US deep dive

For this week's focus section we are putting the US under the microscope and looking at recent developments in rates and economic outlook.

What else to begin with but rates. On both the Transatlantic and Transpacific tradelanes, we have seen rates fall in recent weeks. Weaker demand for goods from Europe, alternate sourcing options and new capacity have all contributed to this decline.

Weak demand has also been reflected in the container import volumes to the US, falling for two consecutive months, with The Loadstar reporting a 21% year-on-year decline for April.?

Another key metric to look at is the ratio of volumes per booking which is currently at 1.7 TEU per booking, its lowest level since 2019. This gives an indication of where the US market sits in the current destocking cycle with an average ratio above 2 TEU per booking, a “signal for a new replenishment cycle for U.S. importers”.??

Taking a more holistic view of demand, the University of Michigan released survey data showing that consumer sentiment had fallen by more than 9% “amid renewed concerns about the trajectory of the economy”.

There are many questions to be answered in the current market such as what inventory management strategies can be employed to combat cash flow issues? Or how should I approach rates to ensure I can lock in a competitive cost of goods sold but also secure a reliable service level?

These are questions we are seeking to answer at our upcoming virtual summit for supply chain leaders, Navigate! You can register for free here

Asia?

China?

Ocean

China's industrial output and consumer spending have fallen short of forecasts, throwing doubt over the strength of the post covid recovery.

• Industrial production was forecasted to rise by 10.6% in April (Y/Y), however in actuality it only rose by 5.6%.
• Retail sales also fell short of expectations.?

Air

Central China to USA and Europe?

From SHA to Europe and the US, rates have mostly remained stable.

From NGB to Europe, rates have fallen? compared with last week,? while rates to the US have remained stable.

• Final rate is offered on a case by case basis.

North China to USA and Europe?

From TSN to Europe and the US, rates have continued to fluctuate but currently remain stable with last week's level.?

• We recommend booking 3 -4 days prior to the cargo ready date for shipments to Europe.
• We recommend booking 5 -6 days prior to the cargo ready date for shipments to the US.
• For Europe, the main services on this lane include Air China, Lufthansa and Singapore Airlines. Korean Air and Asiana Airlines can provide freight flights that can offer an earlier estimated time of departure and arrival.?
• For the US,? the main services on this lane include Japan Airlines, All Nippon Airways and Cathay Pacific. Korean Air and Asiana Airlines can provide freight flights that can offer an earlier estimated time of departure and arrival.?

From PEK? to Europe and the US rates have decreased this week.

• Special rates can be applied to heavy dense cargo. Please check on a case-by-case basis.?

From TAO to Europe and the US rates? have remained stable this week.?

From CKG to Europe have remained stable, while rates to the US have increased slightly since last week.?

South China to USA and Europe?

From?CAN to Europe and the USA, rates have remained stable this week, although airlines may increase rates towards the end of the month.?

• All shipments will need to be checked with the carrier for rates on a case-by-case basis.?

From SZX? to Europe and the US rates have remained stable.

• All shipments will need to be checked with the carrier for rates on a case-by-case basis.?

From XMN to Europe and the US rates have remained stable.

• All shipments will need to be checked with the carrier for rates on a case-by-case basis.?

North America

USA?

Ocean

Rates to the US from Europe have dropped in recent weeks.

• This follows the introduction of more capacity onto the trade lane as well as a fall in demand from the US, with import volumes dropping for 2 consecutive months.?

US West Coast ports are regaining lost volumes following a tumultuous few years.

• For Q1, West Coast ports handled 40% of US container import volumes.?
• In 2019 this figure was 45% over the same period.
• Many businesses shifted volumes away from West Coast ports from fear of disruption for ongoing ILWU labour talks and congestion issues.?
• While 2023 Q1 reflects a drop in volume from pre pandemic levels, it also shows the resilience of trade to the West Coast following a challenging few years.?

Europe

Benelux

Ocean

The Port of Hamburg has cited a challenging environment as Q1 throughput declined by nearly 17%.

• Like many of the leading European ports,? sanctions on Russian trade have impacted container throughput.
• Russia had been Hamburg’s fourth largest trading partner until the beginning of the war.
• Other contributing factors cited have been that China is yet to fully recover from the pandemic as well as industrial action in Germany which impacted the port's performance.?
• ?Hamburg joins the ports of Rotterdam and Antwerp-Bruges, both of which have announced declines in throughput in Q1.?

UK?

Ocean

Forth Ports, the UK’s third largest port group has outlined its commitment to a sustainable future.

• The group, which manages 8 ports, plans to overhaul and electrify machinery and equipment, will switch to lower emission fuels and promote delivery alternatives such as rail and barge.?
• Warehouses will have solar panels installed as standard and LED lighting is also being installed across all port estates.??

The UK government has been called on to provide more clarity on the new post Brexit import controls set to be introduced in October.

• Logistics UK’s Head of Trade and Devolved Policy, Nichola Mallon said: “We’ve highlighted the urgent need for the government to provide greater detail to allow businesses to prepare for these new import control changes.”
• Key among the concerns is a more detailed explanation of the Windsor framework, in particular guidance on the proposed lane system for movements of goods.?

Road/Rail

The Department for Transport (DfT) is consulting on making changes to the HGV roadworthiness test requirements.

• These proposed changes include options to increase the time in between testing and to allow for delegated testing.