Century Weekly Market Update Sept. 2 - Sept. 8

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, along with most major freight lane rates. The Teamsters challenged the Canadian federal order that ended the rail worker stoppage and imposed binding arbitration, Germany’s Union recommended acceptance of a revised wage offer to end port strikes, and South Korean feeder operators have been offering discounted slots for intra-Asia freight. Additionally, the Port of Baltimore hired former New Orleans COO as Deputy Executive Director for Commercial Development.

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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Rising Volatility in Asia-North Europe Vessel Capacity Presents Growing Challenge for Shippers

• Weekly container vessel capacity can fluctuate significantly, especially during periods like Chinese New Year and Golden Week, making it difficult to identify long-term trends.
• A 52-week rolling analysis shows that the Asia-North Europe trade has experienced a threefold increase in capacity volatility over the past decade, from a relatively stable 10% pre-pandemic to much higher levels today.
• This increased volatility in Asia-North Europe makes it challenging for shippers to rely on stable capacity, emphasizing the need for more robust contingency planning.
• In contrast, the Transpacific trades, particularly between Asia and North America's West Coast, have seen less capacity fluctuation and remain more stable over the same period.
• Between September 2023 and August 2024, the standard deviation (the average distance from the mean) of weekly capacity on Asia-North Europe was nearly 90,000 TEU. In comparison, Transpacific routes averaged around 50,000 TEU, while Asia-Mediterranean routes had a deviation of 34,000 TEU per week.

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Growing Volatility in FEU-TEU Spread Highlights Need for Close Cost Monitoring in 2024

• The spread between shipping a 40ft container (FEU) and a 20ft container (TEU) has seen significant fluctuations in 2024, peaking at US$ 3,596 for Far East to North Europe in mid-July.
• Contrary to expectations, the cost of shipping an FEU is not simply double that of a TEU, making the FEU-TEU spread a critical factor for shippers to monitor, especially for index-linked contracts.
• Shippers who moved 40ft containers against a TEU index during periods of high spread risked significant overpayments, such as an additional US$ 1,409 on the Far East to North Europe route in July 2024.
• The FEU-TEU spread has been exacerbated by disruptions like the Red Sea conflict and port congestion, leading to higher spot rates, especially on Far East to North Europe trade lanes compared to Mediterranean routes.
• The spread between FEU and TEU costs for North Europe and Mediterranean routes has grown, with the largest difference of US$ 1,407 recorded in mid-August 2024, making cost monitoring essential for shippers.
• Although shipping rates peaked in July 2024, the market is expected to soften, potentially reducing the FEU-TEU spread, but shippers should continue to carefully monitor index-linked contracts to avoid overpaying.

Normalization of LTL Freight Market Reveals Softening Demand and Adjusted Carrier Strategies

• The surge in less-than-truckload (LTL) freight after Yellow's collapse in 2023 is starting to fade, revealing a clearer picture of the market as volumes normalize and reflect a softer freight economy.
• LTL carriers like Old Dominion Freight Line (ODFL) and Saia are now adjusting their growth expectations, with Saia still gaining market share despite a weaker LTL market and shrinking US manufacturing output.
• LTL rates rose 7.1% Y/Y in July 2024, driven by tighter capacity rather than increased freight demand, with general rate increases expected in the coming months.
• ODFL’s freight volumes have dropped due to continued economic softness, serving as a barometer for the overall LTL market. In contrast, Saia saw a 7% Y/Y increase in August shipments, despite facing tough comparisons to 2023's post-Yellow surge.
• Saia’s acquisition of 28 former Yellow terminals and its continued expansion have helped it grow in a weak market, while ODFL did not pursue Yellow’s facilities and has experienced more modest growth.
• Despite the overall weak LTL market, carriers are focusing on optimizing lane balances and pricing strategies to manage operating ratios and capacity more effectively.

Weekly Blank Sailings Report: ?

Century’s Blank Sailings Report for the week of September 2nd – September 8th. 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 551 port omissions, 20.3% increase compared to the week prior.
• Ningbo recorded the highest amount of port omissions last week with 49, followed by Shanghai with 42 and Singapore with 41.
• Other ports with notably high omissions last week are Shekou with 31 and Busan with 29.
• Cartagena, Columbia received the highest W/W growth percentage with a 600% increase in blank sailings.
• Looking towards the coming weeks, Century’s data shows a 4.7% decrease in currently scheduled blank sailings for week 37.
• Next week’s preliminary data shows notable increases in port omissions to be expected at ports in Ningbo and Shanghai with potential to have 50+ omissions.

Port omissions data for the most frequently omitted ports during week 36 can be found in the table below:

Our?full Blank Sailings Report for the week of September 2nd – September 8th. below provides a full list of every current scheduled port omission from Week 36 to Week 46 as of September 9th, 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 36 Blank Sailings Report?

Week in Review:

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Majority of Major Trade Lanes Saw Decline in Rates W/W

• All trans-Suez trade lanes saw decreased rates W/W along with the Global Container Freight Index which decreased by 5% W/W to US$ 5,062.
• China/East Asia to North America East Coast rates decreased by 3% W/W to US$ 9,130.
• China/East Asia to North America West Coast rates steadied W/W at US$ 6,837.
• The only major routes that saw W/W increases were the North America West Coast – China/East Asia route and the Europe – South America West Coast route.
• The China/East Asia – North Europe trade lane saw a significant decrease of 13% W/W, with this week’s rates at $6,787.

Peak Congestion and Elevated Rail Dwell Times in Pacific Northwest Expected to Ease Soon

• Port congestion and increased rail container dwell times in the Pacific Northwest are peaking, leading to delays in moving intermodal containers to inland destinations.
• Rail container dwell times at marine terminals in Seattle and Tacoma have doubled recently due to a spike in intermodal container moves and increased import volumes.
• US imports from Asia surged nearly 51% Y/Y in July 2024, straining western railroads and terminals, exacerbating congestion issues.
• Rail container dwell times have increased to six days at some terminals, while typical dwell times are normally two to four days, causing significant operational disruptions.
• The influx of imports has led to a substantial increase in inland point intermodal (IPI) container movements, with some services seeing nearly 100% growth.
• Although import volumes are expected to remain high through October 2024, they are likely to peak soon, and relief from congestion should begin later this month as pressures on West Coast ports and railroads ease.

Teamsters Challenge Canadian Federal Order Ending Rail Worker Strike and Imposing Arbitration

• The Teamsters union is challenging a Canadian federal order that ended a rail worker shutdown and imposed binding arbitration, arguing it infringes on workers' right to collective bargaining.
• The appeals filed with Canada’s Federal Court of Appeal contend that the arbitration process undermines the union’s ability to negotiate better wages and working conditions.
• The ruling to end the strike and enforce arbitration was issued by Labor Minister Steven MacKinnon after Canadian National Railway and Canadian Pacific Kansas City locked out workers, risking significant economic damage.
• A prolonged rail shutdown could have severely impacted freight movement through North America, affecting about US$ 282 billion worth of goods annually and costing the economy hundreds of millions of dollars daily.
• Canadian National and Canadian Pacific Kansas City have resumed full freight operations, but it will take several weeks to recover from the disruptions caused by the shutdown and its preparation.
• The arbitration process is intended to be neutral and aims to resolve the labor dispute while prioritizing economic and safety concerns, according to Canadian National

Potential East and Gulf Coast Dockworker Strike has Limited Shipping Alternatives and Presents Rising Costs Ahead

• Shippers and forwarders are preparing for potential disruptions due to a possible dockworker strike on the US East and Gulf coasts, which may begin on October 1, but viable alternatives for rerouting cargo are limited.
• The International Longshoremen’s Association (ILA) has confirmed strike plans if a new master contract is not agreed upon before the current contract expires on September 30.
• Canadian ports are being considered as alternatives to US East Coast ports, with increased emphasis on routes through Halifax, Montreal, and St. John although uncertainty remains due to ongoing tensions following the recent rail work stoppage.
• Diverting European imports to the US West Coast is a possible option, but it would face competition from high volumes of trans-Pacific cargo, potentially leading to port congestion.
• Imports from Europe need to be shipped by early September to arrive before the potential strike date, and there is no significant backlog on trans-Atlantic routes currently.
• Spot rates for trans-Atlantic shipments have surged by 20% due to peak season surcharges and strike fears, indicating increased urgency and frontloading by cargo owners.

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Germany’s Union Recommends Acceptance of Revised Wage Offer to End Port Strikes

• Germany’s United Services Union (ver.di) has recommended accepting a revised wage offer from port employers, which could end a disruptive wage dispute affecting multiple German ports.
• The offer includes a €1,700 (US$1,885) tax-free inflation compensation bonus payable in October 2024 and a €1.15 (US$1.28) increase in hourly wages starting October 1.
• Increased bonuses for shift work, as well as Sunday and holiday work, are also part of the proposal, with the holiday allowance rising to €430 (US$ 476) next year.
• The decision to accept the offer will be determined by a union member survey, with a final decision expected on September 27.
• Previous warning strikes had significantly disrupted port operations in major German ports including Hamburg, Bremen, and Bremerhaven.
• If accepted, the new offer aims to resolve the dispute and prevent further strikes that could impact logistics operations across Germany.

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South Korean Feeder Operators Offer Discounted Slots to Small Exporters Amid Surge in Intra-Asia Freight Rates

• To address soaring intra-Asia freight rates, South Korean feeder operators will reserve slots on intra-Asia routes for small and mid-size exporters at discounted rates until the end of the year.
• Korea Marine Transport Co (KMTC Line) and other operators will allocate a total of 1,200 TEU monthly, offering dedicated space for specific routes such as Busan-Chennai and Busan-Singapore.
• Shipping costs from South Korea to Southeast Asia surged from US$ 318 per 40ft container in January to US$ 1,482 in August due to disruptions in other major shipping lanes.
• The Red Sea crisis has led to a shortage of tonnage and diverted ships from regional routes, driving up freight rates on intra-Asia routes.
• The Korea International Trade Association (KITA) will facilitate bookings at lower fees through South Korean forwarder LX Pantos to help mitigate logistics costs for exporters.
• The initiative aims to support small and medium-sized South Korean exporters facing supply chain instability and high shipping rates.

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Cathay Pacific's A350 Fleet Grounding Disrupts Hong Kong Air Freight Amid High Demand

• Cathay Pacific has temporarily grounded its fleet of 48 Airbus A350s on September 2, due to an engine component failure, leading to the cancellation of 34 flights, including both long-haul and regional routes.
• The grounding of these aircraft has disrupted Hong Kong’s air freight market, which is already strained by high demand for e-commerce, high-tech components, and perishables.
• The loss of belly cargo space on these aircraft could affect shippers for up to two weeks due to Hong Kong's already tight air cargo capacity.
• The disruption comes at a peak time for the air freight market, which has been operating at near-full capacity due to high sales volumes from Chinese retail platforms like Temu and Shein.
• Companies relying on air freight from Hong Kong should consider contingency plans to address potential short-term disruptions in pricing and availability.
• If other airlines with A350s conduct similar checks and face issues, it could further amplify disruptions in the Asian air cargo market.

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U.S. Companies Embracing Nearshoring to South America Amid Global Shipping Disruptions

• U.S.-headquartered companies are increasingly considering locating manufacturing facilities near South America's coasts to facilitate faster and more efficient shipping to North America.
• A survey by DP World found that 92% of respondents consider establishing dedicated inter-Americas supply chains as crucial to their strategic planning.
• The shift towards nearshoring in Latin America is gaining traction as companies seek alternatives to Asia due to disruptions and high shipping costs.
• Cost implications and logistical difficulties are significant challenges in diversifying supply chains, with 43% of survey respondents citing these issues.
• Nearly half of the respondents believe that a diversified supply chain can reduce risks from disruptions such as natural disasters and political instability.
• Despite economic and political uncertainties, 70% of companies remain optimistic about their prospects in South America over the next five years.

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Challenges and Opportunities Arising in the MPV/HL Sector Amid Green Transition

• New ships in the multipurpose/heavy-lift (MPV/HL) sector will need to comply with International Maritime Organization (IMO) and European Union targets for reducing greenhouse gas emissions, with most newbuilds being dual-fuel vessels to meet these goals.
• Immediate EU targets require reducing GHG emissions by 55% by 2030, achievable through operational measures such as weather routing, speed optimization, hull maintenance, and heat recovery systems on existing ships.
• The MPV/HL sector is struggling with the availability of carbon-neutral fuels, especially in smaller or remote ports where infrastructure for alternative fuels may be lacking.
• Investments in new MPV/HL ships are constrained by uncertainty about the availability and scalability of alternative fuels, with green shipping corridors and port bunkering infrastructure becoming key indicators of future fuel standards.
• European green shipping corridors are being developed, such as one connecting Norway to Spain, with key ports like Gothenburg, North Sea Port, and Antwerp-Bruges starting to build bunkering capacity for alternative fuels like ammonia and methanol.
• The MPV/HL sector is likely to adopt green methanol or bio marine gasoil (MGO) as viable low-carbon fuel options due to their compatibility with the design and size constraints of heavy-lift ships.

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Port of Baltimore Hires Former New Orleans COO as Deputy Executive Director for Commercial Development

• Matt Wypyski, former COO of the Port of New Orleans, has been appointed as the new deputy executive director for commercial development at the Port of Baltimore to boost cargo and cruise operations.
• The Port of Baltimore is recovering from disruptions caused by the Francis Scott Key Bridge collapse, and Wypyski’s role will focus on restoring and expanding business operations.
• Wypyski’s previous experience includes significant roles in both public and private maritime sectors, such as with the Mississippi State Port Authority and Mediterranean Shipping Company.
• The Howard Street Tunnel Project, a US$ 566 million initiative, is set to enhance Baltimore’s container capacity by accommodating double-stacked trains, which Wypyski will oversee.
• The Port of Baltimore’s recent performance shows a quicker recovery in auto and roll-on/roll-off cargo compared to container volumes since the reopening of the Fort McHenry Federal Channel.
• Wypyski's new position will involve overseeing strategic initiatives aimed at growing the port's cargo and cruise businesses.

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Sea Intelligence

Xeneta

JOC

Freightos

JOC

WSJ

JOC

JOC

The Loadstar

JOC

SupplyChainBrain

JOC

SupplyChainDive