Century Weekly Market Update August 12th - 18th

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 increased while most global trade routes witnessed a steady trend in rates. The threat of an ILA strike at US East and Gulf Coast Ports could lead to significant backlog in handling of cargo, urging shippers to consider alternative logistics routes, as well as the ongoing Red Sea crisis is prompting more European shippers to select rail transport. Additionally, the container explosion at Ningbo Port resulted in prolonged delays at multiple ports in China and potential congestion.

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:

Possible ILA Strike may Result in Backlog Extending into 2025

• The existing labor contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance, Ltd. (USMX) is set to expire on September 30th, 2024.
• ILA has threatened to initiate a strike on October 1st, 2024, if a new agreement is not reached.
• Analysis based on historical data estimates that a strike would impact 2.3 million TEU of cargo in October 2024.
• Should a potential strike occur, the ports are estimated to have 13% excess capacity over the expected normal flow, allowing them to clear a 1-day backlog of 74,000 TEU in around 6 days.
• A 1-week strike beginning in early October 2024 would not be cleared until mid-November 2024, while a 2-week strike could delay the ports from returning to normal operations until 2025.

Shippers Faced with Constrained Choices to Safeguard Supply Chains Ahead of Looming US Port Strike

• With labor contracts set to expire at US East and Gulf Coast ports in less than 7 weeks, there is only limited time for shippers to take action to protect their supply chains.
• A typical Transatlantic trade from Genoa to Savannah requires 24 days at sea plus an additional 10 days for inland transport, therefore shippers only have a limited timeframe to explore alternative logistics pathways.
• Container volumes from Southeast Asia to North America hit a record high of 500,000 TEU in June 2024, representing a Y/Y increase of 23%, as shippers have been rapidly importing goods to increase their inventory levels.
• Average spot rates on the Far East to US East Coast trade spiked nearly 140% between April and July 2024, since shippers paid a premium to secure capacity.
• Air cargo demand has surged to unprecedented heights in 2024, especially on routes connecting China with the US and Europe, making it an unaffordable choice for many shippers.

Shippers Prepare for Compliance with Looming FuelEU Regulations

• Effective from January 1st, 2025, the FuelEU Maritime regulation will impose penalties on shipping companies failing to meet carbon intensity reduction goals.
• These regulations tighten greenhouse gas (GHG) intensity targets for ship energy every five years.
• GHG intensity regulations encompass all energy utilized during journeys and stopovers within the EU, along with half of the voyages entering and exiting the EU.
• The existing fine of €2,400 per ton of very-low sulphur fuel oil (VLSFO) exceeding intensity limits will increase by approximately 10% annually?for non-compliance, reaching €3,360 by 2029 for persistent failure to meet requirements.
• Companies are required to comply with FuelEU restrictions by using biofuels, LNG/LPG, or through pooling where efficient vessels offset any deficits.

Weekly Blank Sailings Report: ?

Century’s Blank Sailings Report for the week of August 12th – August 18th. 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 462 port omissions, a 17.9% decrease compared to the week prior.
• Both Ningbo and Singapore recorded the highest amount of port omissions last week with 42, followed by Shanghai with 30.
• Other ports with notably high omissions last week are Busan with 28 and Shekou with 22.
• Lazaro Cardenas recorded the most significant W/W increase, a 400% rise in port omissions.
• Looking towards the coming weeks, Century’s data shows a 12.8% decrease in currently scheduled blank sailings for week 34.
• Next week’s preliminary data shows notable increases in port omissions to be expected at ports in Nansha and Veracruz.

Port omissions data for the most frequently omitted ports during week 33 can be found in the table below:

Our?full Blank Sailings Report for the week of August 12th – August 18th below provides a full list of every current scheduled port omission from Week 33 to Week 43 as of August 19th, 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 33 Blank Sailings Report

Week in Review:

?

Majority of Trade Lanes Saw Steady Trend in Freight Rates

• Most global trade lanes exhibited a steady trend or a decline in rates W/W, whereas the Global Container Freight Index rose by 8% W/W.
• China/East Asia to North America East Coast rates decreased by 1% W/W to US$ 9,411.
• China/East Asia to North America West Coast rates was stable W/W at US$ 6,429.
• North America East Coast to China/East Asia rate increased by 1% to US$ 424.
• With the exception of a drop in the rate from Europe to the South America East Coast, the vast majority of trans-Atlantic routes stayed consistent W/W.

HHLA Witnesses Growth Amidst Challenges due to Increasing US Trade

• Hamburger Hafen und Logistik (HHLA), the primary main container terminal operator in Hamburg, experienced a 2.2% volume growth in the initial half of 2024, leveraging boosted trade with the US and a rise in feeder volume caused by disrupted shipping schedules.
• Throughout the first six months of 2024, HHLA managed 2.9 million TEUs, with a focus on enhancing container throughput.
• The group's revenue surged by 4.6% to hit US $837 million, earnings before interest and taxes (EBIT) saw a 16.8% rise to US $65 million, and net profit advanced to US$14.5 million, demonstrating a remarkable 60% Y/Y growth.
• HHLA's enhanced performance was overshadowed by geopolitical tensions and alterations in the syndicate structures of shipping companies, impacting its future outlook.
• HHLA highlighted its ongoing commitment to investing in its European network, terminal upgrades, upgrading terminals, training employees, and fostering sustainable logistics solutions.

PSA International Broadens Hinterland Reach with Loconi Acquisition

• By acquiring an 85% share in the Polish intermodal operator Loconi International, PSA International, operating from Singapore, will enhance its market presence in the Central and Eastern Europe.
• PSA International sees Loconi's involvement in their node-to-network strategy as crucial, signifying a shift beyond terminal operations to bolster their position as a key player in the port ecosystem.
• The Baltic Hub Container Terminal operated by PSA in Gdansk coordinates over 500 trains per month in Poland, while Loconi oversees 220 trains monthly across five corridors in the country, managing an annual throughput of 250,000 TEUs.
• Loconi is actively expanding its railway services throughout the region to promote greater sustainability in transportation.
• PSA's growth encompasses terminals in various European nations such as Belgium, Italy, Portugal, and Poland.

Ro/ro Freight Rates Increase Amid Decreasing Demand

• While global demand for high and heavy roll-on/roll-off (ro/ro) cargo softens, freight rates surge and capacity constraints hinder volume growth.
• Wallenius Wilhelmsen and H?egh Autoliners uphold high and heavy rolling stock at a consistent share of approximately 25% of total volumes.
• While freight rates are increasing, port congestion and diversions in southern Africa reduce overall cargo volume for major ro/ro carriers.
• A rise in high and heavy cargo volumes is expected in the upcoming years, driven by factors such as global investment patterns and industry-specific needs.
• Operators are directing investments towards new vessels that offer improved capacity and flexibility, aligning with the projected increase in high and heavy cargo demand.

?India-Europe Trade Rates Stabilize as Demand Shifts

• The recent increase in rates on the India-Europe trade has ceased, indicating a shift towards a more balanced supply-demand dynamic.
• The average decline in booking rates from West India to the principal UK ports (including London Gateway, Felixstowe and Southampton) reached US$1,000 per standard dry container.
• The approach of September sees a reduction in peak demand, with rates having climbed by 20% from mid-July to early August and now dropping.
• Major carriers have reported a significant drop in spot rates for August sailings. For instance, CMA CGM’s current rates stand at US$ 4,801 per TEU and US$4,979 per FEU, contrasting with the US$5,800 per TEU and US$6,000 per FEU quoted two weeks earlier.
• Forwarders expect a continued decrease in rates through September, following the earlier surge of India-Europe spot rates at approximately US$2,500 to US$2,600 per container in May.

European Shippers Increasingly Opt for Rail Transport

• Due to the persistent Red Sea crisis, ocean freight rates surged in 2024, prompting European shippers to consider rail as a viable alternative.
• Rail freight volumes for China-Europe trade increased by 11% to reach 1.23 million TEUs during the first half of 2024.
• Approximately 185,000 TEUs were carried by over 1,700 trains traveling between China and Europe in July 2024.
• Prices for rail transportation from China to Europe vary by location, such as US$9,200 from Zhengzhou to Paris and US$7,000 to Hamburg.
• With rail transport from Xi’an to Europe taking 13 to 25 days and ocean shipping requiring 35 to 50 days, European shippers are increasingly opting for rail transport due to its faster transit times despite higher costs.

Ningbo Port Explosion Led to Extended Delays and Possible Congestion

• On August 9th, an explosion incident involving the Yang Ming Mobility vessel at China’s Beilun Phase III Container Terminal of Ningbo-Zhoushan Port resulted in closure of the terminal for three days.
• Preliminary investigations indicate that the explosion likely originated from lithium batteries and a specific organic compound stored in a reefer container.
• Without any casualties reported, safety is the primary focus for vessel repairs, cargo transshipment and schedule adjustments.
• While operations at the port were not significantly affected, berthing schedules required adjustment.
• Delays are anticipated at several ports including Shanghai, Xiaman, Hong Kong, Singapore, and Port Kelang due to the rerouting of ships from Ningbo and existing congestion issues.

?Container Unloading Delays and Export Disruptions Caused by Congestion at Chattogram Port

• Congestion at Chattogram Port in Bangladesh is causing delays in unloading containers from ships and the arrival of export containers from depots.
• At present, more than 20 container ships are in line for berthing at Chattogram, experiencing average delays for docking extending from 7 to 10 days.
• Student protests since mid-July causing a nationwide curfew, internet blackout, and factory shutdowns, have disrupted operations at the port.
• As a consequence of the delays, ships have incurred substantial demurrage fees, totaling a minimum of US$1.5 million.
• In July 2024, the export container handling at Chattogram Port witnessed a M/M decrease of 16.4%, with only 59,845 TEUs exported.

CN Halts US Intermodal Traffic Ahead of Expected Labor Disruption

• In preparation for an upcoming strike on August 22nd,?Canada National Railway (CN) will suspend intermodal traffic from the US into Canada as part of its network shutdown, which involves ceasing the transportation of specific hazardous materials.
• Intermodal services encompass the movement of cargo in containers using both rail and truck transportation, with CN witnessing a 17% reduction in volume between May and July 2024.
• In 2023, CN and Canadian Pacific Kansas City (CPKC) handled 1.24 million intermodal containers throughout the US and Canada, accounting for 8% of the overall rail traffic.
• The Teamsters Canada Rail Conference, which represents approximately 9,300 employees, is actively pursuing new labor agreements.
• Importers are encouraged to explore alternative ports like Los Angeles due to potential embargoes and disruptions.

Houston Secures USDA Authorization for Cold-Treated Produce Cargo Handling

• By obtaining approval from the US Department of Agriculture (USDA), the Port of Houston has strengthened its ability to handle cold-treated produce shipments, expanding its opportunities in the refrigerated container sector.
• The endorsement from the Animal and Plant Health Inspection Service (APHIS) under USDA enables swift access for fresh produce imports without extra inspection, provided they are kept at specified temperatures to eradicate pests.
• The executive director of Port Houston considered the APHIS approval as a significant milestone, enabling them to provide extra services to customers and ensuring the safe delivery of their perishable goods in ideal condition.
• Among other major US ports, New York-New Jersey, Savannah, and Philadelphia also possess APHIS-approved facilities for managing cold-treatment cargo.
• Houston has recently installed racks to enhance its refrigerated container capacity, with the goal of revitalizing its refrigerated container volumes.

Sources:

Sea Intelligence

Xeneta

The Loadstar

Freightos

JOC

JOC

JOC

JOC

Sourcing Journal

Sourcing Journal

Sourcing Journal

Sourcing Journal

JOC