Dec 19, 2022 Bi-Weekly Update

OCEAN UPDATE

?Since our last update, China has continued to ease its Covid restrictions (More info below) which we expect to cause more delays in shipping. Blank sailing increased 14% and are expected to rise further prior to Chinese New Year. Volumes are continuing to deteriorate especially at the ports of Los Angeles and Long Beach. LA reported TEU units were down 21% from last year. Port of Los Angeles Executive Director Gene Seroka stated they “haven’t seen numbers like those since the start of the pandemic” as he referred to the number of blank sailings. We continue to see carriers cancel shipments and capacity continue to drop into 2023.

Rate changes have not changed since the last update and remain around the same levels.

China continues to ease its Covid restrictions and a significant rise in Covid cases have been reported. Warehouses across China are dealing with a significant shortage of staff. The factor of low staff, freight demand and the approaching Chinese New Year have affected the exports from China. The Chinese General Administration of Customs reported a drop of 8.7% in exports.

Declines in volume have provided relief for most US ports (especially Savannah). The Georgia Ports Authority reported a 6.2% volume drop in November. Even with the decrease in volume we continue to see slight delays at Savannah’s port. Delays are expected to reduce as Chinese New Year approaches. Houston and Savannah remain the heaviest congested ports this week.

AIR UPDATE

Lower consumer demand has caused inventories and sales to decrease and there is no sigh of a mid-peak season surge as previously hoped. This forecast will likely continue into early 2023. Trade restrictions involving China, the United States, Russia, Ukraine, and Europe will further disrupt global supply chains. Many suppliers are turning their eyes to Vietnam which may become a viable option for exports.

Rates continue to hold above pre-pandemic levels yet, remain soft. Unless we see an increase in demand, rates are expected to decline in Q1 2023.

Suppliers could face some delays due to China’s Covid restrictions being lifted. With low staff, low freight demand and the Chinese New Year, freight could be slower coming out of origins.

US DOMESTIC TRUCKING UPDATE

Truckload demand remains strong. The holidays always tend to disrupt the market but the load to truck ration is about 2.5:1 vs the normal average rate of around 3.5:1 around this time of year. Dry van capacity tightened slightly, although carriers searching for loads is 24% higher than last year. This proves that the spot market capacity is oversupplied.

Rates are expected to fall another 10% over the next 6 months before sharply shooting up towards the end of next year. This will make for a robust 2023 peak season.

Highway diesel fuels continues to drop month over month across the US.

We continue to see rail congestion in Memphis, Dallas, and Chicago.

MORE NOTABLE UPDATES

• Ocean carriers plan to blank half their sailings from Asia, post-CNY
• It's calmer at LA/LB, but some traffic lost to east coast may not return
• New dangerous goods rules will impact shippers and freight forwarders