Century Weekly Market Update July 15 - July 23

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, all major trade lanes originating from China/East Asia experienced a decline in freight rates. Student protests in Bangladesh disrupted international trade, a fire broke out on the Maersk Frankfurt container ship, and the port of Houston gains USDA approval for cold-treated produce. Additionally, Walmart Canada introduced its first hydrogen-fueled cell-powered electric truck.

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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Shipping Rates Sky-rocketed in Recent Months

• Ocean container shipping rates have surged dramatically in recent months, with increases of over 140% on major routes like the Far East to US East Coast and US West Coast.
• Signs the market may be nearing its peak include a stabilization in mid-high spot rates, suggesting shippers are resisting further rate hikes.
• General Rate Increases (GRIs) have shown mixed results, with carriers struggling to maintain higher rates, giving shippers more negotiating power.
• Different trade routes exhibit varying trends, with some, like Shanghai to Mexico West Coast, already seeing rate softening due to increased capacity.
• Despite potential easing, ongoing global shipping network strains and upcoming challenges like port strikes and tariff increases suggest a cautious outlook for the remainder of 2024.

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MSC Increases Market Share as the 2M Alliance Comes to an End

• The 2M Alliance between MSC and Maersk will end in February 2025, prompting MSC to focus more on their own-operated services.
• MSC is increasing its market share in stand-alone services on the Transpacific and Asia-Europe trades ahead of the alliance termination.
• This shift is part of MSC's strategy to carve out more independence in response to market pressures and the forthcoming alliance changes.
• Before the Red Sea crisis, MSC had already begun expanding stand-alone services, accelerating efforts post-crisis.
• MSC's stand-alone capacity share on Asia-Mediterranean routes has been growing steadily since Q2 of 2023.
• On the Transpacific routes, particularly Asia to North America East Coast, MSC has increased stand-alone capacity share from 3% to 6% in Q3 of 2023, with similar trends observed on the West Coast route since the pandemic's onset.

Shifting Pricing Dynamics in the US Truckload Market

• The US truckload market is experiencing an oversupply of truck capacity compared to shipping demand, giving shippers significant pricing power.
• Analysts and trucking executives anticipate a potential market "inflection point" for truckload spot pricing, possibly by the third quarter of 2024 or early 2025.
• Large truckload carriers, including J.B. Hunt, are cautious about the outlook for the second half of 2024 due to uncertain capacity adjustments.
• J.B. Hunt reported significant declines in revenue across its non-asset Integrated Capacity Solutions (ICS) and truckload divisions compared to the previous year.
• Operational costs for trucking have continued to rise even as truckload rates have fallen, a reversal from past trends observed during economic downturns.
• Truckload carriers are emphasizing accurate freight forecasts from customers amid ongoing market unpredictability.

Weekly Blank Sailings Report: ?

Century’s Blank Sailings Report for the week of July 15th – July 21st. 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 511 port omissions, a 10.5% decrease compared to the week prior.
• Singapore recorded the highest amount of port omissions last week with 40, followed by Ningbo with 38 and Shanghai with 32.
• Other ports with notably high omissions last week are Shekou with 22 and Hong Kong with 20.
• Jakarta, Yantian, and Vung Tao recorded the most significant W/W increases in port omissions; Vung Tao soared by 800% with 9 omissions last week and only 1 the week prior.
• Looking towards the coming weeks, Century’s data shows a 1.6% increase in currently scheduled blank sailings for week 30.
• Next week’s preliminary data shows notable increases in port omissions to be expected at ports in Colombo and Kaohsiung.

Port omissions data for the most frequently omitted ports during week 29 can be found in the table below:

Our?full Blank Sailings Report for the week of July 15th – July 21st below provides a full list of every current scheduled port omission from Week 29 to Week 39 as of July 22nd, 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 29 Blank Sailings Report

Week in Review:

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All Major Trade Routes Departing from China/East Asia Experience a Decline in Freight Rates

• Trade lanes from China/East Asia to North America East/West Coast, North Europe and MED have all recorded decreases as the Global Container Freight Index lowered by 3% W/W, to US$ 5,050.
• China/East Asia to North America East Coast rates decreased by 1% W/W to US$ 9,571.
• China/East Asia to North America West Coast rates declined by 4% W/W to US$ 7,738.
• Trans-Atlantic routes saw mostly increased rates W/W, while Trans-Pacific rates saw mostly declining rates W/W.
• The following trade lanes saw steady W/W rates for the second week in a row: MED – China/East Asia and North Europe – North America East Coast.

Surge in US Imports from Asia Driven by Frontloading and Supply Chain Disruptions

• US imports from Asia surged by 7.8% Y/Y in the second quarter, driven by retailer efforts to frontload shipments amid potential East and Gulf coast labor disruptions and longer transit times around southern Africa.
• Import volumes from Asia saw significant increases M/M: up 4.8% in April, 6.9% in May, and 12.1% in June Y/Y.
• June alone recorded 1.565 million TEUs of imports from Asia, marking the second highest since August 2022 and a 9% increase from May.
• Concerns over labor negotiations for dockworkers on the East and Gulf coasts, with a contract expiration looming on September 30, are intensifying import activities.
• Increased transit costs due to diverted routes around southern Africa are pushing some cargo to the West Coast, impacting shipping dynamics and adding approximately $1 million per voyage in fuel costs.
• Despite challenges, the Port of Los Angeles is preparing for heightened traffic, currently operating at 75%-80% capacity and anticipating a robust second half of 2024.

Student Protests Disrupt Trade in Bangladesh

• Trade between India and Bangladesh via land ports, particularly Petrapole, has halted due to ongoing student protests in Bangladesh.
• The Bangladeshi government’s declaration of public holidays from July 21 to 23, combined with a nationwide curfew, a near complete internet outage and congested telecommunication services, causing substantial disruptions to the supply chain.
• Despite the trade disruption, passenger movement, mainly of returning students, continues amid security concerns.
• Border Security Force (BSF) has facilitated the evacuation of Indian, Nepalese, and Bhutanese students from Bangladesh due to the unrest.
• The unrest has not only impacted trade at Petrapole but also at other land ports like Gojadanga, Fulbari, and Mahadipur, further affecting Indo-Bangladesh trade relations.

Port of Los Angeles Receives Funding for Technology Enhancements

• The Port of Los Angeles has secured nearly US$ 8 million in funding from a California program aimed at improving port interoperability.
• This funding will support three key projects, including implementing AI to enhance the truck appointment system.
• These enhancements are part of ongoing efforts to leverage technology and data sharing to optimize port operations and address logistical challenges proactively.
• California's investment underscores the critical role of ports in stabilizing national and global supply chains, benefiting stakeholders through enhanced operational efficiency and reduced environmental impact.

Implications of a Prolonged Red Sea Crisis on Global Shipping and Trade

• For container lines, the prolonged disruption caused by the Red Sea crisis is resulting in sustained high demand and rates, prompting increased vessel orders to accommodate longer shipping distances.
• Asian regional carriers currently navigating safer routes through the Gulf of Aden and southern Red Sea are gaining a competitive edge.
• Long-term effects could see niche carriers expanding northward through the Suez, potentially reshaping global carrier dynamics.
• The crisis may shift sourcing patterns away from Indian manufacturers due to Suez accessibility issues, benefiting Southeast Asia, Turkey, North Africa, and Central America.

Fire Broke Out on Maersk Frankfurt Container Ship Near Indian Coast

• A fire broke out last Friday, July 19th, around 2:30 pm on the Maersk Frankfurt container ship near the Indian coast, carrying International Maritime Dangerous Goods (IMDG) cargo.
• The vessel, built in 2024 and approximately 255 meters long, departed Mundra, India, bound for Colombo, Sri Lanka.
• Indian Coast Guard (ICG) ships and aircraft were deployed to combat the fire, facing challenges due to adverse weather conditions and heavy rain.
• Despite efforts by the ICG to control the blaze, it persists, with a likelihood of taking another day or two to fully extinguish.
• Recent reports indicate that while the forepart fire has been subdued, the midship area has reignited, necessitating continued firefighting efforts by ICG vessels and deployment of specialized resources.
• The situation onboard remains critical, with the vessel's compromised front area posing risks, hindering crew evacuation and anchoring attempts.

Maersk and MSC Expand Bangladesh Apparel Export Routes Amid Growing Market Demand

• Container lines are capitalizing on Bangladesh's growing apparel export market, a key economic driver for the country.
• Maersk has expanded its service offerings with the third weekly Bangladesh-China loop (SH3), aimed at enhancing connectivity between Chittagong and major ports in China like Shanghai and Xiamen.
• The SH3 service utilizes vessels in the 2,800-TEU range and provides flexibility in terms of speed and reach for customers.
• Competing with Maersk, Mediterranean Shipping Co. launched the Bengal Service, bolstering connections between Qingdao, Shanghai, Chittagong, and Southeast Asia.
• The strategic focus on both raw materials from China and garment exports to Europe underscores Bangladesh's role in intra-Asia trade dynamics.
• Despite record-high apparel exports in 2023, Bangladesh faces logistical challenges that impact the pace of its export growth.

Implications for Ocean Carriers Following Recent Supreme Court Ruling

• The Supreme Court’s recent ruling weakens federal agency powers and has significant implications for the Federal Maritime Commission (FMC) by making it easier for ocean carriers to challenge upcoming regulations.
• The ruling overturns the long-standing Chevron doctrine, in effect for four decades, prohibiting federal agencies like the Federal Motor Carrier Administration and the Maritime Administration from interpreting their regulatory authority independently in ambiguous legal contexts.
• The ruling directly impacts FMC’s efforts to enforce rules under the Ocean Shipping Reform Act of 2022 (OSRA-22), which aims to address complaints from agriculture exporters about carriers refusing their cargoes during port congestion.
• Ocean carriers are contesting the FMC’s authority to enforce export policies, despite the agency's efforts to align carrier actions with documented strategies. The court’s decision signals a new era where FMC rulings could face heightened scrutiny and legal challenges, shifting from previous deference to agency interpretations under the Chevron doctrine.
• Recent pushback from courts, such as the rebuke of an FMC ruling against Evergreen Shipping Line, underscores potential future legal battles over regulatory decisions affecting carriers.
• Despite potential challenges, carriers see the ruling as a positive shift in their ability to influence regulatory outcomes amid ongoing disputes over operational practices and responsibilities.

?Port of Houston Gains USDA Approval for Cold-Treated Produce

• The Port of Houston has received approval from USDA's Animal and Plant Health Inspection Service (APHIS) to handle cold-treated produce cargoes, streamlining entry for fruits like citrus and grapes into the US.
• This approval signifies Houston's capability to maintain stringent pest control standards through temperature-controlled shipments.
• Port of Houston's executive director emphasized the significance, stating it enhances their service offerings for perishable goods.
• Previously limited in refrigerated container capacity, Houston is expanding with new racks to stack refrigerated containers.

Walmart Canada's First Hydrogen-fueled Truck

• Walmart Canada has introduced its first hydrogen fuel cell-powered electric tractor from Nikola, marking the beginning of its transition to a 100% alternatively powered trucking fleet by 2028.
• This initiative is part of Walmart Canada's broader US$ 3.5 billion growth plan aimed at enhancing sales and accelerating deliveries across its Canadian network using green technology.
• The Nikola hydrogen truck boasts an impressive range of nearly 500 miles, which is nearly double the range of Walmart's existing electric trucks.
• Walmart Canada's strategy includes deploying state-of-the-art distribution centers in Surrey, British Columbia, and Vaughan, Ontario, designed to use less energy and optimize fulfillment operations.

?Sources:

Xeneta

Sea Intelligence

JOC

Frieghtos

JOC

CNBC

Supply Chain Dive

JOC

World Cargo News

JOC

JOC

JOC

Supply Chain Dive