Top 20 Container Ports: 1.1% Volume Growth in H1 2022

result for the truckload sector has been higher freight volumes in major port markets, including the ports of Long Beach and Los Angeles, which handle 40% of all U.S. container imports.

DAT has recorded higher sequential spot rate increases for the last 12-months on long-haul lanes, such as Los Angeles to Chicago. Spot rates for loads to Elizabeth, NJ were higher at the end of 2021 than the monthly average for December 2020.

Truckload capacity is tightest from Los Angeles to the large e-commerce warehouse market of Stockton and has also been steadily tightening in Chicago.

The dry van load-to-truck ratio has spiked to its highest end-of-year level in five years due to reduced services over the holiday period.

Continue to expect one to two day

Total throughput rose at 11 ports, seven of which were located either in China or the U.S. Nine ports recorded volume declines. There were no new entrants to the top 20 during the period although growth at individual ports varied widely. Port Kelang recorded a decline of –7.4% at the lowest end, while New York/New Jersey saw the largest growth at +11.6%. Overall, Qingdao, Dubai and Antwerp-Bruges moved up one ranking, while Guangzhou, Hamburg and Port Kelang lost ground.

China’s eight ports represented 53% of total throughput for the leading 20 ports in the period. Alphaliner noted this figure would likely to grow further as the country funnels traffic towards a smaller number of hub ports.

Source: Alphaliner

Has the Bottom Dropped Out of the Air Cargo Market?

Several major air cargo operators are signaling an anticipated drop in demand or a flattening of the capacity requirements which characterized the pandemic. According to IATA’s latest industry update, air cargo capacity in June and July were tracking close to pre-pandemic levels but was measured against lowered demand which contracted by -5% year-on-year in August, and -4% compared to pre-pandemic levels, Xeneta’s data revealed.

Consequently, shipping rates which peaked at 156% above 2019 levels, have been down trending since late March. Rates are currently 113% above 2019 levels and the rate slide has started to slow down. According to CLIVE data services, rates have plateaued in August between Europe and North America, leveling off below those seen in 2020 and 2021, but is still much higher than 2019 rate levels (see Figure 1).

Air cargo carriers are anticipating a muted fourth quarter in 2022, due to a multitude of factors including continued disruptions to supply chains, global economic slowdown, a lack of people resources, higher than average fuel prices and the ongoing war in Ukraine.

Some freight airlines have halted their expansion plans, slowed fleet growth, reduced flight frequencies, or grounded aircraft as part of cost saving measures. A global forwarder noted that improvements in operations of seafreight had contributed to a lower demand for air cargo but remained positive about the longer-term prospects for the industry.

Yet, there remain a number of operators who are looking to engage with the air cargo market. Global shipping giant Maersk is launching its own air cargo operation, flying leased Boeing 767s as a complement to its seafreight operation. Vietnam is eyeing the start of its first freight airline, IPP Air Cargo, and India’s new cargo operator Quikjet is anticipating first flights before the end of the year.

Rates are slackening, and demand is beginning to wane, but compared with pre-pandemic times, air cargo remains in a healthy position. Nevertheless, the fourth quarter of 2022 comes with some strong headwinds, and a good deal of volatility that cargo carriers will need to weather. Issues such as reduced purchasing power through inflation, as well as the ongoing high price of jet fuel, will continue to dampen the airfreight market and slim the chances of airline profitability.

Source: Simple Flying

Ocean Carriers Remove 1.5m TEU of Capacity

Carriers have boosted the number of blanked sailings, eliminating around 1.5m TEU of capacity over the last 12 weeks to counter plummeting spot rates. However, rates have collapsed by -46.3% over the same period, Xeneta data shows.

“This is the highest number of blanked sailings on this key trade since January and February, at a time when the industry would normally have anticipated very strong demand. It’s an aggressive strategic play by carriers, but it’s clearly not paying dividends,” noted Peter Sand, Xeneta’s chief analyst.

Manufacturing activity tends to slow down during the Golden Week holiday in China and usually preceded by an uptick in ocean demand leading into the holiday. However, Golden Week’s approach and carriers starting to cancel sailings to try and keep vessels full have not stopped the rate slide.

On the Trans-Pacific, capacity reductions are slated to be 22%-28% of deployed weekly capacity in the weeks following Golden Week, whereas the peak reduction in those weeks was 15%-17% in 2019, and an average of 9%-11% in 2014-2018, according to data from Sea-Intelligence (see Figure 2). “There are higher numbers on Asia-North Europe as well, with the peak capacity reduction following Golden Week slightly under 20%, which, while in line with 2019, is higher than the 2014-2018 average. Asia-Mediterranean on the other hand, is the only trade lane of the four to see capacity reduction during Golden Week 2022, in line with 2014-2019,” said Alan Murphy, CEO, Sea-Intelligence.


Contrary to Ocean Carrier Expectations, Container Spot Rates Tumble

Several shipping liner executives predicted a gradual decline in spot container rates levels during their latest quarterly calls. Maersk CFO Patrik Jany said it would be a “progressive erosion” not “a one-day drop”, while Matson CEO Matt Cox noted rates were “adjusting slowly” and not “falling off a cliff”. Yet, container spot rates appear to be plummeting more rapidly than expected.

The steepest declines have taken place in the Asia-West Coast market. The Freightos Baltic Daily Index (FBX) China-West Coast assessment has fallen -76% over the past six months while the Drewry Shanghai-Los Angeles assessment is down -57% in the same period (see Figure 1). “There is no clarity with respect to when or where market rates may bottom,” said Stifel analyst Ben Nolan.

When import demand plummeted in the second quarter of 2020 due to pandemic lockdowns in Europe and the U.S., ocean carriers blanked sailings, reducing capacity and stopped the spot-rate slide. Sources have told Platts China’s Golden Week holiday (Oct. 1-7) could be a potential turning point. “Most sources expect the period immediately after Golden Week to be marked by a tonnage reshuffling as carriers look to balance capacity against the evolving marketplace,” reported Platts.

Drewry’s global index, despite being down -44% over past 6 months, is still 3.4 times the pre-COVID average (see Figure 2). If this same pace of decline were to continue, the Drewry global index would not reach pre-COVID levels until mid-Q1 2023. If the same pace of decline continued for the next three months, the index would still be double pre-COVID levels.

As ocean carriers now have more volume on annual contracts, the spot rate decline alone will not have the same effect as it did pre-pandemic. Furthermore, contract rates are dramatically higher than they used to be. According to Xeneta’s global index which tracks long-term freight rates is approximately 4.5 times above pre-COVID levels in August and up 121% year-on-year.

Source: American Shipper

India–U.S. Trade Strengthens as Sourcing Shifts

The flow of trade between India and the U.S continues to grow as sourcing shifts away from China. Containerized volumes between the two countries rose 8.3% year-over-year (y/y) in the first six months of 2022 after surging 23.5% for the full year in 2021, according to PIERS. U.S. imports from India accounted for roughly two-thirds of the 1.16 million TEU transported between the two countries in the first half.

Shipments from India to the U.S. grew 12.4% during the first six months of the year after spiking 31.4% in 2021, while outbound volumes from the U.S. to India climbed 1.1% in the first half after rising 10.5% last year. India’s Ministry of Commerce reported the U.S. overtook China as India’s top trading partner during India’s fiscal year 2021–22 that ended in March. Total merchandise trade between India and the U.S. rose 48.3% to an all-time high of $119.42 billion.

China continues to be the world’s largest production hub, but tariff conflicts, stop-and-start economic pressures from Beijing’s zero-COVID policy, and soaring labor costs are affecting the country’s dominant market position, said a global supply chain director at a U.S.-based industrial packaging manufacturer.

Major ocean carriers have responded to the growth in demand by adding capacity between the U.S. and India, via both new services and intermittent extra-loader sailings, primarily to Jawaharlal Nehru Port and Mundra. “Indian exports grew over the last two years due to the heightened repositioning of empty containers into the country and the introduction of additional capacities by the shipping lines,” said Sunil Vaswani, executive director of the Container Shipping Lines Association, which represents foreign carriers operating in India.

Source: Journal of Commerce

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