[July Market Report] Transpacific Rates and Space Situation Updates

Rate & Market Information

Spot rates to both USWC and USEC have started to drop although inflation remain high as some US importers are reducing orders. However, it is still uncertain what the market will be like in the second half of 2022 as there are different theories with limited data support. Industry watchers are expecting rates to remain above pre-pandemic level through till 2023 given the current rate level is still quadruple the rate in June 2020.

Demand for imports have weaken this year with more companies starting to cut back on orders with suppliers due to over-ordering in 2021. According to a report from S&P Global Market Intelligence, container freight rates are expected to fall by 20-30 per cent in the second half of the year. In the meantime, as high inflation, prevailing consumption patterns, and the pressure from the supply side of building new ships have slowed the trade growth, freight rates of dry bulk products are seeing a similar decline.

Maersk said in the latest market report, “demand from Asia to all major markets including North America remaining firm in the approaching peak season with Shanghai continues to return to normal from its lengthy lockdown…Data also shows that the US is experiencing unprecedented consumer demand, but the current spending boom has peaked… Consensus forecasts suggest the global economy will grow by 3% this year although projections show this will ease next year”. All suggest that the volume forecast on TP trade is still healthy in 2022, but is expected to be sluggish in 2023, reflecting the varying economic outlook for these economies.

Importers divert cargo away from USWC, and bring surge to USEC

Fears are raising over the potential disruptions at LA/LB as labor talks are entering a high-stakes phase with the contract expired from 01 July. With the expiration, the union can either extend the contract for 30 days or have members work without a contract. That would raise the specter of port operation slowdowns if any labor disputes occur due to the lack of arbitration mechanism. Some importers with negative anticipation are already rerouting cargoes to USEC or PNW, but also cause further congestion there.

Port congestions in PNW and USEC make capacity loss continue

Due to the severe congestion at PNW and USEC ports, we will continue to see blank sailings or omit calls on these services.

Seattle – High inventory levels. IPI dwell on terminal averaging 19 days on dock with

Vancouver – High port congestion, the berth waiting time has increased to 11 days, outbound rail dwell time is 12 days, with 107% yard density.

Savannah – Ships are returning along with ad-hoc calls vessels are bunching, currently waiting time is 9 to 11 days.

New York – Berth waiting times are running upwards of 7 to 10 days depending on terminal. All terminals report high berth utilization. Currently the container dwell time on terminals is 6 to 7 days.

Houston – Vessels at anchor increased due to draft restrictions. Berth waiting time has increased to 14 days. The emergency dredging works were expected to be completed by 6/30.

Inland congestion increases with lack of chassis availability

Importers are facing delays on IPI transportation from Los Angeles and Long Beach. The import containers at LA/LB dwelling for nine days or more has doubled since February. Carriers advised that “it’s all about the rail, and 60% or more of the total are on-dock rail containers waiting to load”. Containers moving by rail have been rising steadily since March after the service suspension in last summer, and Los Angeles’ rail cargo has increased sixfold since then. But now the inland congestion has occurred again. Containers are being stacked at ports and terminals due to insufficient chassis supply and/or rail traffic jams in Chicago, Kansas City, Memphis, Denver, St Louis, and Omaha. The containers cannot be picked up without chassis, which may cause extra storage fee. Temporary rail service disruptions and train metering can be expected.

OAK OICT terminal

The port is still heavily congested with an overall import increase, causing vessel berthing delays at OICT. IPI dwell on dock last week averaging 6 days, but dwell time off dock is elevated at 21 days while working off backlog of cargo. According to our OICT contacts, “With the influx of imports, chassis shortages and space availability. Terminal has had to deck new imports outside of the import rows (closed locations). As space opens, we move containers to deliverable locations. We are moving containers daily on the dayshift, nightshift and also working on weekends to try to expedite availability. The estimated availability is at least 14 working days from discharge”. For urgent shipments, we’d suggest not to arrange to OICT in order to avoid chances to go to close area.

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Port / Space / Equipment Conditions

• Shanghai: Berth waiting time around 1 to 2 days. Fak Spaces are open for USWC. USEC space are full up to end of July. Requires advance booking at least 4 weeks in advance for USEC. 
• Ningbo: Berth waiting time around 3 to 4 days. Spaces full till late July for both USWC & USEC. 
• Qingdao: Berth waiting time around 2 to 3 days. Port was closed for more than 50 hours last week due to bad weather. Spaces booked up to late July for both USEC & USWC. 
• Dalian: Berth waiting time around 1 to 2 days. Port was closed for 40 hours last week due to bad weather. Spaces are open for USEC but most spaces are booked till late July. 
• Shenzhen: Typhoon caused delay in port operations and berth waiting around 3 to 4 days this week. Spaces booked up to end of July now and spaces are getting tight to USEC ports due to increased blank sailings. 
• Busan: Still experiencing heavy congestions and further disruption due to recent storm/ typhoon. Spaces are tight to USEC ports while USWC are starting to open up but requires 4 to 5 weeks advance booking. 
• Vietnam: multiple blank sailings and port omission. Spaces tight and booked up to end of July. 
• Malaysia: volume to USEC/Gulf is strong, and space getting tight. MSC will only release DT to USEC/GULF very soon. Suggest to advance booking 3-4 weeks for better space planning. CMA has serious shortage of 40’/40HC at Tanjung Pelepa/Penang/Pasir Gudang due to empty return delayed by local importers. CMA empty equipment solely depends on the inbound flow, and in many cases, they have difficulties to get support from other origin ports like Singapore, while the whole SE Region counties are facing equipment shortage issues. 
• India: Overall spaces to EC, WC & Gulf are extremely full. Vessels are fully booked till end August. Carriers can only offer PREMIUM SPACES still. Need at least 5 weeks booking in advance. 

Market News

The above information is for reference only. However, should you have any inquiries, please do not hesitate to contact us. 

For rate inquiries: jmr-rates@jmrodgers.com | For export operations & inquiries: jmr-export@jmrodgers.com | For ISF submission and status inquiries: jmr-isf@jmrodgers.com | For import operations & inquiries: jmr-docs@jmrodgers.com | For traffic-related issues: traffic@jmrodgers.com 

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Although J.M. Rodgers Co., Inc. (JMR) makes reasonable efforts to obtain reliable content, JMR does not guarantee the accuracy of or endorses the views and opinions given by any third-party content provider. JMR disclaims all responsibility for any mistakes or inaccuracies in the information. Further, JMR disclaims all liability for loss or damage resulting from the use of information in this newsletter.