Market Update Q3 2024: No.8

All,

Welcome to the monthly installment for August. The tide is turning slightly, but we are not quite there yet. Though, it makes me happy to deliver some good news for a change.

Rates and Increases:

It seems there has finally been a break downward after several months and it is right on pace with our original estimate. Let's hope the trend continues!

Rates from China and SE Asia are reducing to Los Angeles, and at a lesser pace, some major IPI destinations. Rates for EC and Gulf stay elevated and that will probably continue to stay static through August. We expect some downward pressure for these lanes to start late August to early September.

Rates from India and Subcon to the USA are increasing and subject to GRI/PSS depending on the carrier - these rates are on a 30-day lag vs. China, and they are still struggling with equipment and space. There is still a lot of volatility in this lane as carriers also propose some large increases, particularly to the WC as a result of the service disruptions.

As additional capacity and sailing start to come into the market as demand decreases, we expect rates to start and continue a methodical pace downward. However, be careful and continue to note the blank sailings are continuing from the carriers and it can increase at any time.

Please refer to the attachment for blank sailings and vessel schedules ex China.

PSW/PNW: Space continues to be open in most of the origins, PNW is slightly tight in SPRC region.

USEC/GULF: USEC starts to open up in China origins, but remains tight in SE Asia.

Note below GRI/PSS proposals by carrier - attached MSC proposed 8/18 increase as well that is not on the below table at $1500/container

Operation:

West Coast Ports Prepared for Peak Season Surge After Cargo Front-Loading

• Container dwell times improved despite increased import volumes, indicating efficient operations compared with COVID years.
• Significant double-digit import growth at major West Coast ports, with Prince Rupert also seeing a 6% increase.
• Rail networks to inland destinations are operating smoothly, supporting the handling of increased cargo more efficiently in 2024 compared to 2021 and 2022.

MSC Reintroduces Trans-Pacific Service with New Stop in Philadelphia

• MSC has reinstated the Liberty service to the US East Coast, previously suspended in 2022.
• The service now includes a new call at Philadelphia, enhancing the coverage of major US East Coast ports.
• The full rotation is as follows: Singapore – Shanghai – Busan – Miami – Savannah – Charleston – Philadelphia – New York – Singapore
• The return of this service aligns with rising Asia-US freight rates and easing Panama Canal restrictions.

Expanded Trans-Pacific Services Increase Capacity in July

• A nearly 16% increase in deployed vessel capacity on the eastbound trans-Pacific route was noted, the highest in three years.
• The additional capacity has moderated the recent rise in container spot rates, which were influenced by front-loaded imports and global port congestion.
• Trans-Pacific carriers are deploying 2.6 million TEUs of capacity, reflecting a strategic response to market demand.

Cosco Increases Slot Space on CMA CGM’s India-USEC Route

• The India-US East Coast trade route sees adjustments ahead of the Gemini Cooperation alliance between Maersk and Hapag-Lloyd.
• CMA CGM will operate the standalone India America Express (Indamex) with its fleet, starting in mid-August.
• Cosco and OOCL are adapting to the revised slot space allocations, reflecting the intensifying competition on the India-US East Coast trade route.

Canadian Rail Freight Diverted to US Amid Labor Uncertainty

• A potential rail strike in Canada is causing intermodal freight to be diverted to US routes, impacting Canadian National Railway's (CN) operations.
• International customers are rerouting shipments to avoid potential disruptions, affecting CN's intermodal volume.
• The uncertainty has led to a significant drop in international intermodal traffic for CN, highlighting the sensitivity of supply chains to labor issues.

Tacoma is struggling with congestion for rail and local gates

• Avoid WUT and Husky Terminals as much as possible.
• ONE Line and vessel partners are shifting intermodal cargo to Vancouver (which is a bit funny considering the above about the CN rail).

Charleston and EC ports are also still congested

• Some carriers are not taking inland bookings (to Memphis for example) from India/Subcon.
• The ILA contract renewal date is September 1 as mentioned in earlier reports, so we expect the situation updates to increase this month.

Trends

• Expect vessel/Space/Equipment issues to clean up over the next 30-60 days as more capacity comes into the market and the new routings become more consistent.
• As rates from China and higher volume SE Asia are continually heading down, less voluminous ports have less fluctuation and downward pressure.
• India/Subcon/Middle East will stay higher for longer.
• The next major potential issue, in terms of service disruption, is the ILA contract negotiation which will impact all the ports on the EC that will be coming to head on September 1 - if you can avoid cargo arrivals around this time and route differently it should be considered.
• Rail congestion/labor unrest in the PNW will probably last through August.

Author
Matthew Crocker / CCO