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Market Update

Freight Market Update: October 18, 2022

Ocean and air freight rates and trends; customs and trade industry news plus Covid-19 impacts for the week of October 18, 2022.

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Editor's note:

Hi, I’m Jesse from the Flexport Editorial team with some great news about the Freight Market Update…it’s going to get even better!

FMU was created with one goal in mind—keeping you updated on the state of the global supply chain which included crossing times, port congestion status updates, factory closures, lockdowns, and much more. Now that the global supply chain is settling into its next normal, we are rethinking our FMU content to make it broader, better and even more helpful than before, to keep you up-to-date on the latest in logistics and global trade.

We’re still in the early stages of this refresh and would love to get your feedback and ideas to shape the future of the FMU. With this goal in mind, we’ll be testing new content every week, featured prominently at the top, and asking for your comments.

We want to make FMU the best it can be, for you, so thank you for reading, subscribing and sharing your valuable feedback.

North America Freight Market Update Live | Thurs, October 20 @ 8:30 am PT / 11:30 am ET

European Freight Market Update Live | Tues, October 25 @16:00 CEST / 15:00 BST

Flexport Flow Direct: Helping E-Commerce Brands Like Sharkbanz Stay Agile and In Stock | Weds, October 26 @ 9:00 am PT / 12:00 pm ET

Ocean Freight Market Update

Asia → North America (TPEB)

  • No changes in demand while rates continue to fall:
    • U.S.: Transpacific East Bound (TPEB) demand still remains quite flat despite the planned blank sailings through Week 42, which is the week expected to see the majority of TPEB capacity removed. Port and rail congestion is seen at the major US gateways to some extent, most notably at Houston and Baltimore for vessel dwell (17-20 days) and Los Angeles/Long Beach as rail dwell (17 days).
    • Canada: Market and rate conditions are similar to the U.S. Vancouver and Prince Rupert both saw a deterioration in the vessel count and berthing delays, with an improvement in rail backlog compared to last week.
  • 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)

  • It is the post Golden Week period now where factories have resumed work and demand is gradually recovering. There is a significant blank sailing program in week 42 but in the weeks ahead not much capacity is expected to be taken out. 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: Generally open space 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)

  • Capacity is increasing. As from this week capacity to the U.S. East Coast (USEC) increases with new bigger vessels entering the market. Full deployment is expected by mid-November.
  • Rates: Indexes show that rates are dropping, but not as rapidly as on other trades. Most Q4 Freight All Kinds (FAK) rates are an extension of Q3 rates.
  • Space: Still very tight on the USEC with some space open for direct routing to the U.S. West Coast (USWC). Space is becoming available out of Turkey.
  • 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

  • Rates continue to drop following the overall trend. However, it is important to note that Indian Subcontinent (ISC) pricing is still holding strong and above pre-covid levels for some key ISC > North America port pairings.
  • Rates: Steadily decreasing across the market.
  • Capacity/Space: Space is available across most lanes at standard (non-premium) rates. Decreases in port congestion globally are effectively increasing capacity. Blank sailings are being seen on shared TPEB services, but overall not a whole lot of removed capacity to USEC.
  • Equipment: Increased equipment deficits being felt after Golden Week and overall decrease in China Imports into ISC countries.
  • Recommendation: Take advantage of declining rates.

North America → Asia

  • USEC ports continue to see challenges with vessel congestion at Savannah and NYC. Low schedule reliability is causing significant issues with changes in posted earliest return dates and vessel cut-offs at the port. For USWC, arrivals and available capacity for Los Angeles is generally open whereas Oakland and Seattle remain more fluid.
  • Rates: No GRI’s announced for October or November.
  • Capacity/Equipment: Chicago remains the most reliable Inland Port Intermodal (IPI) locations. Kansas City and Memphis are seeing congestion related to equipment and chassis challenges. Availability for standard equipment has not been an issue for most ports. Capacity from the U.S. Southeast to India remains constrained due to the ongoing omissions of Charleston and Savannah. Overall capacity for Indian 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 in North Europe are easing slightly but the situation will remain fluid until labor disputes are fully resolved.
  • All carriers continue their booking stop for shipments to Ukraine, Russia, and Belarus.
  • Rates: Showing stability at their current market price, week over week.
  • Capacity/Equipment: USEC service to Northern Europe has capacity available however Savannah has irregular challenges due to it being omitted on certain vessel strings & congestion at New York (NYC). Vessel capacity from the port of Houston has been very tight due to a significant increase in demand and delayed vessels. Only one weekly service remains available from Houston to North Europe.
  • Chicago remains the most reliable for loading at IPI. Kansas City and Memphis are seeing congestion related to equipment and chassis challenges. Availability for standard equipment has not been an issue for most ports.
  • Recommendation: Please place bookings 3 to 4 weeks in advance for East or Gulf Coast sailings and 6 weeks for Pacific.

North America Vessel Dwell Times

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Air Freight Market Update

Asia

  • N. China: TPEB demand to USEC and midwest is low, while capacity to USWC and EU destinations is a bit tight due to commercial flight cancellations. Rates have increased on both the TPEB and Far East Westbound (FEWB) tradelanes but are overall trending at low levels. In regards to the Covid situation in Ningbo, the local authorities have tightened epidemic control measures and announced that the city will enter static management starting from Oct. 16th, with citizens encouraged to stay at home. All warehouses in the Beilun area are shut down. Other operating warehouses are expecting low inbound volumes due to Covid restrictions. Some cities also enacted a few restrictions for truckers from the whole Ningbo area. Air operations ex-Shanghai are unaffected.
  • S. China: Capacity has returned to the market after the long holiday, but that market remains soft. Mainland China rate levels have decreased while rates ex-Hong Kong have increased.
  • Taiwan: The market continues to be slack but demand has increased slightly compared to the week prior.
  • Korea: TPEB market demand is picking up while FEWB market demand remains soft.
  • SE Asia: The overall export markets in Southeast Asia continue to be soft with few signals of demand increasing. Thailand is returning from a long holiday and forwarders are applying pressure on airlines to lower rates. For Vietnam exports, TPEB volumes ex-Hanoi keep fluctuating but rates are still holding steady. TPEB Volumes ex-Ho Chi Minh are stable. On the other hand, FEWB demand continues to trend down.

Europe

  • Demand out of Europe remains at a low level, with plenty of capacity available in the market.
  • Expect capacity to drop and rates to rise slightly as passenger flight frequency decreases in the coming months, with airlines introducing their winter schedules.
  • Possible handling strikes at London Heathrow (LHR) and Paris Charles de Gaulle (CDG) might affect operations in the upcoming weeks.
  • Build a forecast for your expected growth in demand between now and Black Friday/end of year holidays.

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.
  • Air Canada has announced beginning Oct. 1st, they will operate 2 non-stop freighters per week from St. John’s (YYT) to Frankfort (FRA). As well as 3 non-stop freighters per week from YYT to Madrid (MAD).
  • There is a bit of a shortage of trucking capacity, as well as congestion at the airports, which is leading to a longer than normal dwell time for inbound cargo. This has been slowly improving and is expected to clear up in Q1.

Trucking & Intermodal

UK/Europe

  • UK trucking traffic is being impacted by extremely low water levels across the continent. This has brought inland navigation close to a full stop. Barges temporarily cannot go on the Rhine past Cologne, blocking the whole Western/South-Western part of Germany from being serviced via waterways. Low water fees apply for inland barge terminals in Germany & the Netherlands, as barges can only take half loads. This is putting pressure on Rotterdam/Antwerp capacity, as 38% of all containers move to/from Rotterdam via waterways, resulting in overbooked rail and truck options.

Americas

Import/Export Market Trends

  • Congestion continues at Canadian ports and rail ramps. Yard utilization at Vancouver and Prince Rupert is >95%. Import rail dwell in Vancouver is over 7 days, and over 14 in Prince Rupert.
  • Chassis shortages continue in inland markets: Ohio Valley, Memphis, Dallas, Chicago.
  • Ports in Florida and elsewhere in the South East have been greatly impacted by Hurricane Ian. Tampa and Jacksonville were closed at the end of September. Closings or limited operations occurred in Miami, Savannah, and Charleston.
  • LA/LB is largely improving, though still congested with imports.
  • Oakland is seeing continued delays due to import volume and labor shortage, along with high yard utilization.

US Domestic Trucking Market Trends

  • Hurricane Ian affected trucking capacity, road infrastructure, and port operations throughout the Southeast region.
  • Tender rejections by carriers has decreased by 77% YoY from 22.8% to 5.25%, 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, while contract rates fell in recent weeks after edging up for 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.

Customs and Compliance News

__USTR Announces Next Steps for 301 Tariffs __

On October 12, the Office of the United States Trade Representative (USTR) announced the next steps in the statutory four-year review of the Section 301 tariff actions currently in effect for certain imports from China. USTR is seeking public comments on the effectiveness of the Section 301 tariffs, and will publish detailed questions to facilitate the public’s preparation of comments by November 1. The public docket will open on November 15, 2022, and close January 17, 2023.

Modernized Customs Broker Regulations Released

CBP has published two long-awaited Final Rules that update the Customs broker regulations: Modernization of the Customs Broker Regulations and Elimination of Customs Broker District Permit Fee. Key changes include updates to the responsible supervision and control requirements, strengthened cyber security obligations, and revising broker/client relationship requirements. More information regarding the changes can be found here.

Factory Output news

  • China: Ningbo Zhoushan Port activated contingency plans to ensure smooth logistics operations, despite recent covid outbreaks in Beilun district, Ningbo. Source
  • Japan: August current account surplus hits record low amid a weak Yen and increased Import charges. Source
  • Vietnam: Foreign Direct Investment (FDI) inflow from Korea helps Vietnam move up global value chain ladder. Source
  • Cambodia: Garment industry is at a standstill due to lack of orders. Source
  • Indonesia: Factories face export slowdown amid potential global recession. Source
  • Singapore: Merck to expand manufacturing hub in SG. Source
  • Philippines: Furniture exporters have received an unprecedented volume of order cancellations due to fears of a recession. Source
  • Bangladesh: The bangladesh Ready-Made Garment (RMG) sector looks to be on course to be one of the largest RMG exporters as market share continues to shift away from China. Source

Freight Market News

Chip Delivery Times Starting to Ease

According to Bloomberg, chip delivery times shrank by four days in September, representing the biggest drop in years—a hopeful sign that the industry’s supply chain woes are easing. This coincides with a sales slowdown in markets, including personal computers, which has prompted chipmakers to start worrying about inventory getting too high.

Port Houston Reports Second-Busiest Month for Imports

According to FreightWaves, Port Houston saw its second busiest month ever in September for as imports surge. The volume increase represents at 26% year-over-year increase as compared to September 2021.

Flexport Research Updates

Post-Covid Indicator

Our latest update shows inflation-adjusted consumer preferences for nondurable goods (e.g. apparel, home/personal care products, and oil products) will fall close to pre-pandemic levels by October. Pandemic preferences for durables (e.g. furniture, consumer electricals and electronics) will dip slightly but remain close to summer 2020 levels. As a result, overall preferences for goods are expected to decline to below summer 2020 levels into late Q4’22.

Never Normal - Ocean Timeliness Divergence

Is the recovery in logistics networks proceeding evenly around the world? There are signs that the disruptions to supply chains over the past two years are improving yet data from Flexport’s Ocean Timeliness Indicator shows uneven progress in Asia-Europe vs. Asia-North America routes.

Weekly Economic Report: Slowing Growth

The latest installment of perhaps the world’s premier economic forecast told a tale of slowing growth in GDP and trade volumes plus rising prices. And both its risk analysis and its forecasting track record suggest things may be even worse than the grim forecast suggests.

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 ~ @ 9.5 days, FEWB ~ @ 9.6 days.

Ocean Timeliness Indicator: TPEB ~ @ 82 days, FEWB ↓ @ 92 days.

Trade Activity Forecast Calls for Continued U.S. Import Growth

In the latest update we expect imports to increase sequentially on a real (i.e. inflation adjusted), balance of payments, seasonally adjusted basis by 1.2% in September after dipping in August. Exports are expected to rise by 0.5% on the same basis.

Logistics Pressure Matrix

  • US: Retail sales in the U.S. were unchanged in September versus August and may have fallen in inflation-adjusted terms. That may contribute to reduced pressure on networks. At the same time, shipping rates have fallen to their lowest since August 2021.
  • EU: Import activity has remained above year-earlier levels, on an inflation-adjusted basis, but is only inline with levels seen year-to-date. Shipping rates have continued to decline, while ocean timeliness has worsened.

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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