Century Weekly Market Update Sep 18 - Sep 24

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 experienced a significant drop. US agricultural exports struggled against lower competitor pricing. In addition, Maersk and CMA CGM announced their collaboration on decarbonizing the shipping industry, while Hapag-Lloyd commenced the installation of its satellite internet technology on all its vessels. Also, Estes Express cemented itself in pole position to win Yellow’s assets at auction.

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

Consumer Spending Shifting Back Towards Non-Containerized Goods Post-Pandemic

• The latest statistics from the US Bureau of Economic Analysis (US BEA) have revealed that consumer demand is shifting back towards the preference for services and experiences, as seen in 2019, following three years of more goods-orientated behavior during the pandemic.
• The shift in demand back towards the consumption of non-containerized products has exacerbated the sentiment of a “missing’ traditional peak season in 2023 which all but failed to materialize except for a short-lived uptick in spot rates in July and August.
• The graph below from the US BEA shows a clear distinction in the demand growth for recreational goods whilst while food and beverages purchased for off-premise consumption, have seen the sharpest decline in demand and demand for clothing and furnishings (typically containerized cargo) has stagnated.
• The US BEA has stated that the largest demand growth is being seen for the video, audio, information, and media category, especially for information processing equipment and computer software; goods which are not typically shipped in containers.
• This shift in consumer spending behavior paints a rather pessimistic picture for container demand in the near future, presenting yet another challenge for the containerized supply chain industry.

Rate of Trans-Atlantic Blank Sailings Set to Slow Down in October

• The rate of Trans-Atlantic blank sailings is anticipated to ease in October despite the prevalence of excess supply and soft demand which is pushing rates well below pre-pandemic levels to the point of unprofitability.
• Last week, average North Europe-US East Coast spot rates were 40% lower than during the same period in 2019.
• Currently, carriers are scheduled to blank a combined 20,664 TEUs in October, equating to just 2.8% of the available capacity and an 8% decrease from September’s blank sailings rate.
• As of September 20th, 2023, the average spot rates from North Europe-US East Coast sat at just US$ 1,385 per FEU, according to Xeneta, 38% lower than during the same period in 2019.
• The current loss-making spot rates make it ever the more surprising that carriers are so reluctant to make any significant cuts to their capacity, especially considering the warnings given by MSC and Hapag-Lloyd, amongst others, that westbound shippers should prepare for a sharp increase in blank sailings.
• Scheduled blank sailings for November are currently at just 0.4% of capacity, however there is still plenty of time for Trans-Atlantic carriers to add to the current 2,967 FEUs of blanks.

Disruption of Backhaul Trade due to Golden Week Blank Sailings

• The increased blank sailings by carriers in the build up to China’s Golden Week is having the unforeseen consequence of disrupting backhaul trades.
• Whilst carriers have been focusing on the much more revenue significant headhaul, vessel movement from port of origin to port of destination only, the neglecting of backhaul trade, moving the same vessel from the destination back to its origin, has become an increasingly pressing issue in the background.
• Reduced schedule reliability, increased inventories, and higher costs have all occurred as a result of the sudden ramping up of blank sailings, however the backhaul disruptions were not as widely anticipated.
• Through the cancelling of headhaul sailings, the backhaul freight is lost as a consequence, introducing a new layer of complexity to shippers’ blank sailings decisions which was not previously anticipated.
• With trade prices on North Europe-Asia currently hitting new lows, carriers are looking to raise the rates of backhaul trades back up to a level of profitability, otherwise the next opportunity for rate increases will be as far away as during the Chinese New Year build-up.

Weekly Blank Sailings Report

Century’s Blank Sailings Report for the week of September 18th – September 24th. 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 470 port omissions during blank sailings, an 81% increase compared to the week prior.
• Shanghai and Ningbo jointly recorded the highest amount of port omissions last week with 42.
• Other ports with notably high omissions last week were Singapore and and Busan with 40 and 23 port omissions, respectively.
• Looking towards the coming weeks, Century’s data shows an increase of blank sailings scheduled for weeks 40 and 41, both currently scheduled to record an increase of at least 12.5% in port omissions during the build up to China’s Golden Week.
• Next week’s preliminary data already shows that a ramping up in port omissions should be expected at ports in Shanghai, Shekou, Xiamen, Yantian, Hong Kong, Port Klang, Kaohsiung, Vung Tau, and Manzanillo.

Port omissions data for the most frequently omitted ports during week 39 can be found in the table below:

Our?full Blank Sailings Report for the week of September 18th – 24th below provides a full list of every current scheduled port omission from Week 39 to Week 49 as of September 25th, 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 39 Blank Sailings Report

Week in review

Trans-Pacific Freight Rates Continue to Slide at an Increasingly Sharper Rate

• Transpacific freight rates have continued to slide at an increasingly sharper rate as China’s Golden Week fast approaches.
• Rates from China/East Asia to the US West Coast decreased 5% W/W to US$ 1,778.
• Rates from China/East Asia to the US East Coast dropped by 5% W/W to US$ 2,650.
• Freight rates from China/East Asia to Northern Europe have tanked over the last week, plummeting 34% W/W to US$ 996, whilst rates to Southern Europe also continued their decline, dropping 4% W/W to US$ 1,751.

• US Agricultural Exports Stunted Amidst Reduced Demand and Lower Competitor Pricing
• Containerized agricultural exports from the US fell to 730,349 TEUs in the first half of 2023, the lowest export levels for seven years equating to a 13.6% decline Y/Y.
• Lower demand from China, the largest importer of US agricultural goods, as well as higher pricing positioning relative to competitors and carriers pivoting towards serving export markets away from the US, are being cited as key factors behind the decline.
• US agricultural exports to China are anticipated to drop 10% during the 2023 fiscal year, for goods including US beef, for which prices have remained high due to tight domestic supplies.
• Soybean exports have seen the largest decline so far this year, with producers in the US facing a strong challenge from high crop production and cheaper export prices from Brazilian producers.
• The Port of Houston recorded the largest decline of agricultural exports Y/Y at 34.9% amidst increased competition for cotton exports from Brazil and Australia, whilst the ports of LA/LB and Seattle-Tacoma recorded 28.9% and 10.3% declines in agricultural exports, respectively.
• The current downturn is hampering carriers’ plans to offset falling import volumes with increased export containers; CMA CGM previously pledged more vessels and equipment to service US agricultural exports in 2023, however, due to the declining volumes, the French carrier has actually carried a 19% decrease in volumes compared to the first half of 2022.

Port of Los Angeles Records First Cargo Volume Increase in 13 Months

• The Port of Los Angeles saw a 3% Y/Y growth in cargo volumes in August 2023.
• The 828,016 TEUs that passed through the US’s largest port represented the first increase in container volume in 13 months.
• The recent ratification of the new six-year contract between the International Longshore and Warehouse Union and the Pacific Maritime Association is cited as a key factor driving the current growth.
• The ratification, which brought an end to an 11-month labor dispute, has seemingly brought back stability to the port and restored customer confidence over its cargo handling capabilities.
• Despite the increase in volumes, the soft import market persists as shippers continue to struggle with excess inventory levels and sustained weakened demand.

Estes Express Wins Bidding War for Control over the Sale of Yellow’s LTL Terminals

• The US’s fourth largest LTL provider, Estes Express, has outbid their industry rival, Old Dominion Freight Logistics (ODFL), to sit in pole position for the sale of the now defunct Yellow’s vacant LTL terminals.
• Este’s newly revised bid of US$ 1.525 billion topped ODFL’s US$ 1.5 billion at a US bankruptcy court ruling in Delaware on September 21st, 2023.
• The ruling now means that Estes’s “stalking horse” bid enables them to control which terminals to keep for themselves and which terminals to sell at auction.
• Estes’s “stalking horse” bid sets a new, and higher, floor price for Yellow’s assets which now cannot be under-bid by their rivals at auction, however, competition from industry rivals, including ODFL, means the final winning bid may be much higher.
• The auction for bids on Yellow’s rolling stock has been set for October 18th by the bankruptcy court, whilst the auction for its real estate is scheduled for November 28th.

Air Cargo Rates Fall to their Lowest Rates Since Before the Pandemic

• Global air cargo recorded the lowest spot rates in over three years in August at US$ 2.19 per kg.
• Eight of the top ten major air cargo trade lanes recorded declines over the past month, with only China-US and Southeast Asia-US lanes recording spot rate growth of 3% and 4%, respectively.
• Xeneta attributes the decline to softened demand amongst a more resilient US economy as well as a disappointing peak season and the delayed recovery of US-China belly space capacity.
• Xeneta anticipates that there will be an upward pressure on air cargo rates in the second half of October 2023 once capacity is taken out of the market amidst China’s Golden Week aftermath.

Hapag-Lloyd to Enhance Connectivity at Sea with Roll Out of Starlink Internet Service

• Hapag-Lloyd is set to roll out its Starlink satellite internet technology across its fleet following the completion of its successful pilot phase.
• Starlink satellite internet is set to enhance the efficiency and safety of Hapag-Lloyd’s fleet through bringing significant improvements to communications for seafarers via seamless video calls and streaming services.
• Starlink offers a bandwidth of up to 250 megabits per second to enable Hapag-Lloyd to conduct remote maintenance and vessel inspections
• Installation of the technology is set to be completed on all Hapag-Lloyd vessels by the end of 2023 and be ready for activation by early 2024.

Maersk and CMA CGM Collaborate to Accelerate Shipping Industry Decarbonization

• Ocean carriers Maersk and CMA CGM have joined forces to enable each other to ensure the decarbonization of the shipping industry.
• The two carriers have set an ambitious Net Zero target and will collaboratively engage with regulatory stakeholders to establish a robust and sustainable regulatory GHG framework.
• In the pursuit of decarbonization, Maersk and CMA CGM will increasingly utilize alternative greener fuels for container vessel propulsion and invest extensively in energy transition.
• Both carriers have been investing into alternative fuels, with Maersk ordering bio/e-methanol operated vessels and CMA CGM ordering LNG-propelled vessels which can also be operated using bio/e-methane – the new green equivalent to LNG.
• Maersk and CMA CGM have also extended the invitation to join their commitment to decarbonization to other international shipping lines interested in cooperating with the regulatory institutions.

ZIM Unveils Latest Service Leveraging Port of Savannah’s Growing Cold Storage Network

• ZIM has leveraged the Port of Savannah’s expanding refrigerated network capabilities to open up a direct connection from the US East Coast to the South American West Coast.
• The new Colibri Xpress refrigerated service has been developed to provide further support for the increasingly high-demand perishables market.?
• The Georgia Ports Authority (GPA) stated that the new service will enable chilled goods imported into the US from South America to reach East Coast and Midwest markets faster and fresher in comparison to alternative ports of entry.
• The GPA is targeting major growth in fresh produce imports from the South American West Coast and is making increasing investments into its cold storage infrastructure.
• Savannah is currently capable of powering over 3,000 refrigerated containers simultaneously, and its ever-expanding network includes cold treatment, fumigation, repacking, and more.

CMA CGM Updates its Asea Kenya Service

• CMA CGM has updated its Asea Kenya service to offer a direct weekly call at Qingdao Port.
• The updated service will offer a faster transit time from North China to Kenya.
• The French carrier has stated that the transit time to Mombasa will be 27 days from Qingdao, 24 days from Shanghai, and 20 days from Nansha.
• The first vessel to arrive in Qingdao will be the 2005-built Emmanuel P schedule for October 9th.
• Updated port rotation is as follows: Qingdao – Shanghai – Ningbo – Nansha – Singapore – Port Klang – Mombasa – Singapore – Qingdao.

Port of Oakland Records a 15% Drop in Cargo Volume in August

• The Port of Oakland recorded cargo volume of 179,161 TEUs in August amidst a slowdown in demand from retailers, manufacturers and shippers.
• August 2023’s figures represent a 15% drop Y/Y for cargo volume at the US West Coast port.
• The Port of Oakland has stated that it has been experiencing this downward trend since late 2021, however it is optimistic about increasing agricultural exports in the near future.
• The August figures are a stark contrast to the port’s July 2023 volume of 181,555 TEUs, which equated to the highest amount of cargo handled since November 2022.
• On a positive note, the Port of Oakland has experienced an encouraging trend of continued growth in the number of vessels calls throughout 2023, indicating better on-time performance of ships and reduced congestion at both the dock and inland warehouses.

Sources

Container News

Freightos

Hapag-Lloyd

Journal of Commerce

Journal of Commerce

Journal of Commerce

Journal of Commerce

The Load Star

Sea Intelligence

Supply Chain Dive

Supply Chain Dive

Supply Chain Dive

SWZ Maritime