Market situation - container flows - September

Update September ‘22 In order to keep some overview, we have broken it down in several segments covering different areas worldwide. Although not all trades are in the report, similar trends apply. If you require more detailed info on a specific trade, you can always reach out to your Manuport contact.

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Asia

With volumes slowing and spot rates rapidly eroding on the main trades leaving Asia (Trans-Pacific & AsiaEurope), the expectations are building that carriers will soon start void sailings in an attempt to do some capacity management. It is a well-known strategy, though it would be for the first time since 2020 that this has been done. A combination of reasons explains the decrease in volumes. China has still kept its zero-COVID policy, meaning that some industrial regions, and workers, are forced to go in lockdown or quarantine. Obviously, these measures mean fewer goods are being produced for export. Additionally, the higher energy costs are also hitting China (albeit less hard than in Europe). China is buying gas from Russia, however, they usually get a lot of energy from hydro plants. With the drought of the past weeks, these plants are not producing at a normal rate. On top of this, and looking at the industry itself, capacity is freeing up due to the lower volumes. The lower volumes are also causing port congestion to go down (albeit slowly in some regions), resulting in more reliable schedules with shorter delays and thus more capacity to fill. According to the LA Port Authorities, the volume of incoming containers has declined by 17% compared to the same period last year and more importantly has reached the lowest number in 2022. Keep in mind these numbers are reported prior to the golden week in China, which normally brings peak volumes and is never the lowest point of the running year.

Europe

The port workers of Felixstowe, the U.K.’s largest container port, called a strike from September 27th through October 5th. This followed earlier strikes in the port. As operations could not continue during the strike, the shipping lines, together with customs and other stakeholders, tried to find ways to get import cargo out of Felixstowe and shifted export cargo to other exit ports. For some vessels it was however too late. For example, the mv ‘MSC Erica’, a megamax vessel (= a ship with a length of 400m and a capacity of between 20,000 and 24,000 TEU) which operates in the 2M alliance, was stuck in the port as it was already berthed and needed to stay for over 10 days in order to be able to leave again. In THE-alliance, the shipping lines decided to drop cargo in Antwerp in order to connect with another service, to take the cargo to Southampton instead of Felixstowe. The receivers will need to pick up their cargo from the other port. In the port of Liverpool, a new strike, following one at the end of September, has been announced for the second half of October. Not only will dockers strike, but also administrative and maintenance workers, in order to get a compensation for the high inflation. Mainly truck drivers and train operators are advised to look for alternative routings. The congestion in Hamburg remains an issue. Due to the lower volumes, the pressure is slightly relieving but Bremerhaven and Wilhelmshaven are still being used as alternative ports to spread the volumes, mainly coming from the Far East. 

North America

The U.S. railroads workers had announced a strike as from September 16th. However, after almost three years of negotiations, U.S. freight railroads and unions reached a tentative deal on September 15th, preventing a possible strike. Now the ‘tentative’ deal is in place, the U.S. freight-rail companies need to turn their focus to clearing a backlog of containers at ports and at inland train terminals, as there are about 28,000 containers awaiting collection by trains at the biggest US port. This is a six-fold increase since February. Almost 60% of the units for pickup have been sitting on the docks for nine days or longer. Tropical Storm Ian has hit the U.S. southeast coast with hurricane winds. Rail and port facilities have closed or reduced operations in the region of Florida, northern Georgia and the Carolinas. Hurricane Ian made landfall on Florida’s west coast on September 28th and hit Georgia at the weekend. For obvious reasons, this is contributing to supply chain issues in the area.

General

Improvement ahead for the U.S. Chassis Market

Intermodal equipment providers are confident that by sometime in 2023 the need for chassis can be fully met. Apart from domestic production, chassis are being sourced from Thailand, Vietnam, South America, Mexico, and Canada – something that was only done to a limited extent in the past years. The biggest issue remains the chassis dwell times at warehouses and ports. With COVID-19 quarantine rules and fewer workers available, this has peaked the past 2 years. With the expectation that congestion in the warehouses and ports will go down, the turnaround of chassis will shorten. In the past year, the turnaround for chassis for laden import containers was two to three times longer than pre-COVID.

Shipping industry asks for extension of European rules on vessel sharing

In April 2024, the current ‘Consortia Block Exemption Regulation’ (CBER) is coming to an end. With this regulation the European Commission (EC) has allowed shipping lines to share space on each other’s vessels to limit unused space. The main reason for this regulation is to increase efficiencies and to lower the costs of the shipping lines. Today the World Shipping Council (WSC), the International Chamber of Shipping (ICS) and the Asian Shipowners’ Association (ASA) are urging the EC to extend this regulation, not only from an efficiency point of view, but also from an ecological perspective. Opposing parties claim that this vessel sharing has created an oligopolistic market and has actually resulted in higher costs for shippers and receivers, as the sense of competition is not as high as it could be. The question remains, however, what would have happened without this regulation. Not that long ago, the shipping lines were unable to manage their costs and many would have perished without this operational cooperation with their peers.

Hapag-Lloyd acquires SAAM

SAAM signed a binding agreement with the German liner shipping company Hapag-Lloyd for the sale of 100% of the shares of subsidiaries SAAM Ports and SAAM Logistics, as well as real estate assets related to the logistics business. The value of the transaction amounts to approximately US$ 1 billion. SAAM, which is a Chilean company, operates in North, Central and South America, providing services for international trade through its Port Terminals, Towage, Inland Logistics, and Air Cargo Logistics. This acquisition is not entirely surprising. Having said that, SAAM also provides (admittedly limited) forwarding activities, while HLL has always said that they are not willing to step into forwarding as such.

Market Trends

How to read:

  • Applicable trade 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 a 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,…

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

Manuport logistics

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Market Situation – Container flows October

Update October ‘23 In order to keep some overview, we break down this look at the market situation into geographical regions and in bullets. Although not all trades are in the report, similar tendencies apply. If you require more detailed info on a specific trade or topic you can always reach out to your usual Manuport contact.