Market situation – container flows – JAN/FEB

Update February 2022 These past weeks have been very intense, not only in the maritime industry but also geopolitically. Therefore, we opted to postpone our market update of January to combine with the update of February. In order to provide a clear overview, we have broken down the market into several segments covering different areas worldwide. Although not all trades are in the report, similar trends apply. If you require more detailed info on specific trade you can always reach out to your Manuport contact.

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Update February 2022 These past weeks have been very intense, not only in the maritime industry but also geopolitically. Therefore, we opted to postpone our market update of January to combine with the update of February. In order to provide a clear overview, we have broken down the market into several segments covering different areas worldwide. Although not all trades are in the report, similar trends apply. If you require more detailed info on specific trade you can always reach out to your Manuport contact.

Black Sea & Ukraine situation update

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Asia

Although the rates are still a lot higher compared to ‘pre-pandemic’, we are noticing that the market is cooling down somewhat ex Asia. This is seen by a slight decrease in different trades.

However, this Omicron variant is raising more concerns for ships that are calling at Chinese ports, as it has proven to be very contagious. For crews, the very strict quarantine requirements are delaying the supply chain and are only adding instability to the already unstable shipping industry. Ship managers say the problem has been manageable so far, though a sustained jump in cases will add pressure to supply chains as many ports still have long lines of cargo ships waiting, while a shortage of workers and drivers are adding to the snarls.

Vessels calling at Chinese ports must be free of COVID-19 for at least three weeks. On top of that, crew changes in China are still nearly impossible for foreign seafarers. The Chinese government seems to be keen on eradicating COVID-19 while the rest of the world resolves to live with it. According to data from project44 (a supply chain visibility platform), average shipment delays from China to the U.S. West Coast were 114% longer in 2021 than 2020. The route to Europe recorded a 172% surge.

Europe

The issues in the U.K. remain. The reduced labor force due to COVID-19 is delaying and limiting port operations in the terminals, as in any other ports, but additionally congestion at U.K. ports remains extremely high, making it difficult for carriers to fully carry out their operations. This results in a lower number of units making intended sailings or arrivals. The recent storms and bad weather across Europe have of course only worsened the situation. With the passing of the 3 storms (Eunice, Franklin and Dudley) over a major part of Europe, the overall situation at terminals and on inland connections has not improved for obvious reasons. The heavy winds made port operations close to impossible as several vessels got knocked adrift and port cranes needed to shut down for safety reasons. In Eastern Europe, the rail connections faced some delays due to debris on the tracks, and cut power lines due to trees and branches that fell on the cables. The most recent reports, however, state that the majority of operators are back operating their normal schedule.

North America

Throughout the pandemic, the U.S. market has proven to be a challenge, with the problems on the islands that have only gotten more intense. Seeing as the port congestion in the major U.S. port gateways has triggered a rare intervention by the White House, the problems are still not resolved. The Federal Office has agreed on a $1.2 trillion bipartisan bill to upgrade the overall port infrastructures and inland connections.

At its core, the current crisis, with ships waiting offshore for berths at multiple U.S. ports, is the result of those containers remaining at the terminal. The ports of Los Angeles and Long Beach have threatened to charge a fee for containers sitting on the docks for longer than nine days. On the East Coast, federally supported “pop-up” yards in Georgia have enabled containers to be relocated from the Port of Savannah to near-dock locations. These additional yards could be a promising longer-term solution, especially if these locations can be kept as ‘reserve’ so they can be activated only during surge periods.

On February 16, we got the following ‘snapshot’ of the vessel count at the top 6 U.S. Ocean ports

As the contract negotiations for the longshoremen the U.S are nearing, delegates from the International Longshore and Warehouse Union (ILWU) gathered at the beginning of February to discuss the strategy, ahead of what is expected to be contentious contract negotiations. The major issue is the automation at West Coast ports. For the unions, the automation of cargo-handling equipment would translate directly to job losses on the docks. On the other hand, automation will also create new types of jobs at container terminals, such as in computer programming. The ILWU has insisted that any new jobs fall under the union’s jurisdiction and that employers train their members for those positions. The ILWU will likely leverage today’s strong cargo volumes and supply chain bottlenecks as the July 1 expiration of the current contract draws closer. Last year, the West Coast ports handled record cargo volumes despite unprecedented supply chain disruptions. Both parties acknowledge that work slowdowns this summer, if a contract is not concluded by July 1, would cripple the already congested West Coast ports and would be devastating for retailers and the U.S. economy.

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South America

The region has not been spared congestion, especially on the East Coast, and the next weeks will be very important as the usual export ports are preparing for the new fruit season, namely apples and pears. The increasing demand to get reefer equipment available from the fruit industry is posing a dilemma for the shipping lines. Do they ship reefers to this region, with the risk of long idle times in the ports because of the delayed throughput, or do they risk losing out on the very high rates (mainly ex Brazil) by not having equipment in position?

How to read:

  • Applicable trade is always mentioned per individual graph

  • The percentages shown give the difference per trade on 3 levels:

    • Year on Year = Rates agreed now compared to the same period 1 year ago

    • Past 3 Months = Rates agreed within the past 3 months

    • Past 1 Month = Rates agreed within the past month. This can be considered as the reflection of the spot market

  • ''Main’ means ports that are normally called on a direct basis.

    • Far East Main = Ningbo, Shanghai, Qingdao,…

    • Mediterranean Main = Istanbul, Alexandria, Piraeus,…

    • South America East Coast = Santos, Buenos Aires,…

    • North Europe Main = Antwerp, Rotterdam, Hamburg,…

    • ...

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General

  • In the last 2 years, the world has changed more than anyone could have imagined

What everybody knows already can also be visualized in the graphs below. These examples are taken from a presentation by the CEO of Hapag-Lloyd, but they stem from neutral sources like the SCFI and bunker databases, and concern global volumes

, not only Hapag-Lloyd's.

(Keep in mind that this data was gathered prior to the escalation in Ukraine).

Graph upper left: the evolution of the spot rates globally

Graph upper right: the global container volumes

Graph middle left: rates to charter a vessel have tripled

Graph middle right: bunker evolutions

Graph bottom left: global order book of new vessels

Graph bottom right: global idle fleet (normally around 6-7%, currently 0.6%)

To complete the full story to explain the higher costs that are being charged, the schedule reliability has been at an all-time low of approx. 30% for a long time, meaning that vessels are not respecting their forecast sailing schedules.

Despite the higher container volumes, the terminal movements have dropped by 4% globally. This might not seem very significant, but this is a global figure. The impact is of course much higher on the major ports of the world.

  • CMA CGM bans plastic waste on their vessels as of June 2022

Chairman Rodolpho Saadé has communicated that CMA CGM will no longer accept plastic waste on their vessels from June this year. The reason is that CMA cannot guarantee that this plastic waste is being processed or recycled in the correct way in the receiving countries. This is in line with their greener strategy.

Side note

:Manuport Logistics raises money each year to support the River Cleanup initiative.

This organization cleans up plastics that end up in waterways. It is estimated that 10 million tons of plastic end up in the oceans each year.

  • Takeover discussions with DB Schenker have started

Several big investors are looking at DB Schenker, which is being put in the shop window to partially reduce the tremendous debt of parent company Deutsche Bahn (DB).

  • Situation Russia – Ukraine & Black Sea area

Click here for the Black Sea & Ukraine situation update

For additional questions or remarks, you can always reach out to your usual MPL contact.

Manuport logistics

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