Century Weekly Market Update Apr 1 - Apr 7

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, freight rates on all major trade lanes recorded notable decline with the exception of Asia-North Europe rates increasing. Air cargo demand exhausted capacity in Asia, import surges at the ports of Los Angeles and Long Beach caused rail dwell times to increase, and the European Transport Coalition urged the EU to increase funding for environmental goals. Additionally, the US Army Corps plans to finish restoring port access in Baltimore by the end of May.

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

Xeneta Shipping Index: March 2024 Insights and Trends

• Xeneta’s Global XSI? dropped to 151.6 points in March 2024, declining by 1.8% from February 2024, marking a significant decrease of 56% compared to March 2023.
• The index tracks and measures changes in ocean freight rates across various trade routes and provides insights into the fluctuations/trends in container shipping rates.
• The stagnation in XSI? movement reflects a low number of new contracts entering validity in the mid-quarter, with shippers delaying signing new long-term contracts to avoid locking in high rates.
• Despite a slight decrease, the spot market remains notably more expensive than the long-term market but is softening gradually, prompting shippers to seek avoidance of high-rate commitments.
• Far East exports' XSI? fell by 0.8% in March 2024, a minimal dip in comparison to an overall decline Y/Y of 62.4%.
• US shippers have been able to utilize the softening spot market during contract negotiations, reportedly securing larger discounts than anticipated

Demand for Alternative Fuels Jumps as Dual-fuel Vessel Orders Rise

• Antwerp-Bruges bunkered its first methanol-powered deep-sea container ship last week, marking a pivotal move in transitioning towards climate-neutral fuels in the bunker market.
• Ane Maersk, a 16,000-TEU vessel, completed its first European bunker operation with green methanol and biodiesel, underlining the port's commitment to integrating climate-neutral fuels.
• Major ports, including Shanghai, are rapidly developing their bunkering infrastructure for alternative fuels like methanol, LNG, hydrogen, and ammonia, in response to rising demand driven by the increasing number of dual-fuel vessels ordered in the container shipping sector.
• Shanghai International Port Group signed a memorandum of understanding with HMM to supply methanol and LNG, highlighting the growing importance of green methanol as an alternative fuel for container carriers in meeting regulatory targets and reducing emissions.
• Regulatory targets set by the International Maritime Organization for reducing greenhouse gas emissions are driving the adoption of alternative fuels, with zero-carbon fuels expected to represent at least 5% of total energy used by international shipping by 2030

Schedule Reliability Improving and on the Path to Stability

• Despite recent disruptions like the Red Sea crisis, global schedule reliability improved in February 2024 by 1.7 percentage points month-on-month to reach 53.3%, indicating a return to stability.
• However, compared to the previous year, schedule reliability was down by 6.9 percentage points.
• The average delay for late vessel arrivals also returned to pre-Red Sea crisis levels at 5.46 days.
• Hapag-Lloyd emerged as the most reliable top-13 carrier in February 2024 with a schedule reliability of 54.9% while seven other carriers achieved above a 50% reliability mark, and PIL scored the lowest at 45.3%.
• On a Y/Y basis, none of the top 13 carriers showed an increase in schedule reliability, indicating ongoing challenges in maintaining consistent performance levels.

Weekly Blank Sailing Report

Century’s Blank Sailings Report for the week of April 1st – April 7th. 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 255 port omissions, a 23.9% decrease compared to the week prior.
• Ningbo recorded the highest amount of port omissions last week with 29, followed by Shanghai with 28 and Qingdao with 16.
• Other ports with notably high omissions last week were Laem Chabang and Shekou with 12, and Singapore and Busan with 11.
• Shanghai recorded the biggest W/W decrease in port omissions, falling by 33.3%.
• Looking towards the coming weeks, Century’s data shows a 12.5% decrease in currently scheduled blank sailings for week 15.
• Next week’s preliminary data shows a notable increase in port omissions expected in Singapore and notable decreases in Shanghai and Ningbo.

Port omissions data for the most frequently omitted ports during week 14 can be found in the table below:

Our?full Blank Sailings Report for the week of April 1st – April 7th below provides a full list of every current scheduled port omission from Week 14 to Week 24 as of April 8th, 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.

Click here to DOWNLOAD the full Week 14 Blank Sailings Report

Week in Review

Majority of Trade Lanes Continue Seeing Declines in Freight Rates

• Trans-Pacific, trans-Atlantic, and Asia-South Europe have all recorded W/W declines as the Global Container Freight Index dropped 10% W/W.
• Trans-Pacific freight rates have now recorded seven consecutive weeks of declines.
• Rates from China/East Asia to the US East Coast declined by 19% W/W to US$ 4,308.
• Rates from China/East Asia to the US West Coast dipped by 9% W/W to US$ 3,294.
• Freight rates from China/East Asia to South Europe fell 19% W/W to US$ 4,315, whilst rates to Northern Europe saw an increase of 2% W/W now sitting at US$ 3,325.?

Surge in E-commerce Demand Exhausts Air Cargo Capacity from Asia

• All air cargo block service agreements (BSAs) from Asia to the US and European Union for 2024 have been completely sold out due to a surge in e-commerce demand inundating China's airport gateways.
• The optimistic outlook for the e-commerce sector has fueled this surge in demand, signaling promising growth for the air freight market in 2024, as stated by the senior director of global sales and marketing at Dimerco.
• March saw an unexpected 11% Y/Y increase in air freight volume, marking the third consecutive month of such growth.
• Despite considering the lower base of 2023 due to weakened global manufacturing activities, the air freight market has remained busy in Q1 2024, indicating sustained demand.
• Rates, while lower than last year, have been trending upwards, especially to US destinations, defying the traditional post-Lunar New Year market slowdown in March.
• Additionally, rising sea-air demand, particularly from cargo owners with urgent shipments, is boosting rates and increasing demand for air cargo space from countries like Vietnam, Thailand, Sri Lanka, and Dubai, with notable increases in volume observed in Asia-Europe sea-air hubs such as Dubai, Colombo, and Bangkok.

Rail Dwell Time Challenges Amid Import Surge at the Ports of Los Angeles and Long Beach

• Rail dwell times in the Los Angeles-Long Beach complex increased significantly from January 2024 to February 2024 amid a surge in imports at the beginning of the year.
• The number of international double-stack railcars flowing into and out of the Southwest region over the past 14 months, indicate a chronic deficit in railcars.
• Volatility exacerbates the problem, with daily deficits and required lengths of empty trains increasing substantially over certain periods, posing storage and operational challenges for railroads.
• The surge in Asia imports into the US in February 2024, up almost 40% Y/Y, further strained rail capacity and contributed to the issue.
• Railroads face limitations in controlling their volume, as traffic generally moves under long-term fixed-rate contracts with ocean carriers who control the inland point intermodal (IPI) flows, leading to railroads absorbing most of the cost of empty moves.
• While ocean carriers have more flexibility in managing their volume and routing decisions based on optimizing internal economics, the downstream effects on railroads can be significant, with shippers needing to account for inevitable dwell time increases in their planning processes.

US Army Corps of Engineers Plans to Completely Restore Port Access in Baltimore by the End of May

• The US Army Corps aims to reopen the permanent Fort McHenry Channel, measuring 700 feet wide and 50 feet deep, by the end of May, following the collapse of the Francis Scott Key Bridge.
• The Army Corps of Engineers is undertaking efforts to open a limited access channel, 280 feet wide and 35 feet deep, by the end of April to support one-way traffic for barge container service and roll-on/off vessels that facilitate the transport of automobiles and farm equipment.
• Vessel traffic remains suspended at the Port of Baltimore, while truck access within the marine terminals is still operational, as per the latest update.
• The timeline for channel reopening is contingent on factors like adverse weather conditions and changes in the complexity of wreckage, according to the USACE commanding general.
• The extensive work including underwater surveys and detailed structural analysis, has provided insights into the immense and complex task ahead, restoring normal port access.

Norfolk Southern and CSX Initiate Rail Services to Mitigate Impact of Baltimore Bridge Collapse

• Norfolk Southern(NS) Railway will commence running trains between the Port of New York and New Jersey and Baltimore following the collapse of the Francis Scott Key Bridge.
• CSX, a railroad head-quartered in Jacksonville, FL, also announced a similar initiative, railroading containers directly from the Port of New York and New Jersey into the Seagirt Terminal at the Port of Baltimore.
• NS's trains will operate from the Elizabeth Marine Terminal in New Jersey to its Bayview Yard near the Baltimore port, with Triple Crown Services handling drayage of containers to the port.
• The NS service will run five days a week between Elizabeth and Baltimore, facilitating imports on Fridays through Tuesdays and exports/empty containers back to NY/NJ on Mondays through Fridays, with containers available at the destination terminal 72 hours post-departure.
• NS is coordinating with terminal operator Ports America to gain temporary access to the on-dock rail yard, ensuring a schedule that doesn't conflict with CSX service, thus optimizing operations.
• The Port of Virginia is collaborating with NS to provide rail service from Norfolk to the Virginia Inland Port in Front Royal, enhancing connectivity to regions like western Maryland, southern Pennsylvania, and northern Virginia.

UAE's AD Ports Group Partners with Iraq for Development of Al-Faw Grand Port Complex

• The UAE’s AD Ports Group has partnered with the Iraqi government to develop a container port complex at Al-Faw Grand Port on the northern tip of the Persian Gulf, aiming to handle 4 million TEUs annually and dry bulk capabilities.
• Construction on the first phase of Al Faw Grand Port is expected to be completed by the end of 2025, with plans to appoint an international port operator by the fourth quarter of 2026.
• The project includes infrastructure development such as roads connecting the port to the national highway network, with plans for a railway connecting the port to Europe, offering an alternative route to the Suez Canal or circumnavigation of Africa.
• AD Ports Group's involvement boosts the credibility of the project, which has faced delays due to political troubles over the past decade.
• The Al Faw Grand Port project is strategically important for Iraq, aligning with global standards and aiming to address capacity limitations and access difficulties faced by existing ports like Umm Qasr and Basrah.
• Iraq's growing population and plans to boost domestic manufacturing highlight the need for additional port capacity to support increased trade and economic diversification efforts.

US Maritime Commission Seeks $63 Million Penalty Against MSC for Shipping Law Violations

• The US Federal Maritime Commission’s (FMC’s) enforcement bureau is seeking a $63 million civil penalty against Mediterranean Shipping Co. (MSC) for alleged violations of US shipping law.
• The alleged violations include charging excessive late fees on non-operating refrigerated containers and incorrectly billing companies with no contractual relationship with MSC.
• The investigation into MSC's practices began in August following complaints about potential violations of the US Shipping Act.
• MSC is accused of knowingly and willfully violating the Shipping Act, with the violations negatively impacting the wider shipping community, according to the FMC.
• The bulk of the recommended civil penalty, $46.3 million, is related to MSC’s practice of charging detention and demurrage on non-operating refrigerated (NOR) containers at higher rates.
• MSC is also accused of incorrectly billing third-party logistics providers and unlawfully charging detention and demurrage fees to "notify parties" on bills of lading who were not directly involved in the shipment, resulting in further recommended fines.

Maersk to Resume Panama Canal Transits in May as PCA Increases Daily Vessel Slots

• Maersk announces the resumption of transits through the Panama Canal in May for its Ocean-Americas (OC1) service, following an increase in permitted daily vessel transits by the Panama Canal Authority (PCA).
• Since January 2024, Maersk had been using the adjacent canal railroad for transferring containers between terminals on the Pacific and Atlantic coasts.
• The decision to shift back to using the canal for the OC1 service was made after closely monitoring the introduction of additional transit slots by the PCA.
• The OC1 service will revert to its pre-existing rotation, with the use of the rail link being phased out by the end of May 2024.
• Hapag-Lloyd and Ocean Network Express have also confirmed the full restoration of transits through the Panama Canal for their Asia-US East Coast trans-Pacific services.
• The PCA increased the number of daily vessel slots to 27 from 24 as of the end of March 2024, following improvements in water levels on Gatun Lake and reducing queue waiting times significantly.

European Transport Coalition Urges Increased EU Funding to Meet Environmental Goals

• A coalition of 43 transport groups in Europe is urging the European Union to boost its budget allocation for the transport sector to meet environmental targets.
• The campaign was launched during the European Commission’s "Connecting Europe Days" conference, emphasizing the importance of EU funding via the Connecting Europe Facility (CEF) instrument.
• Without increased funding, achieving decarbonization goals for 2030 and 2050 will be challenging, especially for cross-border traffic such as rail freight.
• The CEF, managed by the European Commission, provides grants for projects that enhance cross-border transportation infrastructure.
• The campaign demands, outlined in a leaflet handed to EU officials, stress the need for improved rail infrastructure to support heavier and longer freight trains, aiming to reduce road traffic.
• The EU's Green Deal, known as "Fit for 55," sets ambitious targets for reducing greenhouse gas emissions, with a focus on shifting more freight from road to rail and waterways, though achieving this shift has been challenging in recent years.

Taiwan Earthquake Raises Concerns Over Global Semiconductor Supply Chain

• A 7.4-magnitude earthquake struck Hualien County, Taiwan, raising concerns about the impact on the global semiconductor supply chain.
• Taiwan Semiconductor Manufacturing Company (TSMC), a key player in chip production, evacuated sites and paused production in some plants. However, recovery efforts are underway, with 70% tool recovery achieved within 10 hours of the earthquake.
• UMC stated no material impact on operations, while Micron Technology is assessing any operational impact and will update customers accordingly.
• Taiwan hosts 92% of advanced chip production globally, raising concerns about potential ripple effects.
• Companies like Apple, Nvidia, Samsung, and Amazon rely on TSMC for chip supply.
• The earthquake could affect 58,000 parts feeding into 21,000 products across various sectors, primarily impacting lower-tier suppliers. Some experts emphasize the need for geographic diversification in the semiconductor industry to enhance resilience against such events.

Sources

Xeneta

JOC

Sea Intelligence

Freightos

JOC.com

JOC.com

Supply Chain Dive

JOC.com

JOC.com

JOC.com

JOC.com

JOC.com

Supply Chain Dive

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