Century Weekly Market Update June 24 - June 30

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, trade lanes from China/East Asia to the North American East/West Coast have both recorded W/W increases as the Global Container Freight Index rose by 1%. The EU is considering e-commerce regulations, global air freight emissions have seen a steady rise, and the Panama Canal Authority continues to set new daily transit allowances. Additionally, the ports of LA and Long Beach plan to invest millions in charging infrastructure for electric trucks.

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

Reason for Recent Spike in Spot Rates Still Unknown

• US Census Bureau data up to April 2024 shows no significant rise in container demand before May's spike in spot rates.
• Overall inventories and steady inventory-to-sales ratios suggest carriers would not have been able to anticipate the increase in demand, undermining the notion that current rate spikes are solely due to deliberate market manipulation by carriers.
• Carriers are now planning substantial capacity increases on major East/West trade routes.
• Capacity on Asia-Europe routes are expected to sharply increase in early July 2024, with sustained growth of about 6% Y/Y through July and August.
• Transpacific routes should see immediate and sustained capacity growth, leading to the easing of market pressures.
• The effectiveness of these expansions depends heavily on managing port congestion to maintain planned sailing schedules.

Zim's Making Strategic Moves Amid Trans-Pacific Freight Rate Spikes

• Zim Integrated Shipping Services is launching the ZX2 service from Ningbo to Los Angeles with a record 13-day transit time, aimed at meeting high demand in the trans-Pacific market.
• The launch is in response to the recent market conditions; spot ocean freight rates from Asia to US coasts have sharply risen, reaching US$ 7,825 per FEU by June 27, 2024.
• The service will feature dedicated berths, Zim chassis, and expedited container pickup, along with dedicated truck lanes at the destination terminal without appointment requirements.
• Zim has also adjusted its ZEX service to include a call at Vietnam’s Cai Mep port, replacing Xiamen, reflecting ongoing route optimization efforts.
• In addition to ZX2, Zim has recently introduced new services connecting South America to the US Gulf and expanding trans-Pacific coverage to Canada.

US Truckload Demand and Capacity Still on the Road to Recovery

• Analysts predict a prolonged recovery for US truckload demand extending into 2025 and possibly 2026, driven by excess capacity absorbing freight volume increases.
• Truckload sector growth is forecasted modestly, with dry-van loadings expected to rise 2.1% and refrigerated loadings by 2.4% this year.
• Despite a significant reduction in trucking companies since 2022, there remains ample capacity in the truckload sector.
• Expectations for quick inflection points in spot or contract truckload pricing are cautioned against, despite predictions of rate increases by some analysts.
• Spot truckload rates have seen fluctuations, with recent data showing a slight decline Y/Y, while contract rates are expected to adjust upwards in early 2025.
• The economic recovery's uneven nature is illustrated by contrasting fortunes in different sectors like LTL, which has seen capacity contraction and increased profitability following Yellow Corporation's (a major US holding company) bankruptcy.

Weekly Blank Sailings Report ?

Century’s Blank Sailings Report for the week of June 24th – June 30th. 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 557 port omissions, a 5.1% decrease compared to the week prior.
• Busan recorded the highest amount of port omissions last week with 42, followed by Shanghai with 38 and Ningbo with 35.
• Other ports with notably high omissions last week were Singapore with 34, Laem Chabang with 23, and Kaohsiung with 21.
• Hai Phong recorded a significant W/W increase in port omissions, soaring by 125%.
• Looking towards the coming weeks, Century’s data shows only a .7% decrease in currently scheduled blank sailings for week 27.
• Next week’s preliminary data shows notable increases in port omissions to be expected at ports in Hong Kong and Nhava Sheva.

Port omissions data for the most frequently omitted ports during week 26 can be found in the table below:

Our?full Blank Sailings Report for the week of June 24th – June 30th below provides a full list of every current scheduled port omission from Week 26 to Week 36 as of July 1st, 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 26 Blank Sailings Report

Week in review

Trans-Pacific Routes to the US See Slight Rate Increases

• Trade lanes from China/East Asia to Europe and the North American East/West Coast have all recorded W/W increases as the Global Container Freight Index rose by 1% W/W.
• Rates from China/East Asia to the US East Coast grew by 2% W/W to US$ 8,253.
• Rates from China/East Asia to the US West Coast grew by 3% W/W to US$ 7,052.
• All Suez routes saw W/W increases to rates, except for the North Europe – China/East Asia route which saw a decline W/W.
• Trans-Atlantic routes all steadied this week except for the North America East Coast – North Europe route which saw a decline W/W. ?

Challenges and Calls for Fairness Rise in European E-commerce Regulation

• European digital trade groups are advocating for stricter enforcement of EU laws to level the playing field in e-commerce, particularly against dominant non-EU platforms.
• The EU's de minimis rules, exempting imports below €150 from duties but subject to VAT(Value Added Tax), are under scrutiny amid a surge in tariff-free e-commerce shipments, exacerbating regulatory concerns.
• The exponential growth of global e-retail sales, projected to reach US$ 8 trillion by 2027, underscores the scale of the issue and its impact on air cargo demand.
• Increased parcel volumes from Asia-Pacific are straining air cargo capacity, leading to elevated freight rates despite airlines boosting summer flight frequencies.
• Regulatory crackdowns on e-commerce imports into Europe could significantly affect air cargo dynamics, given that over 80% of global e-commerce is transported by air.

E-commerce Freight May Receive a Special Handling Code for Air Transport

• The International Air Transport Association (IATA) advocates for a special handling code for e-commerce freight due to its dominant role in global air cargo markets.
• E-commerce companies transport over 80% of freight via air and this mostly ships as general cargo.
• Shipping items as general cargo results in concerns over the lack of transparency regarding the contents of e-commerce parcels, particularly with regards to items that pose a risk, like lithium batteries which are commonly being shipped via air.
• Global retail sales are projected to reach US$ 6.3 trillion in 2024, with continued growth expected to US$ 8 trillion by 2027, driving significant parcel volume increases across borders.
• E-commerce giants like Shein and Temu are rapidly expanding their air cargo volumes, contributing to sustained high air freight rates on trans-Pacific and Asia-Europe trade routes.
• The use of generous "de minimis" thresholds in the US, exempting imports valued up to US$ 800 from duties and tariffs, has come under scrutiny due to extensive utilization by global e-commerce giants.
• Recent actions by US Customs and Border Protection (CBP), such as suspending access to its Type 86 program for customs brokers, reflect heightened scrutiny of low-value import shipments like those from e-commerce platforms.

Global Air Freight Emissions Rise by 25%

• Greenhouse gas emissions from air freight operators have surged by 25% since 2019 due to heightened capacity aimed at faster delivery times.
• Stand.Earth's research reveals the U.S. accounts for 40% of global air freight emissions, with top domestic carriers such as FedEx responsible for over 27% of these emissions in 2023.
• The air freight sector has expanded significantly since 2019, with more planes added and operations extended to 300 additional hubs worldwide.
• Despite global challenges like the Red Sea crisis, demand for air freight remains robust in 2024, reflected in a 110% year-over-year increase in spot rates for certain air cargo routes in May.

Maersk Drops DB Schenker Acquisition due to Integration Challenges

• Maersk has decided against acquiring DB Schenker due to integration challenges identified during their due diligence process.
• This leaves DSV, Bahri, and a consortium of CVC Capital Partners, Carlyle Group, and Abu Dhabi Investment Authority as remaining bidders for DB Schenker.
• The decision was well received in financial markets, with Maersk's shares increasing by 6% and DSV's by nearly 7%.
• DB Schenker, with over 74,000 employees globally, faces challenges including potential job cuts and a lag in logistics infrastructure investment.
• Maersk remains focused on its upcoming Gemini Cooperation alliance and expanding its terminals business and ocean network.
• Analysts and industry experts expressed doubts about the strategic fit of DB Schenker within Maersk’s integrated logistics strategy, citing potential dis-synergies and recent poor performance in logistics and services.

?ONE's New India-Georgia Service via Port of Savannah

• The Port of Savannah and ONE are introducing a new service linking India and Georgia, recognizing India's growing importance as a manufacturing hub.
• This weekly service, named West India North America, connects Bin Qasim, Hazira, Nhava Sheva, and Mundra to New York, NY and Savannah, GA.
• Georgia Ports Authority highlights the efficiency of deliveries from India to East Coast ports compared to West Coast options, reaching inland markets in the Southeast and Midwest faster.
• ONE's service expands Georgia Ports Authority's direct weekly India connections to four, totaling eight services linking Savannah to the Indian Subcontinent.
• India's role in global supply chains has strengthened, attracting major companies like Apple and Cisco to expand manufacturing operations in response to pandemic-related disruptions.

?US Trucking Company Shutting Down Amid Economic Pressures and Market Volatility

• US Logistics Solutions, a trucking company based in Humble, Texas, is closing down after filing for bankruptcy, citing insufficient funding from its lender to sustain operations.
• The closure will result in the loss of approximately 2,000 jobs and the removal of over 500 trucks from the already troubled American trucking market.
• Specializing in transporting apparel and retail goods from warehouses to distribution hubs and stores, US Logistics Solutions utilized a cost-effective approach by consolidating multiple customers' cargo into single trailers.
• The company operated at the intersection of two struggling sectors: trucking, which has faced a prolonged downturn in freight demand, and brick-and-mortar retail, impacted by rising costs and reduced consumer spending.
• Owned by Ten Oaks Group since its acquisition from Forward Air in 2021 for $20 million, US Logistics Solutions aimed to capitalize on its niche market within the logistics industry.
• The sudden closure highlights the ongoing challenges faced by companies in both the trucking and retail sectors amidst economic pressures and market volatility.

The Panama Canal Authority is Increasing Daily Transits Amid Normal Water Levels

• The Panama Canal Authority (PCA) is increasing the number of daily transits for neo-Panamax from eight vessels to nine starting in August 2024.
• Additionally, super-Panamax ships will see an increase in daily booking slots to 19 by late July 2024, allowing for a total of 35 daily ship transits through the canal.
• This expansion follows relief from a drought that reduced water levels in Gatun Lake, prompting the PCA to cut daily transits to as few as 18 last October.
• With water levels now near their historical average, the PCA has eased draft restrictions on neo-Panamax vessels from 45 to 48 feet, enabling ships to carry more cargo.
• The improved conditions have led carriers to reinstate Panama Canal routes previously suspended due to concerns over reduced transit capacity.

MSC Launches New Service Combining Asia-Europe Swan and Sentosa

• MSC is restructuring its Asia-Europe and transpacific services to streamline capacity, launching the Swan-Sentosa service, combining Asia-Europe Swan with transpacific Sentosa.
• The new service will deploy 20 vessels ranging from 8,000 to 19,500 TEU capacity, starting with the MSC Sveva departing Qingdao on July 2nd, 2024.
• Port rotations for Swan-Sentosa include key stops like Qingdao, Ningbo, Shanghai, Long Beach, and Oakland, completing a round voyage in approximately 20 weeks.
• The reorganization will discontinue the current Far East-India-California 'Sentosa-Shikra' service, transitioning Shikra back to a standalone route in seven weeks.
• This move aims to optimize operations and meet shifting demand dynamics across global trade routes.

Trade Groups Seek Help from the Biden Administration as Concern for the ILA-USMX Negotiations Linger

• US manufacturers, distributors, retailers, and trade groups are urging the Biden administration to intervene in stalled contract talks between the International Longshoremen’s Association (ILA) and maritime employers.
• The current six-year master contract involving 45,000 dockworkers along the US East and Gulf coasts and the United States Maritime Alliance (USMX) is set to expire on September 30th, 2024.
• Negotiations hit a snag over Maersk's installation of an auto-gate system, prompting ILA claims of contract violations.
• Concerns are rising over cargo shifts back to West Coast gateways amid stalled negotiations, impacting port operations.

LA-LB Ports Plan to Invest Millions in Charging Infrastructure for Electric Trucks

• The ports of Los Angeles and Long Beach are jointly investing US$ 25 million to develop charging infrastructure for electric heavy-duty trucks servicing Southern California's harbors and warehouses.
• Each port will allocate US$ 12.5 million from their clean truck funds to install up to 207 charging units across the region, managed by the South Coast Air Quality Management District.
• This investment responds to California Air Resources Board (CARB) regulations mandating a transition to 100% zero-emission truck fleets by 2035, a goal supported by trucking associations like the CTA and HTA.
• Funding is derived from a Clean Truck Fund Rate program charging fees on loaded containers, totaling nearly US$ 153 million collected by both ports over the past two years.
• The infrastructure build-out aims to support over 23,000 trucks operating in the harbor and addresses significant charging needs along California's truck corridors, projected to require billions of dollars in investment by 2035.

Sources

Sea Intelligence

JOC.com

JOC.com

Freightos

JOC.com

JOC.com

SupplyChainDive

JOC.com

SupplyChainDive

WSJ

JOC.com

The Load Star

JOC.com

JOC.com