Freight Forward: Blank Sailings Highest Since March

Welcome to Freight Forward, where each Monday, I’ll recap what happened in supply chains the previous week through JOC.com articles and additional sources and also what to expect for the week ahead.

I’m Cathy Roberson, a supply chain writer and researcher. For this weekly series, I serve as a research analyst for the Journal of Commerce (JOC), for whom I identify trends, provide thoughts and input into stories, and assist with parcel last-mile queries.

My weekend extended into yesterday. Apologies for the newsletter delay. ??

Bill Mongelluzzo writes that US imports peaked in August and are forecasted to edge lower into the new year as retailers are well-stocked with holiday merchandise, and consumer spending, while still strong, is not growing at the rate it did this summer, according to the latest Global Port Tracker (GPT) report. “Cargo volumes will be strong the rest of the year, but not as high as we expected a month ago,” Jonathan Gold, vice president for supply chain and customs policy at the NRF, said in the new GPT.

The 2024 outlook is looking doubtful for ocean freight. Will there be a rebound in Asian imports in the first half of 2024? Some forwarders doubt it due to market conditions, writes Mark Szakonyi. Carriers are increasing the pace of blank sailings from load ports in China and Southeast Asia because the backlog of cargo they thought would build up over the just-ended Golden Week holiday didn’t materialize, said Kurt McElroy, executive vice president of KerryApex. Blank sailings between Asia and North America are the highest since April, at 23%, according to Sea-Intelligence Maritime Analysis.

• Despite a subdued market, US ports are preparing for cargo shifts from India and Southeast Asia. The GPA wants to deepen the Savannah River shipping channel to accommodate larger ships carrying the growing volumes of cargo from India formerly sourced from China, writes Teri Errico Griffis. “When that cargo shifts to India and that cargo starts flowing from India ... that’s five days faster to the US [than via the West Coast],” Griff Lynch, GPA’s CEO and president, said at Savannah’s annual State of the Ports event Thursday. “So in this new trade shift, we’re going to have a situation where no longer are we slower, but faster. Combine that with our landside efficiencies ... we have a win-win situation.”?
• Michael Angell writes CMA CGM’s $600 million investment plan for its two new US East Coast container terminals is a long-term bet on the shift of US importers away from China and toward India and Southeast Asia, the ocean carrier’s CMA CGM chairman Rodolphe Saade said, adding that US ports need to do more to handle bigger ships that would ply that trade lane. “Our customers came up with an ambitious shopping list of additional capacity they will need from Southeast Asia to the US,” Saade said. “To be honest, I was not expecting to hear this because they usually talk about China. Now it’s different.”

In his latest column, Peter Tirschwell writes that it wasn’t a rate war in the classic sense that caused trans-Pacific spot rates to the West Coast to plummet by more than 80% since early 2022 and about 25% since August, according to Platts, a sister company of the Journal of Commerce within S&P Global.? Instead, it was the market adjusting to the unclogging of ports and a sharp decline in volume.

Eric Johnson writes that cargo migrating from air to ocean and a long-term trend of shipment sizes decreasing is putting pressure on forwarders in a market where overall volume growth is static, speakers said at an event sponsored by logistics software vendor Freightos. A number of speakers confirmed that shipments are getting smaller over time, driven in part by e-commerce growth but also by a market that is disentangling cargo previously handled through air or ocean consolidation.

Europe

The European Commission (EC) recently concluded that the Consortia Block Exemption Regulation (CBER) “no longer promotes competition in the shipping sector.” Greg Knowler writes that following the expiry of the CBER in April 2024, container shipping vessel-sharing agreements will not be outlawed but instead regulated under general European Union antitrust rules based on the Horizontal Block Exemption Regulation and Specialization Block Exemption Regulation.

In a separate story, Greg Knowler writes on analysts' thoughts about the CBER ruling.

Inland

• Norfolk Southern will accept ocean containers in Cincinnati, Cleveland, and Columbus, Ohio; Detroit, Mich.; and Louisville, Ky., for transport to ports on the West Coast. Ari Ashe writes that NS CEO Alan Shaw has been working hard since taking over in 2022 to build better relationships with shippers. Adding daily service to Chicago from other Midwest terminals, with an interchange to BNSF Railway or Union Pacific Railroad for onward service to ports on the West Coast, is just the latest signal of NS’s new priorities.
• ?Texas expanded a state truck inspection program to some border crossings in Laredo, the largest US truck border crossing writes Bill Cassidy. The state inspections are now being extended to the Columbia Solidarity Bridge in Laredo. According to CANACAR, Mexico’s national trucking organization, 20,000 US-bound shipments have been stranded in Mexican warehouses or trailers since the enhanced inspections began about four weeks ago. Delays caused by the Texas truck inspections also exacerbate delays caused by problems CBP has had processing cargo entering the US from Mexico.

Chart of the Week

Toepfer’s TMI is expected to decline to $12,572 per day in October, down 3% from September’s $12,958. The TMI has been sliding since July 2022, the height of the COVID market for the MPV sector, when it peaked at $23,099 per day. It is down 46% from that record high and down 38% year over year.? Even so, the index remains 80% higher than the pre-pandemic average of $7,000 per day, writes Janet Nodar.

Economic Outlook

Tuesday, Oct 17 – Retail Sales for September

Tuesday, Oct 17 – Industrial Production for September

Tuesday, Oct 17 – Business inventories for August

That’s it for now. Please be sure to hit the subscribe button to receive the latest updates.

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What did I miss? Have a question? Let me know in the comments. I’ll be checking back throughout the week to answer questions, address comments, and share additional insights.

In the meantime, here’s wishing everyone a good freight week ahead!

-Cathy