February 2022 Liner Capacity Reduced by 11%

According to Sea-Intelligence, missing vessel capacity escalated in January 2022, with 13.7% of the fleet unavailable. The capacity absorption data shows that February recorded a slight improvement at 11.6% (see Figure 1).

Schedule reliability for February will likely be worse than what is being reported now. Sea-Intelligence explains that due to certain cases having protracted average delays, some data will only be captured in next month’s GLP report, leading to retroactive updates to the February data. Using the monthly adjustments of the past year, the February 2022 capacity absorption is expected to be between 11.7% to 11.8%. 

Over the past two months, the North America terminal congestion index has gradually improved, but remains at an elevated level (see Figure 2).

There is a similar trend for the intermodal congestion. In Europe, there has been no improvement in the past three months in the terminal congestion and there is no indication of improvement in the near future. On the intermodal side, we do not see as high a level of congestion as in North America, suggesting that the problems in Europe are more heavily focused specifically on terminals.

Source: Sea-Intelligence 

Air Cargo Demand up 2.9% in February, Uncertainty Continues

Accounting for the volatility of the Lunar New Year by averaging January’s and February’s performance, IATA said demand increased 2.7% year-on-year. Although cargo volumes rose, the growth rate decelerated from the 8.7% year-on-year increase in December. Global cargo capacity was 12.5% above February 2021 (8.9% for international operations). However, compared to pre-COVID-19 levels, capacity remains -5.6% below February 2019 levels.

Several factors benefitted air cargo in February compared to January. Manufacturing activity restarted quickly after the Lunar New Year holiday, boosting demand. Capacity was positively influenced by the general and progressive relaxation of COVID-19 travel restrictions, reduced flight cancellations due to Omicron-related factors (outside of Asia), and fewer winter weather operational disruptions. 

“Demand for air cargo continued to expand despite growing challenges in the trading environment. That is not likely to be the case in March as the economic consequences of the war in Ukraine take hold. Sanction-related shifts in manufacturing and economic activity, rising oil prices and geopolitical uncertainty will take their toll on air cargo’s performance,” said Willie Walsh, IATA’s Director General. 

IATA noted that the zero-Covid policy in mainland China and Hong Kong continues to create supply chain disruptions because of flight cancellations due to labor shortages and many manufacturers are unable to operate normally.

Source: IATA

Volatile Spot and Contract Rates Impact European Trades

Persistent congestion at origin and destination ports, COVID-19 lockdowns in China, and low carrier reliability are creating a turbulent situation in the spot and contract markets on both the Asia-North Europe and Trans-Atlantic trades.

Peter Sand, chief analyst at rate benchmarking platform Xeneta said shippers see long-term contracts with liners as “being one of the remedies in bringing in more predictability, stability, and reliability into their complex supply chains”. The traditional 50:50 split between spot shipments and those carried under contract on Asia-North Europe has shifted with more shippers signing up for contracts, said Sand. 

Schedule reliability on Asia-North Europe continues to below. In February, on-time performance fell to 15%, according to Sea-Intelligence Maritime Analysis. With COVID-19 lockdowns in China disrupting schedules at origin, vessels in February were recording an average delay of nine days in North European hubs.

On the Trans-Atlantic, port delays have lowered schedule reliability to 14.7% in February, down 9 percentage points from the same month last year. Sea-Intelligence reported. U.S. East Coast ports are struggling with rising volumes on two fronts. Firstly from U.S. shippers diverting imports from congested West Coast ports, and secondly from European cargo owners are trying to moving shipments to avoid deteriorating schedule reliability and worsening bottlenecks. 

Source: Journal of Commerce

U.S. Truckload Volumes Cools as Manufacturing Activity Slows, Port Houston Prepares to Receive Larger Ships

The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index was unchanged in February after increasing 0.4% in January. Compared with February 2021, the SA index rose 2.4%. Demand for trucking freight services remains strong. The fact that the tonnage index hasn’t fully recovered is a supply problem, not a lack of demand.

Port congestion on the West Coast is easing. The number of vessels waiting to unload nears 40 (down from 109 on 9 January, 2022) according to the Marine Exchange of Southern California. 

Port congestion on the West Coast is easing. The number of vessels waiting to unload nears 40 (down from 109 on 9 January, 2022) according to the Marine Exchange of Southern California. However, importers continue to redirect loaded containers to other less-congested ports. The Gulf Coasts’ Port Houston has been one of the larger ports to benefit from the coastal shift away from the congested West Coast. February’s import volumes were up 37% y/y. Most shipments come from mainland China, where total volumes are 39% higher y/y in Port Houston.

According to Port Houston, “this is the biggest February Port Houston has ever seen in terms of containers.” In response to this strong growth, the port is opening additional gates and adding three new neo-Panamax ship-to-shore cranes allowing Port Houston to receive larger ships than ever before. 

For truckload carriers, this means more volumes, just as the Houston freight market becomes the number one dry van market for load post volumes. In the nation’s largest port, load post volumes in Los Angeles decreased by 4% w/w.

Source: DAT Freight & Analytics

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