/ By marketupdate / news/ • / 0 Comments

Transit times improve as supply chain congestion fades

THE collapse in demand witnessed since last September has had a positive effect on transit times for cargoes shipped on key trade lanes.

Data from freight visibility provider e2open shows that in the last quarter of 2022 the time between booking a cargo and that cargo being released at the gate of the destination port fell significantly from the previous quarter.

“It takes a company an average of 63 days (down six days) to deliver goods to truck or rail carriers after booking with an ocean carrier and completing the cross-ocean journey,” e2open said.

Even more dramatic is the eight-day decline from the same quarter last year.

“The major drop in demand for goods shipping out of Asia has continued to reduce port congestion and resulted in shorter actual transit times,” it said. “There was also a notable reduction in the booking to gate-in time for shipments out of Asia.”

The continued improvement of the overall duration could be attributed to the “Booking to Gate-In” and “Actual Transit” components of the overall workflow, e2open said.

“This is the shortest overall duration in the past eight quarters, with total days from initial booking to clearing the gate, which will hopefully continue throughout 2023.”

On the Asia-North America trades, average shipment times fell nine days over the quarter to 67 days, and were 12 days shorter than in the corresponding period in 2021.

“The largest contributor to this decrease is the drop in ocean transit time,” e2open said. “The major contributor to the reduction in overall duration are time from booking to loading at the origin port, which was down three days.”

Asia-Europe cargoes took an average of 69 days from initial booking to clearing the gate at the final port during the fourth quarter.

This is down eight days since the previous quarter and 12 days from the same quarter in 2021.

The time from booking to gate-in at the port was down six days, while ocean transit time had decreased by three days. But some of this improvement was lost with the time from unloading to clearing the gate increasing by two days.

While the changes will be welcomed by shippers, e2open warned that there were still hurdles ahead.

“As we head into the new year with a backdrop of an unpredictable global economy, the resurgence of Covid-19, escalating political tensions, and an ongoing war, supply chain leaders are wondering what the next supply chain challenge might be,” it said.

There was a risk that with demand falling, more services would be blanked, making it harder for shippers to find ocean capacity.

“Economic conditions are still uncertain. Last quarter consumers were buying cautiously, but they were buying inventory that arrived well ahead of the holiday season. Key economic indicators such as economic growth, job creation, inflation, interest rates, and fuel costs remain top of mind and make forecasts about what we’ll see in the next year unreliable.”

Source:

Baker, J. (2023, January 17). Transit times improve as supply chain congestion fades. Lloyd’s List. Retrieved January 18, 2023, from https://lloydslist.maritimeintelligence.informa.com/LL1143615/Transit-times-improve-as-supply-chain-congestion-fades

/ By marketupdate / news/ • • / 0 Comments

Doomsday clock’ ticking down as shipping lines lose control of the market

Ocean carrier voyage results could soon start appearing in red ink as freight rates flirt with breakeven levels on major east-west tradelanes.

Although the container spot rate crash appears to have bottomed-out in the past few weeks, annual contract rates are also now in sharp decline.

According to Drewry’s latest Container Insight report, carriers have “lost control of the container market” by failing to manage capacity and will “act on capacity only when they are forced to do so by heavy losses”.

The maritime research consultant claimed “a deep-seated instinct to preserve volumes has kicked in”, with carriers discounting rates heavily to secure short-term bookings.

It said that, until a few months ago it was fairly confident the lines would take “the necessary steps” to reduce capacity before the market got out of control, but now admits it was wrong and that it gave carriers “too much credit by thinking they would proactively manage capacity”.

Drewry said that, after talking to various stakeholders, it had been convinced a structural change had occurred in the liner industry and that “consolidation and more efficient carrier alliances would help change old habits”.

“That was wrong too,” said Drewry.

“The price paid for reverting to type is that contract quotations are now being set at a fraction of the levels of a year ago,” it said, adding it had “vastly downgraded freight rates and profitability forecasts” showing that, from Asia to North Europe and Asia to the US west coast, revenues were running at close to round-voyage slot costs.

Drewry described the scenario on the key tradelanes as “akin to a doomsday clock, counting down the time before carriers incur losses”.

Meanwhile, anecdotal reports to The Loadstar suggest carriers are “waiting for more visibility” after the Chinese New Year on 22 January before taking more radical action, such as suspending more network loops, but that they remain optimistic there will be an inventory restocking rebound in demand post CNY.

Indeed, an investor note from HSBC Global Research say post-CNY it expects “capacity discipline to keep contract and spot rates above breakeven”.

It adds: “China’s removal of Covid-19 restrictions and potential restocking demand could drive a recovery in shipments post-CNY and lift rates in the near term.”

Nevertheless, it believes there are downside risks, from inflation, on consumer spending that could dampen demand and “likely trigger another round of price competition”.

Drewry said it still thought there would be a “major capacity reconstruction” in the liner industry, “but it will be carried out to prevent freight rates from falling below breakeven, not to gently ease profit margins above historical averages”.

It concluded: “While cargo demand has contracted at a faster pace than many anticipated, and some action has been taken to address overcapacity, it has been largely too little, too late. Instead, carriers have lost control of capacity and reverted to price competition to retain volumes.”

Source:

Wackett, M. (2023, January 5). ‘Doomsday clock’ ticking down as shipping lines lose control of the market. The Loadstar. Retrieved January 10, 2023, from https://theloadstar.com/doomsday-clock-ticking-down-as-shipping-lines-lose-control-of-the-market/

/ By marketupdate / news/ • / 0 Comments

POLB SEAFARER COVID-19 VACCINE PROGRAM DRAWS TO A CLOSE

NEARLY 12,000 MARINERS AT SAN PEDRO BAY PORTS VACCINATED

A Port of Long Beach COVID-19 vaccination program for mariners aboard cargo vessels calling in the San Pedro Bay will wind down by year’s end after delivering nearly 12,000 shots to sailors.

The successful program operated by the Long Beach Department of Health and Human Services in partnership with the Port and the National Guard offered free, onboard COVID-19 vaccinations beginning in the spring of 2021 for any cargo ships’ crews berthing in San Pedro Bay.

During the program’s 1½-year run, 11,766 crew members on 1,275 ships voluntarily received the one-dose Johnson & Johnson vaccine at no charge. In the Port of Long Beach alone, 5,971 crew members on 684 ships received vaccines. The program will come to an end on Dec. 31.

The innovative program helped protect the health of workers throughout the supply chain, helping to ensure the delivery of essential goods during the pandemic. Long Beach Health and Human Services dispatched mobile COVID-19 vaccination units to visit ships’ crews aboard docked vessels at both the Port of Long Beach and the Port of Los Angeles. The Long Beach Fire Department also helped administer vaccinations when health officials were needed elsewhere.

“We are proud to have sponsored free vaccines for sailors visiting the port. The Port is about more than just moving cargo, it’s about the people who move the cargo and keeping them healthy and safe,” said Port of Long Beach Executive Director Mario Cordero. “We’d also like to thank our Port of Long Beach staff, the Long Beach Department of Health and Human Services, the Long Beach Fire Department and former Mayor and Congressman-elect Robert Garcia for the collaboration and leadership on the ship vaccination program.”

“We are so pleased to have vaccinated so many international seafarers, many of whom had no opportunity to be vaccinated in their home countries,” said Long Beach Harbor Commission President Sharon L. Weissman. “The Long Beach community – the Port, the City, terminal operators and dockworkers – were able to help mariners coming to both our Port and the Port of Los Angeles. Together, we had a global impact in fighting the spread of COVID.”

Source: Port of Long Beach

POLB seafarer COVID-19 vaccine program draws to a close. polb.com. (2022, December 27). Retrieved January 3, 2023, from https://polb.com/port-info/news-and-press/seafarer-covid-19-vaccine-program-draws-to-a-close-12-27-2022/

/ By marketupdate / news/ • / 0 Comments

Port of NY & NJ retains top spot amid nationwide import slowdown

THE PORT of New York and New Jersey has remained the US’ busiest seaport in November, recent figures from the port show.

Despite throughput falling 4.8% year on year, the east coast gateway handled 20.6% more cargo than in in November 2019, and 13.1% more than the port of Los Angeles, which ranked second nationwide.

Moreover, with one month left in 2022, the port handled almost 19% more cargo than it did in all of 2019, highlighting its extraordinary growth since the onset of the COVID-19 pandemic.

From August to November, the ports of Los Angeles and Long Beach saw imports drop 23.8% and 16% respectively from the year-earlier period. Year to date, imports to the ports declined 9.8% and 2.5% respectively.

In contrast, despite two consecutive months of declining volumes, the port of NY & NJ handled 4.6% more cargo between August and November than the same period last year, and volumes have increased by 8.1% so far this year.

US import volumes have been declining from their 2021 highs in the last few months, and November’s figures came within 2.8% of 2019 levels, according to the latest report by supply chain and logistics software provider Descartes.

However, the declines haven’t been distributed evenly across US ports, and those on the west coast – where dockworkers have been working without a contract since July – have borne most of the brunt.

The unresolved labour situation led many shippers to divert cargo eastwards, but an early peak season that led inventories to fill up well ahead of the holidays also took a toll on cargo volumes in the San Pedro Bay.

Defying the nationwide trend, import volumes to east coast ports had maintained year on year growth until recently. But as overall import demand fell, so did the rate of import growth, and aggregated import volumes across the four largest east coast ports declined by 0.2% in October, the first such year on year contraction in 2022.

Imports across the major east coast ports that have reported November totals – Savannah, Virginia, and Charleston – are down 12.7% year on year. November import figures for the port of NY & NJ are not yet available, but they are expected to come in lower than the year-earlier period.

On the Gulf coast, the port of Houston maintained its remarkable growth streak in November, the only major US port where imports increased year on year, although the rate of growth dipped below double digits for the first time since February 2021.

As imports slow down, port congestion and vessel backlogs continue unwinding. Lloyd’s List Intelligence data shows about 32 boxships anchored outside the ports of NY & NJ, Savannah, Houston, Virginia, and Charleston as of mid-day December 29; that figure stood at almost 100 in September.

Source:

Raanan, T. (2022, December 30). Port of NY & NJ retains top spot amid nationwide import slowdown. Lloyd’s List. Retrieved January 3, 2023, from https://lloydslist.maritimeintelligence.informa.com/LL1143446/Port-of-NY–NJ-retains-top-spot-amid-nationwide-import-slowdown

/ By marketupdate / news/ • / 0 Comments

Carriers are facing the ‘quiet before the storm’ for contract rates

A year ago, shippers were desperate to agree annual contract deals with ocean carriers  to secure their supply chains, and were prepared to do, and pay, ‘whatever it took’.

And carriers were holding ‘beauty contests’ to determine the most attractive large-volume BCOs to be included in their exclusive customer portfolios.

But 12 months on, the container liner shipping market has seen an 180-degree turn – world economies are being racked by huge hikes in energy costs, high inflation and spiralling interest rates, causing a pause in discretionary spending by consumers and a sharp downturn in demand.

Since the ‘non-event’ peak season in July and August this year – traditionally when carriers garner the most revenue from pre-holiday season orders – container spot rates from Asia have collapsed, along with demand, as carriers have been obliged to heavily discount their short-term rates.

Moreover, the margin between the weekly decreasing spot rates and the elevated annual contract rates became so great that one by one carriers buckled and granted their core contract customers dispensation to book cargo via their spot platforms.

Meanwhile, despite an aggressive blanking strategy by the shipping lines, including ‘slidings’ and sending vessels on the backhaul from North Europe back to Asia via the longer Cape of Good Hope route, carriers were unable to turn the fall in spot rates back to pre-pandemic levels, or below on some tradelanes.

Nevertheless, there is evidence over the past couple of weeks that the spot rate bottom may have been reached on the key Asia-North Europe and Asia to US west coast routes.

For instance, this week’s Asia-North Europe component of Drewry’s WCI index actually recorded a slight uptick, to $1,706 per 40ft.

And there was another sign this week that the rot had stopped on the route, with The Loadstar’s inbox receiving very few ‘spam’ e-mail quotes from China-based forwarding agents offering “prompt space with all carriers at $1,000 a box”.

And on the transpacific Asia to US west coast route, spot rates also seem to have plateaued, with the week’s Xeneta XSI reading ticking up 1.3%, to $1,529 per 40ft.

By Christmas on the Asia to Europe tradelane, the contract season is normally well under way, but judging by the feedback from some of The Loadstar’s forwarding and NVOCC contacts, there is an understandable reluctance by both shippers and carriers to start negotiations until they see how the market plays out after the Chinese New Year, which commences on 22 January.

Xeneta’s long-term contract market report for December saw its index of crowd-sourced contract rates flat on the month, albeit that few deals were completed.

But Xeneta’s CEO Patrik Berglund believes we are really just seeing “the quiet before the storm”, in terms of contract rate reductions. He said: “The narrative for the beginning of 2023 looks to be very different.

“All indicators point towards considerable rate drops from today’s levels, with several of the major Far East trades pointing towards new long-term contracts that are much closer to the current far lower spot rate benchmarks.”

Source:

Wackett, M. (2022, December 23). Carriers are facing the ‘quiet before the storm’ for contract rates. The Loadstar. Retrieved December 28, 2022, from https://theloadstar.com/carriers-are-facing-the-quiet-before-the-storm-for-contract-rates/

/ By marketupdate / news/ • • / 0 Comments

Ocean Network Express acquires terminals in US West Coast

OCEAN NETWORK Express has agreed to acquire a 51% stake in two terminal companies held by its Japanese parents.

Both TraPac LLC and Yusen Terminals LLC—owned by Mitsui OSK Lines and Nippon Yusen Kabushiki Kaisha, respectively—provide container terminal services in Los Angeles, with the YTL also operating in Oakland in the US west coast.

A definite agreement has been signed between the parties, while the deal remains pending regulator’s approval.

The acquisitions are part of the continued efforts by MOL and NYK to integrate their container shipping businesses into ONE.

“The recent disruptions to the supply chain due to the [coronavirus pandemic] have highlighted the importance container terminals play in keeping global trade flowing,” ONE said in a statement.

“The newly acquired container terminals will safeguard ONE’s access to terminal capacity in key and strategic gateways, support its growth ambitions and enhance its service offerings to customers.”

Source: The Lloyds’ List

/ By marketupdate / news/ • / 0 Comments

Ocean carriers plan to blank half their sailings from Asia, post-CNY

Against a background of extremely weak demand forecasts, ocean carriers are preparing to blank around half their advertised sailings from Asia to North Europe and the US after Chinese New Year on 22 January.

High inventory levels in Europe and the US, coupled with uncertainty surrounding future consumer demand, has seen orders cancelled or postponed, resulting in Chinese factories preparing to shut down well ahead of the CNY holiday.

For example, apparel marker Inditex said in its earnings call this week its inventory levels on 31 October were 27% higher year on year, and 15% higher on 8 December. It would not be drawn on its orderbook for next year.

In its latest North America market update, Maersk said this year “more shippers are opting to wait until the holiday period concludes, as stocks shipped earlier in 2022 are already in position to fulfil demand”.

Meanwhile, after several consecutive weeks of double-digit falls, container spot market indices plateaued this week, suggesting the bottom may have been reached.

For example, on the transpacific, the Asia-US west coast component were all virtually unchanged on the week, with Xeneta’s XSI recording an average rate of $1,496 per 40ft. While, for the east coast, Drewry’s WCI edged down just 1%, to $3,952 per 40ft.

Indeed, joining the port of Los Angeles monthly media briefing this week, ONE CEO Jeremy Nixon said he expected short-term rates would remain flat into 2023, and added: “I think we are effectively on the bottom of those spot market rates.”

But he warned of a “big drop” in exports from Asia after the CNY holiday, and a “very soft” February and March.

“Let’s see whether demand starts to push back up around April/May time,” he said.

Elsewhere, on the Asia to North Europe tradelane, the average spot rates recorded by the publishing indices this week ranged from a reading of $2,167 per 40ft by the Freightos Baltic Exchange, down to $1,674 per 40ft by the WCI.

However, reports to The Loadstar indicate that space is becoming tight for sailings to North Europe prior to CNY.

And many annual contract negotiations for the route – traditionally finalised in December or January – appear to have stalled, as neither shippers nor carriers want to commit in the uncertain market conditions.

Spot rates from Asia to Mediterranean ports were also stable this week, with, for instance, the WCI reading unchanged at $2,909 per 40ft.

The transatlantic tradelane remains the outlier, with headhaul North Europe to US east coast short-term rates still at least three times higher than before the pandemic. In fact, this week’s XSI reading for North Europe to the east coast rates even ticked up slightly, to $7,189 per 40ft.

The strength of the US dollar against the euro and sterling, along with the increased focus on sourcing product from Europe instead of China, has enabled the trade to stay robust despite the downturns elsewhere.

Nevertheless, according to Sea-Intelligence, freight rates are about to nosedive on the tradelane, due to a huge 43% year-on year injection of capacity on the route.

“Spot rates on the transatlantic are primed to collapse in the coming months,” said the consultant.

Source: Theloadstar

/ By marketupdate / news/ • / 0 Comments

CMA CGM expands onshore power use in Shanghai

CMA CGM has signed a long-term agreement with Shanghai International Port Group to expand the use of onshore power supply to cut emissions.

The approach, dubbed as “cold ironing”, allows ships to shut down auxiliary engines while at berth, hence eliminating emissions — including carbon dioxide, sulphur oxide, particulate matter and nitrogen oxide — and reducing noise pollution.

“From today, all fully-fitted CMA CGM containerships calling at the port of Shanghai will systematically use the onshore power connection,” said the French carrier in a statement on Thursday.

Earlier, the two companies completed a technical trial of the facilities at the Yangshan Deepwater port in Shanghai in late November, which involved a large containership, the 13,982 teu APL Fullerton (IMO: 9632026), among several other vessels.

CMA CGM said its newbuildings and the most recent vessels to enter its fleet were equipped with the technology to use cold ironing. Meanwhile, “an extensive retrofitting programme” is being conducted to extend the facilities to other ships.

The company expects 13 of its vessels to connect to onshore power when calling at the port of Shanghai by the end of this year and a further 50 by mid-2023.

“CMA CGM is steadfastly committed to installing more environmentally responsible solutions on board our vessels, the group supports cold ironing and we will continue to equip our fleet accordingly,” said CMA CGM’s China chief executive Ludovic Renou.

CMA CGM and SIPG have also collaborated on liquefied natural gas bunkering at the port.

In March this year, Hai Gang Wei Lai (IMO: 9886756), a 20,000 cu m LNG bunker barge deployed by the Chinese port operator, fuelled 15,000 teu CMA CGM Symi (IMO: 9867839) via a ship-to-ship transfer.

“We firmly believe that enhanced co-operation between ports and shipping companies will accelerate the journey of decarbonisation,” said SIPG general manager of engineering Wenbin Luo.

Source: The Lloyd’s List

/ By marketupdate / news/ • / 0 Comments

China eases Covid rules at ports

CHINA has relaxed its coronavirus restrictions at ports, including new rules that benefit crew changes, as part of a broader policy U-turn that will see the country co-exist with the virus.

In a newly published guideline for domestic port operations, the transport ministry has removed the mandatory requirement of nucleic acid tests for port workers, except for those on posts exposed to high risk of infection.

The positions include pilots, inspectors or stevedores that need to perform their duties by boarding international trading vessels.

Vessels calling at Chinese ports are no longer required to provide the digital health code and 48-hour virus test results of the crew on board before arrivals.

The new rule is expected to make vessel docking and crew rotation easier in China, according to shipmanagement sources.

China has also opened visa application for seafarers from eastern European countries, allowing them to enter the country and take over newbuildings via a process that involves seven days of quarantine, they said.

“This was not possible a few months ago,” said a Hong Kong-based shipmanager.

However, not all ports have followed Beijing’s order.

One executive from a Hong Kong-based tanker company said crew are still required to test negative before being allowed to enter ports in China.

“Beijing is moving fast,” said the person. “I think it will take some time for all ports to follow suit.”

And the changeover of foreign crew at Chinese ports continues to be a tall order.

Seafarers from some big crew nations, such as the Philippines, are unable to obtain Chinese visa, while the ban on repatriation of foreign crew remains largely in place, said sources.

China is one of the few countries in the world that still impose strict cross-border travel restrictions, including compulsory quarantine in designated hotels, for overseas arrivals.

That said, there are unconfirmed media reports which suggested Beijing was considering a reopening of its border early next year.

The transport ministry has also requested ports and pilot stations to establish contingency plans and reserve duty that can keep port operations normal in the event of an infection flare-up.

Source: The Llyod’s List

/ By marketupdate / news/ • • / 0 Comments

CMA CGM to acquire two terminals in the growing port of New York and New Jersey

CMA CGM has agreed to buy two “flagship” terminals at the port of New York and New Jersey from Global Container Terminals.

The French liner giant will take control of GCT Bayonne and GCT New York, which have a combined capacity of 2m teu per year.

“While Bayonne terminal has the highest level of automation, the fastest truck turn time in the harbor, the closest ocean access, and an ability to service vessels of up to 18,000 teu, New York Terminal benefits from a highly productive labor force in the Port of New York and New Jersey and connects the dense New York hinterland with direct trucking and intermodal access,” the company said.

The group said it had significant development plans for the terminals, including expanding its combined capacity by up to 80%. The increase will serve the company as it seeks to further grow its shipping line calls in the New York area.

The move is part of CMA CGM’s strategy to develop its terminal business and increase its presence in the US, having also bought back Fenix Marine Services’ terminal in the port of Los Angeles in January.

Overall, the group has investments in 52 port terminals in 28 countries through CMA Terminals and its Terminal Link joint venture, including five terminals in the US.

“The acquisition of GCT Bayonne and GCT New York terminals is a strategic investment for the CMA CGM Group. It reinforces the services we provide to U.S. customers and their supply chain efficiency. It further consolidates our positions in the United States, a major market among the fastest-growing worldwide, and will help us continue our development,” said chairman and chief executive Rodolphe Saadé.

The announcement comes as the port of New York and New Jersey is on track for its strongest year on record, having grown 18.5% in 2021 from the previous year, and 9.4% in the year to date. It has taken the lead as the busiest port in the US in the past three months, overcoming both of its west coast competitors at Los Angeles and Long Beach.

A significant chunk of the port’s growth this year is due to cargo diversions from the west coast, where port congestion and a protracted labour dispute have led disruption-wary shippers to send their freight eastwards. It remains to be seen how much of the diverted cargo will remain in the port of New York and New Jersey and other east and gulf coast ports after the labour situation on the west coast is resolved.

After handling record levels of cargo for 26 straight months, the port of New York and New Jersey showed the first signs of slowing down in October amid a broader trend of declining imports to the US. Throughput declined by 0.5% year-on-year, while imports were down 4%, and the vessel backlog at its anchor has shrunk to average between two and three ships. Still, October’s throughput was 18.9% higher than in 2019, and while spot rates on the Shanghai-New York route were down 65% this year, they were up 12% on the New York-Rotterdam route and 17% on the Rotterdam-New York route, according to Drewry.

The acquisitions, announced late Tuesday, are subject to regulatory approvals.

Source: The Lloyd’s List