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 declined W/W for the fourth consecutive week, decreasing by another 4%. Global shipping faced major capacity reductions, Norfolk Southern Railroad faced and continues to face disruptions due to Hurricane Helene, and the International Longshoremen’s Association (ILA) negotiations with the United States Maritime Alliance, Ltd. (USMX) continued facing challenges. Additionally, hospitals in US have been rationing IV fluids due to a shortage caused by recent disruptions.
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:
Frontloading and Falling Freight Rates Impact Asia-to-US Imports
- Retailers frontloaded their holiday imports in August to avoid potential disruptions from a strike on the US East and Gulf coasts, leading to weaker-than-normal import demand from Asia for the remainder of the year.
- The heavy frontloading contributed to a sharp drop in Asia-to-US freight rates, with East Coast rates down 49% and West Coast rates down 25% since August 30th, nearing parity between the two coasts, which is unusual.
- Carriers are facing skepticism about maintaining a planned rate increase, as import demand is expected to remain low and ad hoc “bullet” rates are being offered to undercut official spot and FAK rates.
- Peak season surcharges, initially set at US$ 2,000 per FEU in May 2024, are expected to decrease to around US$ 1,200 to US$ 1,500 by November 1st, 2024, putting further pressure on overall freight prices.
- West Coast import volumes are expected to remain elevated through October due to the earlier holiday frontloading, but volumes are likely to decline into November, with the market entering a quieter period until the pre-Lunar New Year shipping spike in December.
India-US East Coast Trade Facing Softening Demand and Rate Adjustments
- Carriers on the India-US East Coast trade are offering special rate deals to large-volume customers in an effort to keep vessel loads close to full capacity amid softening market demand.
- Spot rates on this trade have dropped as much as US$ 1,000 per container W/W, with booking quotes ranging between US$ 3,000 per TEU and US$ 3,400 per FEU depending on the carrier.
- Major carriers such as Maersk, OOCL, Cosco, and HMM are competing, pushing rates lower as they try to maintain their market share in a weakening demand environment.
- Despite initial plans to raise rates in October, all attempts at rate increases have been postponed until November, as carriers try to manage the fluctuating demand.
- Carriers are struggling with slow booking inquiries and are maintaining a buffer to account for last-minute cancellations or no-shows, which is further contributing to price instability on this trade lane.
Truckload Spot Rates Surging in the US Southeast Amid Hurricanes Helene and Milton
- Spot truckload rates, including dry-van, refrigerated, and flatbed, are rising across the US, particularly in the Southeast, due to the destruction caused by Hurricane Helene and Hurricane Milton.
- The aftermath of these hurricanes has tightened trucking capacity and pushed up rates, even though the total number of loads posted has dropped, as trucks are moving more slowly due to damaged infrastructure and road closures.
- In the Southeast, spot linehaul rates increased by an average of 10 cents per mile post hurricane, with specific markets like Atlanta seeing spot rates rise by 7 cents, despite a decrease in load volumes.
- The truckload market, already approaching supply-demand equilibrium, is expected to see continued price hikes and tighter capacity, which could drive rates even higher in the coming months.
- National spot rates have surged as a result, with Truckstop.com and FTR Transportation Intelligence reporting the sharpest W/W rate increase for Week 40 since 2008, and total load activity rising by 7.6% across the country.
Weekly Blank Sailings Report: ?
Century’s Blank Sailings Report for the week of October 7th – October 13th. 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 648 port omissions, a 7.1% increase compared to the week prior.
- Shanghai recorded the highest amount of port omissions last week with 76, followed by Ningbo with 75 and Singapore with 38.
- Other ports with notably high omissions last week were Busan with 33 and Shekou with 31, and Yantian with 29.
- Laem Chabang saw a significant increase in blank sailings W/W, increasing by 120%, from 10 to 22 blanks.
- Looking towards the coming weeks, Century’s data shows only a 2% decrease in currently scheduled blank sailings for week 42.
- Next week’s preliminary data shows notable increases at Hong Kong, Port Klang, and Singapore.
Port omissions data for the most frequently omitted ports during week 41 can be found in the table below:
Our?full Blank Sailings Report for the week of October 7th – October 13th below provides a full list of every current scheduled port omission from Week 41 to Week 51 as of October 14th, 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.
?Week in Review:
Global Container Freight Index Decreases for Fourth Week in a Row
- The Global Container Freight Index has dropped for four consecutive weeks with this week’s rates decreasing by 4% W/W to US$ 3,628.
- China/East Asia to North America East Coast rates decreased by 1% W/W to US$ 6,787.
- China/East Asia to North America West Coast rates dropped by 3% W/W to US$ 5,565.
- The only other major routes that saw W/W increases were: North America West Coast – China/East Asia, and North Europe – China/East Asia, and North Europe – North America East.
- The Europe – South America East Coast route was the only lane to have steady W/W rates.
US East Coast Port Strike Impacting Global Shipping Capacity
- A recent 3-day strike by the International Longshoremen's Association in US East Coast ports has ended with a tentative agreement, but the final resolution is still pending until January 15th, 2025.
- Despite the short duration of the strike, vessels queuedwhich is likely to cause about a week of reduced shipping capacity as ports work to clear the backlog.
- Exporters from Asia to the US East Coast could experience a temporary capacity drop of up to 40%, while North European exporters might see a 30% reduction if delays persist for a full week.
- Mediterranean exporters could face capacity losses of 10% to 25%, depending on whether the backlog is cleared in 3 days or stretches to a week.
- Shipping lines are unlikely to speed up vessels or take other actions to mitigate the short-term capacity reduction, meaning exporters should prepare for temporary shipping delays.
Challenges Ahead in ILA and USMX Contract Negotiations
- The International Longshoremen’s Association (ILA) and US East and Gulf coast employers have until January 15th, 2025, to negotiate complex issues such as automation, royalties, work rules, and job jurisdiction.
- The three-day strike ended with a provisional agreement on wage increases, but it only addresses salaries, leaving other key issues unresolved for future negotiations before the January 15th deadline.
- Despite over 10 failed attempts by the United States Maritime Alliance (USMX) to restart negotiations since June, the ILA has not returned to the table, leading USMX to file an unfair labor practices case to force talks to resume.
- The ILA’s demand for an "absolute" ban on port automation remains a major sticking point, with the USMX resisting, as automation is seen as essential for terminal densification and future trade growth, especially in the face of limited land and capacity at US ports.
- Carriers argue that without the ability to densify terminals through automation, handling increasing American consumer demand and exports will be nearly impossible, making this a critical issue for growth opportunities in the US market.
- The USMX’s attempt to engage in direct, face-to-face, wage negotiations with the ILA during the recent strike failed, which has highlighted the unprecedented challenges both sides face in agreeing on a final contract.
?Port of Tampa Bay Reopens After Closing for Hurricane Milton
- The Port of Tampa Bay reopened vessel operations on Saturday, October 12th, after being closed for several days due to power loss caused by Hurricane Milton, with vessel movement currently restricted to one-way travel during daylight hours.
- Engineering firm Woolpert conducted a survey to clear storm debris from the shipping channels, ensuring safe navigation before operations resumed.
- Power was restored to all seven fuel terminals on Friday, October 11th, allowing the port to perform safety tests for fuel discharge.
- Commercial traffic is now being queued for full operations, with priority given to fuel tankers, cruise ships, and vessels carrying perishable cargo.
Norfolk Southern Faces Prolonged Disruptions Due to Hurricane Helene Damage
- Norfolk Southern’s rail line between Asheville, North Carolina, and Newport, Tennessee, will remain closed until at least late January, with extensive damage to tracks and bridges from Hurricane Helene.
- Assessments of the hardest-hit areas found 21,500 feet of track washed out, 50,000 feet damaged by scour, and 15,000 feet affected by fill failure and slides, along with multiple damaged bridges.
- While key segments between Morristown and Newport, Tennessee, and Salisbury and Old Fort, North Carolina, have reopened, ongoing assessments are still being conducted on parts of the route through mountainous terrain.
- The challenging topography and remoteness of the damaged areas around Asheville and Black Mountain are complicating the repair and assessment processes.
- Norfolk Southern’s engineering team cleared over 15,000 trees, repaired washouts and slide fences, and deployed 400 generators to restore core routes within 72 hours of the hurricane's landfall, showcasing their efforts to reconnect affected communities.
- The company’s commitment to recovery is evident as their teams work to safely restore service and maintain the movement of critical goods despite the challenging conditions.
?MSC CEO Highlights Standalone Network and Global Strategy
- MSC CEO emphasized the company's shift towards a standalone point-to-point network after its departure from the 2M Alliance with Maersk, allowing MSC to better respond to decentralized cargo flows driven by diversified consumer demand and supply chains.
- MSC's new alliance-free network, with expanded port coverage, aims to provide greater operational flexibility, offering more than 1,900 direct port connections, enabling the carrier to swiftly adapt to future market disruptions.
- MSC's recent acquisition of a 49% stake in Hamburg's HHLA, underlines the company's commitment to port investment, not solely for profit but for network control, operational efficiency, and growth.
- The CEO also pointed out that while port investments are crucial, global ports have not seen significant improvements in productivity over the past decade, and more technological advancements are needed to drive efficiency and growth.
- Unified global regulations on fuel emissions were also called for due to a patchwork of local rules that would increase operational costs and complicate compliance for global shipping companies.
?Singapore to Lead Global Bunkering with Mandatory Digital Services and e-BDNs by 2025
- Starting April 1st, 2025, all bunker suppliers in Singapore will be required to provide digital bunkering services and issue electronic bunker delivery notes (e-BDNs) by default, enhancing transparency, efficiency, and compliance in the sector.
- This follows successful pilot programs initiated in 2023, with support from major bunker players and recognition from the International Maritime Organisation (IMO), positioning Singapore as the first port to implement digital bunkering at scale globally.
- The Maritime and Port Authority of Singapore (MPA) expects the shift to digital processes to expedite operations, reduce errors, detect fraud early, and save the Singapore industry an estimated 40,000 man-days annually.
- To further ensure transparency, a centralized e-BDN verification facility will be launched, alongside new standards like the Singapore Standard (SS) 709 for digital documentation, and updates to the existing SS 648 for Bunker Mass Flow Metering to meet the new digital era's demands.
- In a cost-saving move, MPA will reduce the frequency of mass flow meter verifications from twice to once a year starting 2025, saving the local industry approximately $300,000 annually.
- As part of its multi-fuel strategy, the Port of Singapore is preparing for future fuels like methanol and ammonia, conducting successful operations and developing related standards for alternative fuel bunkering, expected to be finalized by 2025.
?Maersk and Hapag-Lloyd Ditch Suez Canal in 2025, Focusing on Southern Africa Route
- As Maersk and Hapag-Lloyd prepare to launch their Gemini Cooperation network on February 1st, 2025, they have opted to eliminate the Suez Canal from their routing options for Asia-Europe shipments, favoring the longer transit around southern Africa.
- This decision reflects a cautious outlook on the safety of Red Sea transits amid ongoing concerns, with Maersk CCO emphasizing the need for lead time certainty for shippers planning their 2025 contracts.
- The Gemini Cooperation network will offer alternative routes via the Cape of Good Hope, ensuring a more reliable service for shippers in the face of ongoing geopolitical uncertainties in the region.
- Felixstowe will serve as the British hub for the Gemini network, featuring three weekly calls, while other European hubs include Rotterdam, Hamburg, Bremerhaven, and Wilhelmshaven.
- In Asia, the network will focus on major ports in China and Malaysia, with plans for multiple weekly calls to maintain operational efficiency.
- The carriers aim to achieve 90% schedule reliability through a combination of owned and operated shuttles and terminals within the Gemini network.
Emissions Reduction in Shipping: Trends and Challenges for Supply Chain Companies
- Global maritime regulators have set an interim target for a 20% reduction in ship emissions by 2030, prompting ocean carriers to invest in 1.2 million TEUs of dual-fuel ship capacity capable of using low- to zero-emission fuels like methanol and LNG.
- Significant investments in sustainable shipping are illustrated by the US$ 150 million cost of vessels like the Alexandra Maersk, which supports the shift to greener operations amidst rising regulatory pressure.
- The International Maritime Organization (IMO) is under pressure to provide regulatory support and clarity on alternative fuels, which is crucial for driving a large-scale transition to zero-emission solutions in the shipping industry.
- The lack of fuel availability is currently a major barrier to sustainable shipping, with companies like MSC emphasizing that the challenge lies in securing a reliable supply of low-emission fuels, rather than in ship technology itself.
- Maersk's recent decision to order dual-fuel vessels that can operate on both methanol and LNG highlights the importance of maintaining flexible fuel options to adapt to changing market conditions and regulatory requirements.
- As the transition to cleaner energy continues, companies may face increased costs, as green fuels can be significantly more expensive than traditional fuels, necessitating strategic decisions to manage these changes within supply chain operations.
Impact of Supply Chain Disruptions on Hospital Operations
- Hospitals in the U.S. are currently rationing critical intravenous (IV) fluids and delaying surgeries due to significant supply chain disruptions caused by Hurricane Helene and ongoing threats such as the respiratory virus season.
- Baxter International, a key manufacturer of IV fluids and dialysis solutions, faced temporary closure at its North Cove facility in North Carolina due to severe weather, impacting its ability to meet supply demands.
- Although Baxter has resumed distribution and increased allocations for essential IV fluids to as much as 60% of typical order volumes, many healthcare providers still rely on special protocols to manage ongoing resource constraints.
- Hospitals, like Mass General Brigham in Boston, MA, are implementing emergency operations plans and making medication substitutions to conserve supplies, highlighting the precarious nature of current healthcare operations amid ongoing shortages.
- The situation remains fluid, with healthcare providers on high alert and adjusting strategies continuously as they navigate supply constraints and changing circumstances in the healthcare environment.
