February 2023 Market Update
OCEAN MARKET
OVERALL
February continues to be soft with capacity outpacing demand. Inbound U.S. volumes remain flat with rates following suit. Carriers continue to implement blank sailings throughout trade lanes to control capacity and stabilize rates, with vessel cancellation rate holding steady at 10%. To combat blank sailings, shippers need to have an effective 6-8 week forecast and clearly communicate with trade partners. Added lead time will also allow additional carrier sailing options, routing and mode change if necessary.
New data is casting doubt on the optimism of a strong second half of 2023.Indicators such as manufacturing and retail inventories to sales are showing little sign of a freight surge in Q3. Signs are predicting a return to a normal peak season however.
Rate Changes
Rates continue to slide slightly week over week, however inbound to North America remain stable. Three factors behind the overall reduction in ocean rates are "reduced consumer demand, new container ships entering the market and sourcing origin changes" - Spencer Shute, Proxima.
Port Updates
Normalcy has returned to the ports with little to no congestion and dwell time. A positive result of low demand is the improved transit times and ease of turn times at the terminals.
The West Coast labor talks remain in limbo. This has left some wary of shifting trade back to the West Coast ports. "The uncertainty regarding the contract has everybody on edge," said Jonathan Gold, VP of National Retail Federation. There has been little impact on cargo operations at the ports during these contract negotiations and the sentiment is that by spring a deal will be reached.
Port of Savannah will stop offering night hours for truckers past 9pm.Starting Monday, port gates will operate between 4am and 6pm during the week and 8am-5pm on Saturday. The decision to eliminate evening hours comes as volumes in SAV have cooled.
Upcoming Events
TPM23: February 26 - March 1
RCS Cocktail Party February 27th, The Ordinaire 8pm
AIR MARKET
OVERALL
Global capacity remains stable underpinned by a lack of demand as we progress through Q1. More capacity will enter the market as passenger travel restrictions have been lifted in China. Rates remain soft out of major China trade lanes. Smaller but as significant origins such as India and Vietnam are seeing lesser reductions. E-Commerce demand will continue to be a driver for air cargo growth.
"The softer outlook for the global macroeconomy, along with international trade, is presenting headwinds to air cargo. Things that are exerting a bit of drag in terms of cargo volumes include the conflict between Russia and Ukraine, global growth slowdown, higher inflation, higher interest rates, and the higher cost of living." Andrew Matters-IATA Head of Analysis
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Rate Changes
Rates continue to slide but remain above pre-Covid levels. Many shippers are returning to traditional contracted procurement, specifically out of Asia.
Congestion/ Delays
Several major Turkish airports have sustained serious damage due to the recent earthquakes, including Hatay Airport and Gaziantep International Airport. Adana airport is closed until further notice. RCS offers our deepest condolences for all those affected by this tragedy.
US Domestic Trucking
Overall
Softening continues through February and predicted through to first half of the year. "February is typically the slowest month of the year for truckload markets, and that seasonal trend is playing out in national average rates and load-to-truck ratios. While capacity is loose at national level, we're seeing markets tighten in the southern states." - DAT
Rate Changes
Truckload freight rates are down 5.5% vs. 6 months ago; LTL down 9.3%. There is chatter about the bottom being near and expectations are still for a shift to a much tighter market along with higher rates in the second half of the year.
Fuel
Diesel this week : $4.444
Vs Last Week : $4.5359 (down 2.1%)
Vs Same week last year : $4.019 (up 10.6%)
“Potential headwinds for shippers - Economic Climate: Consumer Spending, Interest Rates, Possible Recession; Labor Challenges: Negotiations at railroads and ports, Labor shortages. Protecting strategic carrier and broker relationships will prove fruitful when the market inevitably turns and capacity tightens.” - DAT