Century Weekly Market Update August 26th - September 1st

Welcome to the Century Weekly Market Update! We’re excited to bring you the latest news and insights from the supply chain and logistics industry over the past week.

Our weekly market update features a dedicated section on emerging industry trends and a report specifically focused on the frequency and impact of port omissions during blank sailings. These updates provide valuable insights to help supply chain decision makers navigate potential disruptions, optimize their supply chains, and stay informed about the latest industry developments.

Last week, the global container freight index dropped as rates on various global trade routes experienced fluctuations. Trucking obstacles continued in Canada despite the resumption of rail services, the looming strike by Indian port workers was successfully resolved through a new salary agreement, and federal mediation is required to break the deadlock in contract talks for East and Gulf Coast Ports to prevent a potential dockworker strike. Additionally, growing demand for air cargo in 2024 shows a continuous increase, with air freight in Bangladesh struggling amid both global and local political issues.

At Century, we're committed to helping our customers stay a step ahead in this rapidly changing industry. Our team of experts is dedicated to providing comprehensive and timely insights to help you make informed decisions and stay competitive.

Emerging Industry Trends:

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Global Schedule Reliability Declines in July 2024 with Major Carriers Experiencing Mixed Performance

• Global ocean freight schedule reliability decreased to 52.1% in July 2024, aligning with the fluctuating trend observed throughout the year, varying between 50% and 55%.
• July 2024 witnessed a significant Y/Y drop by 12 percentage points, indicating a broader decline compared to the previous year.
• The average delay for late vessel arrivals showed a slight?improvement to 5.24 days in July 2024, approaching the peak delays experienced during the pandemic in 2021 and 2022.
• Maersk emerged as the most reliable carrier among the top 13, with a schedule reliability of 54.6%, while Wan Hai was the least reliable at 41.3%.
• On a Y/Y basis, only ZIM and MSC improved their schedule reliability, while Wan Hai experienced the largest decline of 11.6 percentage points.

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Strong Air Cargo Demand in 2024 Continues to Rise

• Air cargo demand remained robust in 2024, with a 13.6% increase in July compared to the previous year.
• Global cargo tonne-kilometers (CTKs) exhibited consistent monthly growth, rising by 1% from June 2024.
• The industry achieved its highest level of CTKs, reflecting the exceptional demand experienced since 2021.
• International routes experienced a significant 14.3% surge Y/Y, particularly in?Asia Pacific, Middle East, and Europe.
• Favorable factors such as the expansion of global trade, booming e-commerce, and limitations in maritime shipping capacities benefited the air freight ecosystem
• Despite challenges, air cargo capacity expanded by 8.3% from July 2023, with rates climbed by 7.4% compared to the prior year.

LCI Suggests Cautious Optimism and Market Uncertainty

• Shippers in the US are showing increased caution for the latter part of 2024, as indicated by the BlueGrace Q4 2024 Logistics Confidence Index (LCI) showing an uptick in negative sentiment.
• Positive revenue expectations among shippers declined by 3.4% compared to the previous survey results.
• Neutral perspectives regarding Q4 revenue decreased by 4.3%, while negative sentiments saw a 7% increase.
• Feedback on inventory and orders indicated varied opinions, with a notable 7.9% increase in neutral views regarding inventory levels.
• Optimism about Q4 orders dropped by 4.2%, with shippers reporting a 1.4% rise in negative anticipations and a 2.8% increase in neutral responses.
• The LCI reflects that the logistics sector is striving for stability and growth amid unclear economic forecasts and cautious supply chain strategies among shippers.

Weekly Blank Sailings Report: ?

Century’s Blank Sailings Report for the week of August 26th – September 1st. Discover the latest insights on the current trend of blank sailings through the most up-to-date carrier data direct from Century.

• Last week saw a total of 458 port omissions, a 3.1% decrease compared to the week prior.
• Singapore recorded the highest amount of port omissions last week with 38, followed by Ningbo with 37and Shanghai with 35.
• Other ports with notably high omissions last week are Shekou with 28 and Busan with 25.
• Jeddah recorded the most significant W/W increase, a 200% rise in port omissions.
• Looking towards the coming weeks, Century’s data shows a 20.9% decrease in currently scheduled blank sailings for week 36.
• Next week’s preliminary data shows notable increases in port omissions to be expected at ports in Nhava Sheva and Port Klang.

Port omissions data for the most frequently omitted ports during week 35 can be found in the table below:

Our?full Blank Sailings Report for the week of August 26th – September 1st below provides a full list of every current scheduled port omission from Week 35 to Week 45 as of September 2nd, 2024. The second tab breaks down this data into an easy-to-read table which shows port omissions by?each location per week so you can see which locations are being omitted the most and which locations are experiencing the sharpest increase in port omissions.

Century consistently strives to enhance customer satisfaction by proactively addressing challenges in the shipping process. In our commitment to securing space for our valued customers amidst ongoing carrier constraints, our dedicated operators diligently undertake additional measures. After working through meticulous analysis of Carrier Booking and the Actual Shipped Ratio, we found that our teams are currently, on average, making two carrier booking requests per container in order to help ensure our customers' cargo flows as smoothly as possible.

Click here to DOWNLOAD the full Week 35 Blank Sailings Report

Week in Review:

Global Freight Rates Witnessed First Drop Following Consecutive Rises

• While rates on most global trade lanes fluctuated W/W, the Global Container Freight Index dropped by 4% W/W.
• China/East Asia to North America East Coast rates fell by 3% W/W to US$ 9,409.
• North America East Coast to China/East Asia rate surged by 17% to US$ 523.
• Apart from the stable trend in rates from MED to China/East Asia, the vast majority of trans-Suez routes experienced declines in rates.
• Rates from China/East Asia to MED saw a significant 12% W/W decrease to US$ 6,274.

Trans-Pacific Shipping Rates Soar Amidst Intense Competition and Special Rates

• Ocean carriers have recently introduced more competitive prices for shipments from Asia to the US, featuring voyage-specific and commodity-specific rates that undercut standard fares, particularly for shipments to the West Coast.
• In response to surplus capacity on the trans-Pacific route, these revised rates are approximately US$1,000 lower per FEU than the listed rates.
• While the typical spot rate from North Asia to the West Coast stands at US$6,000 per FEU, some carriers are proposing prices of approximately $5,000 per FEU.
• Carriers are applying commodity-specific rates for shipments, including those bound for the East Coast, where special rates have become the market norm. Discounts are being offered on a variety of commodities, ranging from furniture to forest product imports, to attract shippers.

Air Freight in Bangladesh Encounters Difficulties Amidst Civil Unrest

• Bangladesh's air cargo sector has been severely disrupted in 2024 by global and local political issues, causing chaos in the supply chain with factory closures and cargo backlogs.
• The air cargo market in Bangladesh witnessed a substantial increase, with spot rates escalating by 163% Y/Y, hitting a peak not seen in over two years.
• Rates from Bangladesh to Europe reached a high of?US$ 4.95 per kg, while those bound for North America surged by 127% to US$ 6.91 per kg.
• Shippers are facing rising costs and reduced margins, with a high air cargo load factor of 97% for shipments to Europe from Bangladesh, underscoring the imbalance between demand and supply.
• Ocean container shipping rates from Chittagong to North Europe have soared by 270% Y/Y, impacting shippers financially and prompting considerations for route diversions to other air hubs such as Delhi and Kolkata.
• Shifting trends are observed as some global fashion brands are redirecting orders from Bangladesh to other garment export markets like Cambodia and Indonesia, potentially reshaping the air cargo landscape in the longer term.

Trucking Challenges Persist Despite Canadian Rail Transport Resumption

• Following a rail shutdown in Canada due to labor disputes, freight rail services have resumed, but trucking operations continue to face disruptions.
• ·High spot rates, particularly on long-haul intra-Canada routes, have persisted since the rail stoppage.
• The temporary stoppage of rail services triggered a significant escalation in spot market truck rates along trade lanes between West Coast ports and central Canada.
• Load volumes have surged by over 30% in the previous week, with a notable increase in long-haul lanes within Canada.
• Trucking costs in Canada have rapidly increased, impacting capacity and driving up rates, especially for east-to-west shipments.

Indian Port Workers Call Off Strike and Agree New Wage Deal

• The All India Port Workers’ Federation has agreed to a new five-year pay deal with government officials, averting a planned nationwide strike.
• The contract included an 8.5% wage increase, retroactive to January 1st, 2022, along with a 30% variable dearness allowance.
• Workers will also receive a special monthly allowance of US$5.95 during the contract term.
• The agreement, valid until December 31st, 2026, benefits 18,000 employees across 12 major state-operated ports.
• By avoiding a strike, this deal safeguards exporters from potential daily losses estimated at US$14.9 million.

Stalemate in East and Gulf Coast Port Contract Talks Necessitates Federal Mediation to Avert Dockworker Strike

• Negotiations for the East and Gulf Coast port contracts have reached a deadlock, requiring the involvement of a federal mediator to facilitate a resolution and prevent a potential dockworker strike on October 1st.
• The International Longshoremen’s Association (ILA) filed a Notice to Mediation Agencies (Form F-7) with the Federal Mediation & Conciliation Service (FMCS) on August 19th. In response, United States Maritime Alliance (USMX) filed the same form on August 22nd.
• USMX faces challenges in resuming discussions for a new Master Contract with ILA, prompting the need for mediation intervention.
• The ILA halted master contract negotiations due to a dispute regarding an automated gate at the Port of Mobile, Alabama and has scheduled an internal meeting to present final demands on September 4th and 5th.
• The ILA seeks wage hikes that reflect the profits of USMX member companies following the Red Sea crisis, aiming for increases that exceed the 32% secured by West Coast dockworkers.
• Port operations are at risk due to the potential strike threat, with estimates indicating that clearing the backlog from a one-day strike could take up to six days.

Strained Negotiations Continue as German Port Workers Reject Contract Offers

• Despite four rounds of negotiations, German dockworkers and employers remain in conflict over a new labor agreement.
• The union Ver.di declined two offers after 56% of the 11,500 members who participated in an internal survey voted against them. Workers have been operating under the terms of a contract that expire on May 31. ?
• The union’s demands include a 3 euros per hour wage increase from June 1st, along with retroactive adjustments to shift allowance.
• The first proposal offered a 12-month term with a US$1,118 bonus for inflation compensation and a US$1.06 hourly wage raise.
• The second proposal was extended to 16 months, providing higher compensation and an increased hourly wage, yet it still failed to meet employee expectations.
• Germany is facing heightened logistical challenges due to concerns about labor disputes in ports, compounded by the operational impacts of recent strikes in rail and airport.

Rising Import Volumes at LA and LB Ports Prompt Increased Vessel Deployment

• Over the upcoming two months, 28 extra vessels will be dispatched on the eastbound trans-Pacific route to the ports of Los Angeles (LA) and Long Beach (LB) in anticipation of a surge in import volumes during peak shipping season.
• US West Coast ports may see increased freight redirected from Vancouver due to ?unresolved rail labor issues. While the Canadian government intervened to end the strike, the possibility of another strike remains if the federal court rules in favor of the union.
• The impending strike by the International Longshoremen’s Association at East and Gulf coast ports is expected to have minimal effects on projected import volumes moving through Southern California.
• Asian imports saw substantial growth in July, with LA experiencing a 32.8% rise and Long Beach a 44.8% increase Y/Y.
• The Southern California transportation community has expressed concerns about the capacity of terminal operators to handle peak season volumes, as rail container dwell times have nearly doubled over the past two months.

PCA Introduces New Booking System and Updates on Indio River Project

• The Panama Canal Authority (PCA) anticipates another El Ni?o-induced drought within the next four years, prompting preparations for infrastructure improvements.
• The US$1.6 billion Indio River reservoir project aims to add capacity for 11 additional transits during drought periods.
• Average tonnage per transit at the Panama Canal has increased to 43,000 metric tons in 2024.
• The PCA is currently permitting up to 36 vessel transits daily across the 50-mile waterway, nearing the canal’s maximum sustainable capacity.
• The recently introduced Long Term Slot Allocation (LoTSA) methodology for Neopanamax vessels is set to commence on October 1st, 2024, enhancing both transit certainty and flexibility.
• The water levels of Gatún Lake show a remarkable improvement, surging by 6.2 feet Y/Y to reach 85.8 feet in August 2024.

Port of Portland in Marine Prepares New Cold Storage Warehouse in 2025

• A new cold storage warehouse near Maine’s Port of Portland is expected to open in early 2025, aiming to lower transportation costs for seafood and produce shippers.
• Developed by UK's Amber Infrastructure Group with an investment of US$ 55 million, the 107,000-square-foot facility will provide an alternative to out-of-state storage.
• Maine's seafood businesses typically manage their own small cold storage units, while those requiring third-party services often use facilities in Massachusetts due to proximity.
• The warehouse's strategic location near to the port is expected to benefit various local industries, including fishing, blueberries, and pharmaceutical imports.
• In the first half of 2024, Portland processed 3,134 TEUs of refrigerated cargo, which is less than Boston's 4,773 TEUs during the same period.
• To accommodate the growing number of refrigerated containers, the International Marine Terminal in Portland secured a $14.2 million grant in 2023 for expanding rack storage.

?Sources:

Sea Intelligence

Sourcing Journal

JOC

Freightos

JOC

Xeneta

JOC

Sourcing Journal

Sourcing Journal

Sourcing Journal

JOC

Sourcing Journal

JOC