Century Weekly Market Update Oct 30 - Nov 5

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, Trans-Pacific freight rates continued to increase. The EU looked to close ETS loopholes to prevent carriers evading emissions charges. Danish energy company ?rsted announced the cancellation of two offshore windfarm projects in New Jersey, whilst the ports of Halifax, Hamburg, and Valencia are collaborating to establish the first port innovation hub network. Additionally, Boeing experienced a ransomware cyberattack.

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

Carrier Schedule Reliability Records Improvement in September

• Global Carrier Schedule Reliability figures published for September show a reliability of 64.4%, equating to a M/M improvement of 1.2%.
• September’s reliability figures represent the second-highest score of 2023, surpassed only by May when reliability peaked at 66.8%.
• The September 2023 schedule reliability figures, however, represent a 19% improvement Y/Y.
• The reliability recovery in September may be a reflection of a period following a returning to regular port operations following the two-month-long labor turmoil at North American West Coast ports, and before a ramping up in blank sailings prior to China’s Golden Week.
• Maersk and Hamburg Süd ranked as the most reliable carriers scoring 71.3%, overtaking MSC and ending its three-month streak at the top in the process.
• MSC ranks closely behind with a score of 69.8%, whilst CMA CGM, Wan Hai, OOCL, PIL, COSCO, and Evergreen all recorded a reliability above 60%.
• Hamburg Süd achieved the highest Y/Y improvement, scoring 26.8% higher that September 2022.
• In contrast, HMM ranks as the least reliable carrier with a score of just 45.9%, with Yang Ming the only other carrier with a reliability below 50%.

Spectrum of Uncertainty Facing Carriers and Shippers Heading into 2024

• For 2024, there are three major risk categories associated with market forecasts that carriers and shippers should consider according to the Journal of Commerce.
• Supply and demand forecasting: Predicting capacity developments, considering idling of vessels and reduction in sailing speeds, and assessing container demand linked to the economy, which may no longer align with the traditional GDP multiplier.
• Regulatory environment changes: Anticipating the impact of Europe's Emissions Trading System (ETS) and the abolition of the Consortia Block Exemption Regulation (CBER) on carrier behavior and network rearrangement, while accounting for differing interpretations between regulators and carriers.
• Planning for unexpected events: Assessing the potential risks of major shocks, such as temporary closure of vital maritime routes due to geopolitical conflicts, climate-related disruptions, or cyberattacks on ports and carriers.
• How carriers and shippers adapt to identifying these risk categories and subsequently approach them based on the lessons learned from the experiences of the past three years will be a key factor in how effectively they cope with the inevitable unforeseen circumstances of 2024.

Vessel Capacity Utilization Records Further Decline in 2023

• Amidst a period of increased blank sailings and ongoing announcements of further port omissions for the remainder of the year, vessel capacity utilization has been on the decline since June.
• Blank sailings data, however, is not necessarily a true indicator of capacity utilization, as vessels often carry cargo allocated to other trade routes during transits. Nevertheless, relative changes over time can still provide insights as the same constraints apply throughout.
• Data from Sea Intelligence shows the underlying trend of capacity utilization from January 2020 to August 2023, with the orange line representing projected capacity for the rest of the year based upon carriers’ vessel deployment schedules.
• The data and projections show a significant Y/Y growth in capacity being offered by carriers despite a ramping up of blank sailings which seems to have failed in reverting capacity growth as intended, and thus, very low capacity utilization figures are expected to persist throughout the rest of 2023.
• The projected increase in capacity utilization for December 2023 is based on the demand spike seen in December 2019, however, Sea Intelligence admits this projection is highly doubtful amidst a subdued import market ahead of the winter holiday period.

Weekly Blank Sailings Report

Century’s Blank Sailings Report for the week of October 31st – November 5th. 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 593 port omissions during blank sailings, a 9.8% increase compared to the week prior.
• Ningbo recorded the highest amount of port omissions last week with 49, followed by Shanghai with 47 and Singapore with 45.
• Other ports with notably high omissions last week were Busan with 38, Hong Kong with 28, and Qingdao with 23 omissions.
• The Port of Hong Kong recorded the biggest W/W increase in port omissions rising 55.6%
• Looking towards the coming weeks, Century’s data shows a 17.9% decrease in currently scheduled blank sailings for week 46 and further preliminarily decreases for weeks 47 and 48 in the build-up to the winter holiday period.
• Next week’s preliminary data shows notable decreases in port omissions to be expected at ports in Shanghai, Shekou, Singapore, Busan, Kaohsiung, Hong Kong, Jakarta, Jebel Ali, Rotterdam, and Hamburg.

Port omissions data for the most frequently omitted ports during week 45 can be found in the table below:

Our?full Blank Sailings Report for the week of October 31st – November 5th below provides a full list of every current scheduled port omission from Week 45 to Week 52 as of November 6th, 2023. 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 45 Blank Sailings Report

Trans-Pacific Freight Rates Increase for a Second Week in a Row

• Transpacific freight rates for both the US East Coast and US West Coast increased for a second consecutive week as the Global Container Freight Index rose 7% W/W.
• Rates from China/East Asia to the US East Coast increased by 7% W/W to US$ 2,357.
• Rates from China/East Asia to the US West Coast increased by 3% W/W to US$ 1,609.
• Similarly, freight rates from China/East Asia to Europe also increase last week, with rates to North Europe shooting up by 18% W/W to US$ 1,249, whilst rates to Southern Europe bucked an eight-week trend of decline to instead rise by 13% W/W to US$ 1,551.

Scramble to Acquire Yellow’s Redistributed Business not a Sign of Actual Market Growth

• US less-than-truckload (LTL) companies are preparing for future capacity expansions through increasing the number of terminals and doors within their networks across the US.
• Following the collapse of Yellow, the country’s second-largest LTL provider, earlier this year, the redistribution of its assets and vacant terminals has triggered a race to not only fill the immediate gap but also secure assets and capabilities for long-term needs.
• XPO, the US’s third largest LTL provider by revenue, has recently commenced preparations for a new 32,000 sqft 60-door service center in Florida, scheduled to open by Spring 2024.
• The new facility is critical for XPO as it experiences an influx of redistributed freight from Yellow. XPO’s daily LTL shipments increased by 4.7% between Q2 and Q3 of 2023 and are currently 7.9% higher than the same period last year.
• Other LTL carriers such as ODFL and Estes Express are also expanding their networks following Yellow’s collapse, as they prepare to compete for the 160 vacant facilities at an auction later this month.
• LTL carriers across the country are looking to acquire a larger share of the market in Yellow’s absence, leading to a reported increase in shipment counts. However, there are no indications of actual LTL growth or a true recovery, as the individual success of LTL carriers is primary dependent on absorbing redistributed business from Yellow rather than an upswing in demand.

Cargo Volumes at Jacksonville Port Rise 16% in September

• The Jacksonville Port Authority (JPA) reported a 16% Y/Y rise in cargo volumes for September, attributing the growth to the addition of new services at the port.
• In September, the Jacksonville port handled a total throughput of 114,747 twenty-foot equivalent (TEUs), with the introduction of MSC’s and Ellerman City Liner’s new European container services playing a significant role in the volume increase.
• The upsizing of vessels on the EC5 Asian service operated by ONE has also contributed to the creation of additional capacity.
• While the port experienced a slight decline in volumes M/M, with a decrease of under 400 TEUs, the comparison to 2019 volumes shows a double-digit increase in TEUs.
• The Jacksonville Port joins the ranks of the top ports on the US East Coast, as well as Los Angeles/Long Beach and the Northwest Seaport Alliance, in reporting Y/Y cargo volume growth for September.

ETS Looks to Close Neighboring Port Loopholes Amidst Concerns Over Evasion Strategies

• There is growing concern regarding potential evasion strategies by carriers in response to the upcoming EU Emissions Trading System (ETS). Actions such as calling at non-EU ports to reduce costs associated with ETS compliance could undermine EU competitiveness.
• Starting on January 1st, 2024, carbon-related charges will be implemented for all vessel emissions on maritime trade routes starting and ending at EU ports, as well as 50% of emissions for routes starting or ending at an EU port.
• In anticipation of these charges, carriers have begun considering changes to their shipping patterns in Europe, including increased calls at non-EU ports to save on ETS charges. This has raised concerns among EU forwarders about potential disinvestment from EU ports.
• Some Mediterranean ports have already seen a reduction in vessel traffic and cargo volume as carriers adjust their schedules ahead of the ETS rollout.
• To address these concerns, the European Commission is moving to close the neighboring ports loophole ahead of January 1st, developing an ETS order that excludes non-EU ports close to EU borders.
• Non-EU neighboring container transshipment hubs will not be classified as a “port of call” if they are within a 300 nautical mile radius of an EU port and have a transshipment activity greater than 65% of the total annual volume handled by the EU port.?
• The ETS will close loopholes with Mediterranean transshipment hubs such as Tanger Med and Port Said to prevent carriers travelling from South America and Asia etc. from trying to use the hubs to reduce their emissions charges by “shortening” their journey to EU ports.

ONE Embarks on Rapid Expansion of its India Network Amid Signs of Export Recovery

• Ocean Network Express (ONE) is expanding its network in India to take advantage of the perceived rebound in export trade as the subcontinent shows early signs of recovery.
• ONE has introduced a new routing called the India-Oman-Mediterranean (IOM) service, starting from January 14th, 2023. The weekly loop will include major ports in India, Pakistan, Saudi Arabia, Egypt, Greece, Italy, and Spain.
• The port rotation is as follows: Nhava Sheva – Mundra – Karachi – Jeddah – Damietta – Piraeus – Genoa – Valencia – Barcelona – Piraeus – Damietta – Jeddah – Karachi – Mundra – Nhava Sheva.?
• In addition, ONE has launched the Southeast Asia-India-Gulf (SIG) shuttle, which will begin operations on November 16th. The service offers comprehensive connections for transshipment trade, with ports including Singapore, Nhava Sheva, Mundra, Dammam, Jebel Ali, Cochin, Colombo, and Singapore.
• Alongside the new services, Indian container volumes have shown a positive trend, reaching 1.8 million TEUs in September, up from 1.6 million TEUs in the previous year.

Boeing Impacted by Cyber Attack, Disrupting Global Services

• Last week, multinational aerospace designer and manufacturer Boeing experienced a cyber attack that disrupted its global services division.
• According to a Boeing spokesperson, the attack has affected elements of their parts and distribution business but has not had any impact on flight safety.
• As of now, Boeing has not yet filed a disclosure with the Securities and Exchange Commission, so no official details about the nature of the cyber-attack, its identity, or the outcome have been made public.
• Ransomware group, LockBit, is taking credit for the attack and has reportedly threatened to leak sensitive data from Boeing if their ransom demands are not met.
• At this time, Boeing is actively investigating the cyberattack and is in coordination with law enforcement and regulatory authorities.

New Baltimore Container Terminal on Course for Debut in 2028

• The construction of a new container terminal at the Port of Baltimore, supported by Mediterranean Shipping Co. (MSC), is progressing as planned, with expectations for it to be operational and ready to receive ships by 2028.
• The Sparrows Point Container Terminal project involves dredging the shipping channel leading to the proposed terminal to a depth of 50 feet. Permitting for this project is currently underway in collaboration with the US Army Corps of Engineers.
• The terminal covering 168 acres, will feature a 3,000-foot wharf capable of accommodating two post-Panamax ships simultaneously and nine ship-to-shore cranes as well as an additional 162 acres of adjoining warehouse and storage space.
• With the addition of the new terminal, the Port of Baltimore’s capacity will be effectively doubled, reaching 2.5 million TEUs annually, solidifying its position as a top-tier port on the US East Coast.
• The site will be equipped with 2,900 feet of working track for intermodal train service, connecting to the US Midwest through the Howard Street Tunnel which, once raised in height, will be used by CSX to offer double-stacked container service out of Baltimore.

Two New Jersey Offshore Windfarm Projects Cancelled Citing Supply Chain Issues

• Danish energy company ?rsted recently announced the cancellation of two offshore wind projects in New Jersey. The decision was attributed to inflationary interest rates, timeline issues, and delays stemming from supply chain-related challenges.
• Ocean Wind 1 and 2 were ?rsted’s largest wind projects in development with a planned capacity of over 1,100-MW for each, however, ?rsted’s CEO announced the ceasing of development on Tuesday October 31st, 2023.
• Supply chain issues were cited to have played a significant role in the decision, with a market-wide lack of vessel availability needed for construction anticipated to had led to a multi-year delay for the entire Ocean Wind 1 project.
• ?rsted still has six other offshore wind projects in development across the US and announced that it will be progressing with its windfarms in Connecticut and Rhode Island.

Ports of Halifax, Hamburg, and Valencia Create First Port Innovation Hub Network

• The innovation hubs at the ports of Halifax, Hamburg, and Valencia announced at the end of October that they have commenced work on the design, and implementation, of the world’s first network of port innovation hubs.
• The goal of the Canadian, German, and Spanish ports is to establish a global network of port innovators through their partnership to drive innovation adoption globally across the global port system.
• The network will connect communities of innovation centers including universities, researchers, investors, companies, start-ups, entrepreneurs etc., to share innovative ideas, project results, experiences, methodologies, and best practices.
• Through the network, the ports intend to facilitate cross-learning to help improve services to global maritime shipping and their respective local communities
• The three ports are in the final stages of designing the network and aim to publicly launch it within the next few months.

Hapag-Lloyd to Enhance its Adriatic Sea Express Service

• Hapag-Lloyd has announced that from December 2023, it will be enhancing its Adriatic Sea Express (ADX) service to include an additional port of call in Egypt via the Port of Alexandria.
• The ADX service offers direct connections between Italy and Egypt via Slovenia, Croatia, and Greece.
• Alexandria will join Damietta as the second port of call in Egypt, matching the two ports of calls in Italy which include Ancona and Venice.
• The first port of call under the new rotation is expected at the Port of Piraeus in Greece on December 3rd, 2023.
• The enhanced port rotation is as follows: Piraeus – Alexandria – Damietta – Koper – Venice – Rijeka – Ancona – Piraeus.

Sourcing

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Sea Intelligence

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Supply Chain Dive

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