volume, labor, and congestion.
- Highway Diesel fuel prices have increased again MoM in most markets, with Canada seeing the largest increases—West Coast continuing to drop but all markets are over $1.40 YoY.
- East Coast ($5.40/gallon), Midwest ($5.33/gallon), and Gulf coast ($4.97/gallon)
- West Coast ($5.81/gallon), California ($6.626/gallon) and Rocky Mountain ($3.30/gallon)
- British Columbia, Quebec and Ontario $6.33/gallon (~$8.61 CAD/gallon)
US Domestic Trucking Market Trends
- Tender rejections have fallen to a new cycle low of 5.05% which was last seen in March 2020.
- Trucking carriers are only rejecting 3% of contract loads outbound from Los Angeles and 4.5% of loads outbound from Chicago.
- Spot rates fell hard in the first half of 2022, but national averages have been somewhat range-bound since mid-August.
- Contract rates are currently at $2.70, which is down about 25 cents from its mid-June peak.
- Load-to-Truck ratios are down ~20% QoQ, which is the key barometer for supply/demand in the marketplace.
- Tender volumes from customers are down 40% QoQ.
Customs and Compliance News
Flexport Government Relations Head Predicts Trade Action by 2025
At a November 15 webinar, Darien Flowers, Flexport’s head of government relations, predicted Congress will work on a variety of customs and trade policy issues. Given the upcoming composition of the 118th Congress, which will be from 2023 through 2025, Customs Modernization has a high chance of making it through a divided Congress by 2025. Flowers previously worked with Senator Bill Cassidy (R-LA), who is leading the effort on a customs modernization bill.
Freight Market News
Consumer demand is not falling off a cliff as some have predicted: Flexport
According to BNN Bloomberg, this holiday shopping season seems extremely ordinary for consumers; welcome news after many economists predicted a massive decline in consumer demand for the 2022 holiday shopping season. Flexport consumption forecast has shown a 1% increase in consumer demand this holiday season, pointing to stability and modest growth.
Consumers could pay price if railroads and unions can’t agree
According to The Associated Press, the likelihood of a railroad strike grew substantially Monday when SMART-TD, the largest of the 12 rail unions, rejected management’s current contract offering. While most holiday goods have already hit retail store shelves, an interruption for rail transportation could greatly impact shipments of perishable goods and ecommerce sales, driving prices up for consumers and adding even more inflationary pressures to the economy.
Flexport Research Updates
Retail sales in October saw a slight but noticeable climb since September, but the positive growth does not point to huge economic growth. In actuality, the retail sales numbers are consistent with other indicators that show modestly positive but slowing growth, and the much-anticipated recession numbers are not currently appearing.
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 ↓ @ 8.3 days, FEWB ↑ @ 10.4 days.
Ocean Timeliness Indicator: TPEB ↓ @ 75 days, FEWB ↓ @ 82 days.
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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.