Ocean Freight

Logistics Market Update – March 2023
Logistics Market Update – March 2023 2560 1438 Transmodal

Starting off with a look at US container imports, the 10 busiest ports saw a drop in volume of 296,390 TEUs in February 2023 when compared with the previous month. The bad news for the Port of Los Angeles is that it represented 40% of that decline.

The good news is that this isn’t unprecedented. In fact, February’s numbers are a mere 0.3% lower than they were in 2019, pre-pandemic.

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Port owners at the Port of Los Angeles are hoping that they’ll soon iron out a new contract agreement. Their executive director says they’re “pretty confident they’ll see some progress by springtime.”

Negotiations have been going on since last summer, and they haven’t been going all that well, leading to a general feeling of distrust among shippers, who started rerouting shipments to the East Coast.

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Some say the supply chain is repairing itself, and they might be right to some extent—at least on paper. But reality may be a bit out of focus, especially for consumers who still can’t catch a break with COVID generated issues—like insanely escalated shipping costs. Costs that have completely tanked, but since shippers were locked into long-term contracts, consumers are still paying the price. And that isn’t even factoring in inflation.

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In line with the thought above—that the supply chain is healing itself—the New York Federal Reserve Bank stated in early March that the supply chain is back to normal. Again, this may be the case on paper, but realistically? Not so much.

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In a rebuttal to the Fed’s claim that all was back to normal in the supply chain, several analysts are calling them out and saying not so fast, we’re not quite there yet. Referencing other available data sources, their take is that stating things are back to normal is premature. That, in fact, while some issues may be resolving, they are still much worse than they ever were pre-pandemic.

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What are INCO Terms?
What are INCO Terms? 2560 1438 Transmodal

International Commercial Terms, also known as INCO phrases, are a set of standardized terms that are used in international trade to specify the responsibilities of buyers and sellers in a more precise manner. When determining who is liable for the costs of shipping, insurance, and any other expenses connected to the movement of products, these phrases are utilized.

There are a total of eleven INCO terms, which can be broken down into the following categories: Ex Works (EXW), Free Carrier (FCA), Free Alongside Ship (FAS), Cost and Freight (CFR), Cost, Insurance and Freight (CIF), Carriage Paid To (CPT), Carriage and Insurance Paid (CIP), Delivered at Terminal (DAT), Delivered at Place (DAP), and Delivered Duty Paid (DDP). Ex Works (DDP).

EXW, FOB, CIF, and DDP are the INCO words that are utilized the most frequently. EXW indicates that the seller is only responsible for making the products available at their premises, whereas FOB, which stands for “Free On Board,” indicates that the seller is also responsible for loading the items onto the shipping vessel. CIF is an abbreviation that stands for “cost, insurance, and freight,” and it indicates that the cost of the goods, as well as the freight and insurance costs, are the responsibility of the seller. DDP stands for “Delivered Duty Paid,” which indicates that the seller is liable for all costs associated with getting the products to the buyer, including any and all applicable taxes and customs duties.

It is essential for a buyer to have a thorough understanding of the INCO words and the roles that are denoted for each party by those phrases. This will assist ensure that you are aware of any additional costs that may be incurred and that you are prepared to handle them by ensuring that you are aware of any additional costs that may be incurred. In order to steer clear of misunderstandings and disagreements, it is essential to check that the INCO words are stated in a manner that is crystal obvious in the contract.

In addition to the INCO terms, buyers may also have other specialized requirements, such as product certifications, packaging, labeling, and documentation. It is critical to provide the seller with advance notice of these needs to increase the likelihood that they can be satisfied.

Because they outline the responsibilities of buyers and sellers for the flow of commodities, INCO words are essential for anybody participating in international trade to have a solid grasp on. It is possible to reduce the likelihood of misunderstandings and disagreements by maintaining clear communication and thoroughly comprehending these concepts. In addition, buyers need to be aware of their particular requirements and express those criteria to sellers in order to guarantee that transactions go off without a hitch.

Aerial view of a working dock and cargo ship begin loaded by a crane

Logistics Market Update – January 2023
Logistics Market Update – January 2023 690 518 Transmodal

It’s feels like the pendulum has swung—from boom to bust.

The last few years had segments of the industry beside themselves in glee as they raked in huge profits. But the boom is bust, and it’s time to stop swaggering. The party is over for ocean carriers especially, and they’re preparing for things to get even worse. To the extent that major trade lanes canceled 100 sailings between Dec. 12 and Jan. 15.

Click to Read: https://www.freightwaves.com/news/viewpoint-ocean-girdle-tightens-as-trade-slims-down

Closer to home, trade between the US and Mexico is expected to remain steady through 2023. During 2022, cross-border commerce between the two countries remained healthy in comparison to 2021 year-over-year stats. There was only a drop of 1% against the record spending of 2021 that spurred cross-border freight. And 2023? It looks like the future is just as bright, with Mexico becoming a choice location for companies who are considering nearshoring some of their operations.

Click to Read: https://www.freightwaves.com/news/us-mexico-trade-growth-to-remain-steady-in-2023-bolstered-by-nearshoring

Just when you thought it couldn’t get any worse—or, at least, after the last few years, you thought it could only get better. Unfortunately, after learning that global trade was far more fragile than we thought, we must accept that things could get even worse.

From past woes like the grounding of the Ever Given, the pandemic, the war, and more, we have a future that could be colored by currently festering issues. Issues like the Biden administration’s policies when it comes to global trade, especially with China.

Click to Read: https://www.ttnews.com/articles/fresh-fragility-global-trade-set-be-revealed-2023

December 2022 saw a drop of 19.3% in box volumes against December 2021, but still maintained a tiny increase of 1.3% over December 2019. All thanks to tanking global trade and increasing inflation. A recent Global Port Tracker report predicts a drop of 11.5% for January and 23% for February when compared to their corresponding 2022 months. Meaning imports will be much the same as they were when COVID lockdowns first went into effect and shipping volumes tanked.

Click to Read: https://www.wsj.com/articles/u-s-container-imports-tumbled-close-to-prepandemic-levels-in-december-11673373778?

Finally, in air freight news, air passenger traffic is almost back to normal, adding freight space capacity—almost too much capacity. Regardless, this has led to an easing of bottlenecks and fewer delays. But the industry is realizing, as things revert back, that they’re going back to a new normal, not pre-pandemic norms. And we can look to issues like a looming recession, higher energy costs, inflation, the ongoing war, and the trade war between the US and China as factors that are contributing to the change.

Click to Read: https://www.joc.com/article/global-air-freight-capacity-oversupplied-entering-2023_20221220.html

Dock cranes and docked cargo ship

Logistics Market Update – December 2022
Logistics Market Update – December 2022 630 440 Transmodal

News from around the global logistics industry:

Earlier this month, a brand-new 24,004 teu carrier named the Ever Atop made its maiden voyage. It’s the world’s largest boxship — in terms of capacity — to date and is one of 10 new A24 carriers for Evergreen.

It made its maiden voyage less than three-quarters full, causing many to question the need for adding extra capacity at a time when blank sailings are on the rise. Despite this, at least three carriers are moving forward with plans for new ships.

Click to Read:  https://theloadstar.com/latest-worlds-largest-containership-sails-light-on-its-maiden-voyage/

Maersk and IBM, who had partnered on the TradeLens project, have announced it will go offline by the end of March 2023.

TradeLens was meant to be a platform that would make it possible for everyone in the industry to share and analyze both data and documents. However, a lack of support and collaboration from industry members has halted the development of of the platform. It seems that not everyone wants to move the industry into the 21st century by digitizing processes and information.

Click to Read: https://splash247.com/tradelens-folds/

The Marine Exchange of Southern California has updated the status of the backlog at the ports of Long Beach and Los Angeles. The ports’ backlogs have finally been cleared to zero ships.

The backlog started building up in October 2020 and peaked in January 2022. Unfortunately, the reason why the ports were able to clear their backlog is because of the increasing number of blank sailings.

Click to Read: https://www.wsj.com/articles/southern-californias-container-ship-backup-ends-11669162514

We’re just weeks away from the commencement of contract talks between the International Longshoremen’s Association and port employers.

According to the ILA, they’re confident that they’ll be able to quickly negotiate a new six-year contract. They’re basing this reasoning on the success of previous negotiations with the US Maritime Alliance in 2018.

Click to Read: https://www.joc.com/ila-sees-no-disputes-port-employers-ahead-2023-contract-talks_20221206.html

There’s been a lot of upheaval and confusion in the supply chain over the last few years and the industry itself has added to it. 2022 saw many regulatory changes, meaning supply chain and logistics organizations had yet another challenge to face in order to stay up-to-date and compliant.

There were new sanctions and regulations that came about because of Russia’s invasion of Ukraine, which included Harmonized Schedule (HS) code restrictions. In June, the Uyghur Forced Labor Prevention Act (UFLPA) went into effect. And in case that wasn’t enough, there was the added confusion around section 301 tariffs.

Click to Read: https://www.logisticsmgmt.com/article/2022_trade_update_whos_on_first

Overhead view of dock crane unloading containers from a cargo ship

Logistics Market Update – November 2022
Logistics Market Update – November 2022 690 518 Transmodal

Here’s our November 2022 Logistics Market Update.

Earlier this month, an issue of the Global Port Tracker shared that retailers are not feeling optimistic. The prediction is that this month’s containerized imports will drop 9.2% in comparison to November 2021. Further, December imports are expected to drop 9% year-over-year, and this downward trend will continue through March 2023 at least.

Click to Read the full article: https://www.joc.com/maritime-news/container-lines/us-retailers-lower-import-forecast-amid-demand-decline_20221108.html

China’s zero-COVID policy continues to put pressure on its economy—which has slipped for the third month in a row. A senior economist from Caixin Insight Group states that “manufacturing activity was still way down by COVID-19 outbreaks,” and added, “both output and new orders saw further declines.” COVID restrictions prompted 200,000 Foxconn workers across a Zhengzhou complex called iPhone city to flee to escape lockdowns.

Click to Read the full article: https://theloadstar.com/china-manufacturing-slips-for-third-month-in-a-row-as-zero-covid-policy-bites/

In air freight news, the industry remains optimistic in the face of falling air cargo rates. Some levels have dropped to below 2021 rates and continue to fall. The good news is, they aren’t at recessionary levels yet. The industry hopes that demand will return in March, but no one is holding their breath.

Click to Read the full article: https://theloadstar.com/airfreight-a-tough-few-months-but-demand-could-return-in-march/

The drop in consumer demand is being felt around the world. Asia-Pacific airlines have seen a drop of more than 10% year-on-year in demand in September. The director general of the Association of Asia Pacific Airlines (AAPA) says, “The outlook for the cargo market remains subdued in the near term. Overall, the region’s airlines continue to face a challenging operating environment, with costs under pressure as a result of high fuel prices and weak local currencies.”

Click to Read the full article: https://theloadstar.com/sudden-slump-in-demand-leaves-asia-pacific-air-cargo-carriers-in-limbo/

For those who work on the high seas, the Delivering on Seafarers’ Rights progress report was published, thanks to the Sustainable Shipping Initiative. A progress report was written based on an October 2021 Code of Conduct and self-assessment questionnaire. The purpose of the assessment was to look into the welfare and rights of seafarers to identify areas where improvement is necessary.

Click to Read the full article: https://safety4sea.com/new-report-marks-progress-regarding-seafarers-rights-and-welfare/

 

 

Row of trucks against a background of stacked containers

Logistics Market Update – October 2022
Logistics Market Update – October 2022 690 518 Transmodal

Here are some of the top global shipping news stories for October.

For the last several years, the norm has been to hear about port congestion on the US West Coast. However, West Coast ports are reporting their second month of decreased congestion. On the flip side, thanks to typhoons in the East, the ports in China and South Korea are experiencing rising congestion levels. In fact, levels were higher than they were during the pandemic.

Transit times were up by at least 25% in September at the ports of Qingdao, Busan, Ningbo, and Shanghai, with Qingdao experiencing an astounding 59% increase.

Click to read: https://windward.ai/blog/a-reshuffling-of-port-congestion-in-september/

In line with the above, CNBC reports a 20% drop in ocean freight orders throughout September and October. The reason is a drop in demand across many sectors, including apparel. The CEO of United National Consumer Suppliers explains that in part, the reason for the drop is many consumers shifting to off-price or discount stores like T.J. Maxx and Marshalls. That’s leaving retailers of more prestigious brands stuck with inventory.

Click to Read: https://www.cnbc.com/2022/10/03/ocean-shipping-orders-are-signaling-a-big-drop-in-consumer-demand.html

Labor at ports continues to be a global issue for supply chains. From October 11 until October 17, Port of Liverpool dockworkers were on strike—again.

Union officials took action because, in their words, the port operator refused to establish “sensible negotiations.” Instead, officials say the operator tried to intimidate its workers, which is likely a reference to an announcement made by Peel Ports saying that due to a deterioration in volume, 132 dockworkers were issued redundancy notices. South Africa is still dealing with a work stoppage and tensions are high at US West Coast ports.

Click to Read: https://www.joc.com/port-news/european-ports/port-liverpool/liverpool-port-workers-begin-second-pay-strike-talks-stall_20221011.html

The outlook isn’t too merry as we head into the holiday shopping season in the US.

Retailers are still stuck with summer stock thanks to extreme weather events, ongoing labor issues, geopolitical problems, and continuing post-pandemic chaos. For holiday shoppers, this could mean that some retailers try to offload inventory at significant reductions instead of paying to store it—that’s the good news. However, in terms of items that are facing supply chain delays, you can expect costs to rise.

Click to Read: https://www.usatoday.com/story/money/2022/10/10/supply-chain-issues-holiday-shopping-season/8233775001/

The worldwide factory sector is experiencing increasing upward pressure thanks to higher energy prices.

The PMI states that for the first time in five months, September saw average input costs escalating at a faster rate than ever. According to data, supply chain and wage price pressures have calmed down, but energy costs remain at an all-time high. Companies reporting increased costs because of energy prices increased by 4.7 times higher than the PMI’s longest-run average.

Click to Read: https://www.hellenicshippingnews.com/worldwide-industrial-price-pressures-rise-as-higher-energy-costs-and-strong-dollar-offset-impact-of-cooling-supply-chains/

Docked container ship at dusk with dock cranes in the background

Logistics Market Update – September 2022
Logistics Market Update – September 2022 1920 615 Transmodal

While the pandemic isn’t really over, in a lot of aspects, it is. Life is returning to a slightly skewed version of our pre-pandemic norms. So what’s up with the supply chain? Why are we still dealing with such widespread disruptions?

First off, little disruptions and ripples have always been relatively easy to course-correct. But the hits have just kept coming over the last few years, with no time for correction before the next hit. Add to that the state of the world—think geopolitical events such as the war. Even raising costs and an unstable economy adds to the current state of the supply chain.

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There’s been a significant increase in rail system volume on the China-Europe route. The reason behind this is mostly due to port congestion, which is pushing up demand for trucking options. The China State Railway Group reports that there was a total of 1,517 Silk Road trains running in July, a year-on-year increase of 11%. There’s also a 12% increase in volume.

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Ports in Europe faced increased wait times thanks to the situation at Felixstowe. An 8-day strike in August had a ripple effect across the region since carriers opted to avoid the port and divert to others. German ports, which were already dealing with labor issues of their own, faced significant increases in congestion, with Hamburg hitting a peak of 42 hours at Bremerhaven.

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Despite a turbulent year, the air cargo industry has seen some significant highs. Most notably, there were 23 carriers and service providers who achieved the Quest for Quality gold this year for their achievement in maintaining world-class service levels.

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Finally, it seems that the sky-high demand in container shipping is dropping. While rates are still up, this can be attributed to the general chaos in the industry and port congestion. Rates between November 2020 and January 2022 maintained a level of about 10% higher than capacity, but as of June, this number has dropped down to 2%.

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Cargo waiting to be loaded on cargo plane in the background

Logistics Market Update – August 2022
Logistics Market Update – August 2022 1920 615 Transmodal

The industry is used to hearing news about port congestion and ships loitering as they wait for berths—at least at the West Coast ports of Los Angeles and Long Beach. But the tide has shifted. As carriers try to escape the backlog in the west by moving to the east, the problem has followed along like an albatross. The Ports of Houston and New York now have as many containerships waiting for berths as Los Angeles and Long Beach combined.

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The summer saw still more lockdowns in China as COVID fears continued. Fortunately, Shanghai’s two-month-long lockdown was lifted and with it some speculation that leadership may relent—at least to some extent—on their zero covid policy. There is no escaping the impact on their economy, and manufacturers are becoming increasingly vocal about leaving the country and near-shoring production back to the US and Europe.

Click to Read the Full Article

According to a survey of 233 senior procurement executives done by Ivalua, nearly all procurement leaders—97% of them—say they are facing significant disruption in the direct materials supply chain. 67% say they have little to no confidence in existing technology, and 84% say modernization needs to be a priority.

Click to Read the Full Article

The Biden Administration is considering a relief package that will roll back some of the tariffs that were previously imposed on China during the Trump Administration—which raised prices on everything from diapers to clothing and furniture. The expectation is that a modest list of tariff suspensions will tamp down inflation.

Click to Read the Full Article

The FMC has a bit of a conundrum. Back in June, a vote was passed, giving them more power to handle allegedly unfair business practices carried out by ocean carriers and marine terminal operators. But now they’re saying they don’t have enough staff to enforce reforms. According to FMC Commissioner Carl Bentzel, “We have major rulemakings we’ll be starting in the short term but very few people to do the work, so we’re wrestling with that.”

Click to Read the Full Article

Bow of docked cargo ship at dusk

Logistics Market Update – July 2022
Logistics Market Update – July 2022 690 518 Transmodal

Sluggish supply chains could get even slower going forward. The green shipping initiative has had the industry concerned about increased costs, but now decreased speed could be a factor as well. This is because of the lack of insight shipping companies have into what type of fuel they’ll need to use. To offset that lack of knowledge, they’ll continue to use older vessels. The problem is that those vessels will need to run more efficiently and that could translate into them sailing at slower speeds.

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For some good news on the high seas, the ICC International Maritime Bureau (IMB) reports that the period between January to June 2022 had the lowest incident rate of piracy since 1994. Of the 58 incidents reported—there were 68 in the same period in 2021—there were 55 boardings, two attempted boardings, and one hijack. Despite the lower numbers, the IMB reminds the industry that it’s not the time to be complacent since the number of boardings remains high.

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California’s AB5 law has truckers protesting. The law restricts independent owner-operators, forcing them to be reclassified as employees. In response, a protest at the Port of Oakland forced its closure. Truckers blocked gates and access to the port’s container terminals. West Coast ports are already dealing with congestion and contract negotiations, so this new issue adds more stress to an already fragile supply chain.

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Speaking of ships, in a world of super-sized container vessels, the tide has turned—at least in the commodity trades market. Small ships are outperforming larger vessels by a significant amount. According to a report from Clarksons Platou Securities, Spot employment for smaller bulk commodity ships costs more than for larger ships — in most cases, a lot more.

Click to Read the full article

Moving to the East Coast, ports there are starting to deal with the same pain West Coast ports have been facing since early in the pandemic. Ships that are hoping to escape the congestion issues at the Ports of LA and Long Beach are moving east and shifting congestion at the same time. The McCown Report by Blue Alpha Capital states that the number of container ships waiting for a berth on the East Coast is much higher than usual, despite an overall drop in the number waiting country-wide.

Click to Read the full article

Container being loaded onto a cargo plane

Logistics Market Update – June 2022
Logistics Market Update – June 2022 1920 615 Transmodal

Shippers are happy about the impending launch of three new initiatives. These are in the wake of an investigation by the Federal Maritime Commission (FMC) into ocean carriers. The three new initiatives are the International Ocean Shipping Supply Chain Program, the reintroduction of the Rapid Response Team, and the designation of an FMC Compliance Officer.

Click to Read: FMC launches new initiatives to help shippers with supply chain challenges

Brace yourselves. With most COVID restrictions in China—Shanghai specifically—lifted, terminals are preparing for waves of imports hitting already congested ports. One estimate calculates an unshipped backlog of 260,000 teu from Shanghai for April alone. This means ports are scrambling to get ready for two months of backlog while also preparing for the peak summer season. For now, there are no major disruptions, and the feared tsunami hasn’t happened.

Click to Read: Terminals around the world brace as Shanghai exhales 

It’s been a tough and expensive few years for shippers. Ongoing vessel delays have forced shippers to maintain higher inventory levels, leading to financial losses of about $10 billion over the course of the pandemic. At the same time, carriers—whose rates to shippers have skyrocketed—have made more than $163 billion in operating profit this year alone. For shippers, this has to cause some resentment, especially since that $10 billion doesn’t include losses due to delays due to missed connections and or long wait times in port.

Click to Read: Vessel delays costing shippers billions: Sea-Intelligence

The economy may be struggling, but America’s ports continue to maintain the historically high numbers we’ve had for the past few years. Specific mentions go to the Port of Long Beach, which in May had its second busiest month ever, and the Port of Charleston, which had its third-highest month ever. Although queue wait times have dropped, ports are still working through their backlogs.

Click to Read: Boom times not over yet: US container ports still near highs

With just over two weeks remaining before the longshore union contract for the U.S. West Coast ports expires, both sides felt compelled to break their self-imposed silence to refute media reports that the ports were preparing for a possible strike or lockout. Without offering any specific details, the International Longshore Warehouse Union and the Pacific Maritime Association both emphasized that the discussions are continuing and that no actions were imminent.

Click to Read: No Strike or Lockout Planned as West Coast Labor Contract Nears End

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