Freight Forward: Rates Peak as Demand Remains Strong

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 express and parcel last-mile queries.

• Spot ocean rates for Asia to the US West Coast appear to have peaked reflecting the capacity recently injected on the trade to handle what US retailers are calling their strongest volumes in two years writes Bill Mongelluzzo. “We’re getting notifications of [rate] reductions from some carriers,” said Kurt McElroy, executive vice president of the NVO Kerry Apex.

• The NRF upgraded its forecast for containerized imports for the sixth straight month as the frontloading of cargo and strong sales during an early peak shipping season have driven freight volumes to their strongest in two years writes Bill Mongelluzzo.? October is the first month in 2024 in which imports are forecast to decline year over year. But the forecast drops 0.5% for the month, revised from the 2.3% decline expected a month ago. NRF's initial forecast for November is for imports to increase 3.5% from November 2023.
• The US Federal Maritime Commission (FMC) delayed its approval of Gemini Corporation, the operational partnership between Maersk and Hapag-Lloyd, pending the receipt of further information from the two carriers and shippers about the new container alliance writes Michael Angell.
• The International Longshoremen’s Association (ILA) said Friday it’s still far from reaching an agreement with maritime employers along the East and Gulf coasts over a new master contract, citing ongoing complaints against Maersk’s terminal arm writes Michael Angell.

“We will not entertain any discussions about extending the current contract, nor are we interested in any help from outside agencies to interfere in our negotiations with USMX. This includes the Biden administration and the Department of Labor.” - ILA President Harold Daggett

• The unusual rate upswing seen in June for the China-India backhaul trade amid widespread rushed cargo flows and port congestion-linked schedule disruptions has begun to taper writes Bency Mathew. “Though varying from carrier to carrier, we are generally seeing a 40% correction,” said a Mumbai-based forwarder who didn’t want to be identified.?
• European importers of lower-margin goods and bulkier products from Asia are curbing shipments as ocean rate levels and surcharges levied by carriers to guarantee space on the westbound trade lane make it economically unviable to load the cargo, according to forwarders and shippers writes Greg Knowler.

• MSC will complete its $698 million acquisition of Gram Car Carriers by July 25 after Gram confirmed that all regulatory approvals have been received for the takeover. The deal marks MSC’s return to the booming car carrier market that it exited in March 2023 when it sold its two vehicle carriers to focus on transporting vehicles in containers writes Keith Wallis.
• ONE will launch the Asia Latin America Express 4 (ALX4) starting Aug 16. The carrier said it is introducing the ALX4 “to meet the increased capacity demand for Asia-to-Mexico West Coast cargoes.” The new service joins three other ONE services that also call Mexico and South America’s west coast writes Michael Angell.

Earnings

• Taiwan’s three largest container lines, Evergreen, Yang Ming and Wan Hai, saw their first-half revenues surge, fueled by soaring freight rates on long-haul and intra-Asia services due to supply chain disruptions and strong demand writes Keith Wallis.

Ocean Tech

• Changes in the ocean freight booking landscape hold the key to unlocking broader digitization in the containerized supply chain, software vendors catering to shippers and forwarders say writes Eric Johnson. While electronic bookings have been possible for two decades, Bryn Heimbeck, president of Trade Tech, argues it is still a largely siloed process, even if it is digital.
• Thomas Bagge, CEO of the Digital Container Shipping Association (DCSA), is convinced that the first half of 2024 was a watershed period for the adoption of the technical standards for container lines that DCSA has developed over the past five years writes Eric Johnson.
• INTTRA’s dominant share of electronic bookings has gradually eroded since its acquisition, with e2open CEO Andrew Appel saying during an April earnings call that the company’s “logistics ecosystem” now handles 21% of all ocean freight bookings. INTTRA is still a key player in the electronic bookings space. But according to a range of technology providers, its position is more tenuous than it has ever been, thanks to a range of factors writes Eric Johnson. ?

Air

• The first of two Boeing 777 freighters was handed over to Maersk Air Cargo, expanding the airline’s controlled capacity on China-North Europe routes writes Greg Knowler. Three weekly flights will be offered by the freighter from Maersk’s hub at Billund Airport. That will increase to six flights when a second B777F is delivered in the third quarter, Maersk said.
• In my latest Air Cargo Next column, I wrote about recent UPS and FedEx investments in Asia-Pacific including both express providers plans to invest at Clark International Airport in the Philippines and FedEx Express' recent launch of two flights to the United States from Qingdao and Xiamen, China. Both express carriers are focusing on the health care and e-commerce markets and delivery speed.

Columns

• Small Mexican domestic intermodal market sees big growth, Larry Gross

That's it for now. Thank you for reading! For readers interested in reading more Journal of Commerce stories, click here to subscribe. Enter code FFNL20 at checkout to receive a 20% discount on any subscription option. (Note that this is only for first-time subscribers or for upgrading a current subscription). 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