U.S. ports occupy the top five positions with New York having the most expensive Demurrage and Detention (D&D) charges followed by the ports of Long Beach, Los Angeles, Oakland and Savannah. All five of these ports are more than two to three times more expensive than seventh-placed Hong Kong and at least 20 times more expensive than other major Asian container hubs such as Dalian in China and Busan in Korea.
The Demurrage & Detention Benchmark 2022 report by Container xChange, ranked 60 global ports based on the D&D charges levied by container lines on customers two weeks after their cargo arrives at the port or is discharged from the vessel.
Global average D&D charges levied by container lines for standard-sized containers increased from $586 in 2020 to $868 in 2021. So far in 2022, average D&D charges at major global ports have declined by 26% to $664 per container, although fees are still 12% higher than before the pandemic.
The report further notes that D&D charges vary widely by port and by the carrier. Of the leading container lines across ports, COSCO currently has the lowest D&D charges while HMM’s D&D fees are the highest. By region, D&D charges in May in the U.S. were the highest at $2,692 per container. This compared to $549 in Europe, $482 in India, $453 in China, and $366 in the ‘rest of Asia’.
Source: Container xChange
Congestion has reached critical levels at some of North Europe’s hub ports. The bottlenecks are worsened by ongoing driver shortages and disruptions to inland rail and barge services. Although imported container volumes into North Europe and the Mediterranean in the first four months of the year fell -4% y/y to 4.16 million TEU, according to Container Trades Statistics (CTS), it has not eased congestion at the hub ports.
Accumulated delays stemming from congestion have necessitated the adjustment of 17 sailings offered by the 2M Alliance on the Asia-North Europe corridor from August until November so far. Meanwhile, shippers overloaded with inventory are delaying the collection of their cargo from ports causing boxes to stack up at container terminals.
The port challenges have consequently pushed delays inland to intermodal services that collect and carry containers to inland terminals for distribution via road, rail, or waterway to their final destinations. The average wait times for barges in Rotterdam and Antwerp last week was 56 hours in Rotterdam and 51 hours in Antwerp, significantly higher than pre-pandemic levels. Rail freight in Europe has also faced significant disruption through June with construction work in Germany closing lines and impacting train arrivals and departures, creating imbalances across the network.
A number of key factors are driving terminal congestion. Schedule reliability remains at a low 25.7% according to Sea-Intelligence Maritime Analysis (see Figure 1). Additionally, vessel call sizes have risen significantly at North European ports. S&P Global Port Performance Program data shows average call sizes in the first five months compared with the same period last year at Felixstowe were up 30%, Gdansk up 26%, Rotterdam up 20%, and Antwerp and Hamburg both up 10%. This means there are greater volumes on vessels bunching up outside their arrival windows, placing enormous pressure on the handling capabilities of terminals.
Drewry data noted productivity across North Europe container terminals has deteriorated significantly. Average port hours of the deep-sea vessels across the North Europe hubs in the first five months increased 20% y/y to 52 hours, while the average anchorage hours increased 37.6% compared with the same period in 2021.
Source: Journal of Commerce
Air cargo demand declined by -8% in June 2022 compared with a year ago, according to the latest statistics from CLIVE Data Services. The dynamic cargo load factor in June was at 59%, having fallen by nine percentage points compared to 2021. Carriers have increased capacity by 6% over 2021 to meet returning passenger demand but capacity is still -11% below 2019 levels. Despite the weakening demand, rates in June 2022 are 13% higher than last year’s levels and 129% higher when compared to 2019 (see Figure 1).
Xeneta’s chief airfreight officer, Niall van de Wouw, said the North Atlantic market had seen the steepest decline in conditions, falling by -30% over the last three months. The rates are now close to 2020 levels (see Figure 2). He warned of knock-on effects on other trade lanes, while inflation could also impact market demand. “While flights ex Asia to the U.S. and Europe remain relatively full, we are seeing a subdued North Atlantic market, largely due to more capacity.
“We are already seeing some freighter redeployment in the market. It will also be interesting to see the reaction of forwarders that have secured air cargo capacity directly with airlines or through charter brokers or ACMI providers because, in a softening market, more options are available. They were willing to pay a price for reliability and their own control, but they may now be considering how much cheaper it could now be to use commercial airline capacity. And, has the ‘cost of living’ crisis even started to kick in yet?” van de Wouw said.
Rising cases of COVID will be another market concern, along with a staffing shortage in the aviation and logistics industries. Van de Wouw pointed to reports of restrictions on freighter operations at Frankfurt Airport due to labor shortages as well as the recent study by the International Road Transport Union, which shows 2.6m truck driver vacancies went unfilled in 2021 and forecasts a worsening situation in 2022.
Source: Air Cargo News
Maritime analyst Drewry said in a recent market update, “It certainly feels like we are at the beginning of the end of the container market bull run”. There are signals of a weakness at origin which would typically bring with it a return to the normal flow of goods. Indicators such as falling spot freight rates, increase in vessel capacity, cancelation of manufacturing orders, a slow recovery from the recent COVID-19 lockdowns in Shanghai, as well as industry discussions about a mild peak season and the significance of spot rates falling below contract rates.
However, cargo flows in both North America and Europe have worsened and largely in part due to what is happening on the ground at destination. The system is at a breaking point, brought on by the strain of an early inventory buildup. With shipper receiving facilities full, containers are piling up outside those warehouses and at distribution centers (DCs), ports, and inland rail ramps, idling both containers and chassis and forcing growing numbers of ships to wait at anchor.
This is not only attributable to importers holding on to excess inventory but rather that inventory is mismatched to current customer demand and consequently, not easily moved. This is in part a result of bottlenecks earlier on in the supply chain that saw inventory missing the holiday season, or importers ordering much earlier to mitigate the risk of lost sales from supply chain delays.
Meanwhile, volumes remain significantly elevated. Containerized imports from Asia into the U.S were up more than 30% in the first five months of 2022 compared with the same period in 2019, according to PIERS. That “staggering increase” in volume, has left U.S. container flow in a severely handicapped state and further vulnerable to any peak season uplift that may materialize over the summer, said Bethann Rooney, port director for the Port Authority of New York and New Jersey. Additionally, the system has been continually out of balance - from the Suez closure to multiple pandemic-related lockdowns in China, and U.S. rail service meltdowns – offering no opportunity to right itself after the shocks. This has translated to idle capacity and much higher rate levels.
Although volumes will probably ease in the second half of 2022, new forms of disruption are emerging such as industrial action in trucking in Vancouver, Canada, at U.S. railroads, and at ports in Europe. Other problems continue to emerge which include U.S. intermodal rail service. In a recent filing with the U.S. Surface Transportation Board, BNSF Railway wrote, “We continue to see a significant number of trains queue for intermodal service in our LPC facility [outside Chicago] because shippers are not pulling containers fast enough to allow BNSF to ground new containers.”
Source: Journal of Commerce
The four-day strike by 4,000 container trailer operators serving India’s Southern Chennai region has ended. Disrupted cargo flows at the East Coast gateway ports of Chennai, Ennore (Kamarajar) and Kattupalli, which handle the majority of containerized trade in and out of the region, have resulted in more than 10,000 TEU stranded across the three docks.
A Chennai-based customs broker said it would take at least a week to “get things back on track”, and pointed out that “importers, who had to hold containers beyond normal free times, are likely to be penalized in the form of storage and detention charges”. Export boxes will also likely miss sailing connections due to the bottlenecks.
Much of India’s East Coast cargo is traditionally transshipped via Colombo or other South Asia hub ports however, due to sailing disruptions and economic problems in Sri Lanka of late, many carriers serving India had rerouted some loads out of the Chennai region to the West Coast ports of Nhava Sheva (JNPT) and Mundra.
Volumes in India have remained steady and ocean services are seeing intermittent sailing cancellation while vessels continue to be overbooked in every Indian port. Indian container volumes (major/minor ports combined) last month stood at 1.7m TEU, up from 1.66m TEU in May.
Source: The Loadstar
