May 17, 2021

Hapag-Lloyd Sets A $3,000 GRI

Hapag-Lloyd has just announced a $3,000 per 40ft GRI on Asia to the US and Canada services from 15 June.

A year ago, the Shanghai Containerized Freight Index (SCFI) US west coast component stood at just $1,686 per 40ft – 12 months on, and shippers are paying up to $14,000 to ship the same cargo on the same route in the same ships.

Although today’s Freightos Baltic Index (FBX) reading for the route jumped 9.5%, to $5,516 per 40ft, there is virtually no chance of shippers securing space at that price.

For the US east coast, the FBX spot rate spiked by 11.5% on the week, to $7,358 per 40ft, but here too shippers are likely to have to pay substantially more to get equipment and a guaranteed shipment.

“With nearly 40% of containers getting rolled, many shippers are paying significantly more in premiums in the hopes of getting space,” said Freightos research lead Judah Levine.

Even some BCOs that have signed new annual contracts with carriers are reported to be scrambling to get their products shipped as the lines row back on start dates and volume commitments in favour of abundant lucrative spot and short-term business.

And shippers face much the same challenges on the Asia-Europe tradelane: sky high rates, equipment shortages and premium charges that often still result in containers being rolled.

“The Asia ocean freight market is broken right now,” said UK-based NVOCC Westbound Logistics. “We are experiencing conditions on this trade that we have never witnessed before,” the forwarder told its customers this week.

The FBX component for North Europe increased by 1.74% this week, to $8293 per 40ft, which, although an astonishing 460% higher than a year ago, is unlikely to turn the heads of carriers that are effectively auctioning space to the highest bidders, some of which are prepared to pay $16,000 or more to secure prompt shipment.

It is the same story on Asia to Mediterranean services, where the FBX spot of $9,395 per 40ft, up 5% on the week before, will not buy space much before July or August.

And, perhaps even more worrying for North European exporters to the US, considering the pace of the rate hikes, the FBX transatlantic component leapt by 20% this week to a new record of $4,299 per 40ft, the rates having doubled in the past two months.

However, alongside the highly elevated freight rates squeezing the margins of retailers, leading to higher prices in shops and potentially kick-starting a return to economy-damaging high inflation, Westbound Logistics said there may be some “light at the end of the tunnel” for beleaguered shippers.

“With delayed vessels arriving back in Asia over the next few weeks, we believe we should see an easing of current market conditions between the middle of June and early July,” it said.

(Source: The Loadstar)

May 13, 2021

Over Half of Container Bookings Rolled at Ports

Container shipping service quality is continuing to worsen, with the number of boxes being rolled increasing.

Figures from freight visibility platform project44 shows the percentage of containers missing their scheduled sailings is rising, with some carriers and ports rolling more than half their cargo in April.

Carriers have been watching their rollover rates increase for over a year, and have so far failed to mitigate the situation.

The average rollover rate for April across ports and carriers surveyed by the company was 39%, but there were outliers such as Malaysia’s Port Klang, Rotterdam and Athens showed signs of “endemic congestion”, rolling 64%, 54% and 59% of cargo, respectively.

Hapag-Lloyd, CMA CGM and Ocean Network Express all showed worsening performance in April, posting rollover rates of 51%, 56%, and 53% respectively.

“Other global ports and carriers reported similar numbers showing that abysmal performance now seems to be the industry norm,” project44 said. “With shippers entering their second year of pandemic-induced volatility, these numbers are a sobering reminder that volatility and under capacity are the new normal.

Rates are almost universally trending upwards, and well above the levels posted during April 2020.

(Source: Lloyd’s Loading List)

May 12, 2021

Ports of Los Angeles and Oakland Report Record Cargo Surges

The Port of Los Angeles and Port of Oakland both reported a record cargo surge in March.

During an April 14 press conference, Port of Los Angeles Executive Director Gene Seroka detailed how the L.A. port processed 957,599 20-foot equivalent units (TEUs) last month. It was a 113 percent increase compared to March 2020 when the COVID-19 pandemic severely limited global trade and the port processed fewer than 450,000 TEUs.

Seroka described the cargo surge as the port’s version of “March Madness” and explained that they were “breaking records” with the increased level of activity. The nearly 1 million TEUs, which would be large during the peak season in September or October, is unprecedented during this time of year. “We’ve never seen volume like this in the first half of a calendar year,” Seroka said.

It was the strongest March in the port’s 114-year history, outpacing the previous record of March 2015 by 21%. It was the port’s busiest first quarter, third busiest month and the largest monthly year-over-year increase ever.

“As more Americans get vaccinated, businesses reopen and the economy strengthens, consumers continue to purchase goods at a dizzying pace. I applaud our longshore labor force, truckers, terminal operators and supply-chain partners, who are working day and night to process the additional cargo,” Seroka said. “Collectively, we have been able to significantly reduce the amount of container vessels awaiting offshore. I’m also proud of the steady progress being made to vaccinate waterfront workers at the port’s on-site locations and elsewhere.”

Similarly, the Port of Oakland reported single-month record import and export numbers during March. The port received the equivalent of 97,538 TEUs and shipped out the equivalent of 94,169 TEUs last month. In the port’s 94-year history, neither number had ever been achieved.

“Ships are full, ocean freight rates are sky high and the need for empty containers to ship more cargo is never-ending,” Port of Oakland Maritime Director Bryan Brandes said. “We just don’t see conditions easing in the next several months.”

Similar to the experience at the Port of Los Angeles, the Port of Oakland had a decrease in imports and exports last March at the beginning of the pandemic. But this year’s March imports saw a 45% increase and exports increased 12% year-over-year.

The port also said its volume is up nearly 9% through the first three months of 2021.

And growth is not expected to slow down, according to Marilyn Sandifur, port spokesperson for the Port of Oakland. Sandifur said the port and other industry leaders are expecting large cargo volumes to continue at least throughout the summer.

A couple of key factors for the port’s continued strong performance is that ocean freight rates remain high while vessel space is tight, the U.S. economy continues to bounce back due to consumers’ engagement in retail therapy, and the peak-season trade is expected to begin in August. The port is expected to benefit from these and other factors including major e-commerce retailers, which have established distribution hubs close to the port and an increase in labor to help meet demand and the backlog of containerships.

Both the Port of Los Angeles and Port of Oakland are expecting continued growth in the coming months.

(Source: Apparel News)

May 10, 2021

Shippers Experiencing Massive Increases or Rolled Cargo

Shippers from Asia to Europe saw a further spike in container spot rates this week, particularly for Mediterranean ports, while ocean carriers are said to be preparing big increases in short-term rates as cargo-rolling becomes the norm.

On the transpacific, carriers are sold out for the rest of May and into June.

The North Europe component of the Freightos Baltic Index (FBX) increased by 5% this week, to $8,127 per 40ft, which represents a remarkable 475% increase on the same week of last year.

For the Mediterranean, the FBX spot jumped 10%, to $8,868 per 40ft, as shippers from Asia scrambled for space to meet urgent inventory replenishing for the summer holiday season. Short-term rates have spiked by a ‘less spectacular’ 345% compared with 12 months ago.

The Ningbo Containerized Freight Index commentary reported “considerable cargo” for Europe was rolled this week, as demand for space “remained very high”.

This week has seen FAK carrier rates to North Europe of up to $14,000 per 40ft, with one Shenzhen-based forwarder offering a “very good rate”, with guaranteed space, of $12,000 per 40ft from Chinese main ports to Felixstowe or London Gateway for a late May shipment.

For the transpacific tradelane, this week’s FBX recorded a 3.5% increase for Asia to the US west coast, to $5,015 per 40ft, and a 5.5% uplift to spot rates for the east coast, to $6,584 per 40ft.

Meanwhile, on the normally robust transatlantic route, shippers from North Europe are still struggling to secure space and being obliged to pay much higher rates with a raft of surcharges and premium fees to secure shipment.

The FBX component for North Europe to the US east coast was up 4% this week, to $3,558 per 40ft – nearly double the rate of a year ago. And CMA CGM has hiked its Sea Priority Go premium charge on the transatlantic to $2,000 per 40ft.

With the spot market indices only representing average rates in the marketplace, shippers are often frustrated that they cannot book space at index rates.

(Source: The Load Star)

May 6, 2021

Canada Imposes Duties on Upholstery from China and Vietnam

furniture

Upholstered furniture from China and Vietnam sold in Canada now is subject to country-wide duties of 295.5% and 101.5%, respectively, after a preliminary determination of dumping by the Canadian International Trade Tribunal.

CITT found “reasonable indication” that dumping and subsidizing of upholstered seating made in China and Vietnam has or is threatening to damage Canada’s domestic furniture manufacturing industry. The CITT will continue its inquiry and expects to issue its ultimate finding by September 2.

A letter from the Canada Border Services Agency notified importers that provisional duties will be collected on subject merchandise as of Wednesday, May 5.

Twenty-eight Chinese manufacturers were assigned separate rates ranging from 20.65% to 226.45%, while seven manufacturers in Vietnam received separate duty rates ranging from 17.44% to 89.77%. A list of those companies can be found here.

Under Canada’s Special Import Measures Act, importers are required to declare their company’s liability, if any, for provisional duties and taxes on any subject goods imported into Canada, and it is their responsibility to inform their customs broker if they are importing goods subject to provisional duties and to ensure proper declaration of subject goods and proper payment of duties. Importers can go here for a self-assessment.

CBSA launched the investigation in December based upon a complaint filed by Palliser Furniture and supported by fellow Canandian manufacturers Elran Furniture Ltd., Jaymar Furniture Corp., EQ3 Ltd. and Fornirama Inc. The move looks to limit the penetration of motion upholstery and leather stationary furniture from China and Vietnam into Canada. According to CBSA, the Canadian market for such merchandise has been estimated at $675 million annually.

Click here to read the full notice from CBSA.

(Source: Furniture Today)

May 5, 2021

Global Container Shortage Likely To Last Until 2022

shipping containers

The world does not have enough containers in the right places to handle cargo demand.

The New York Times recently reported how the box shortfall is contributing to inflation: “Demand … has outstripped the availability of containers,” while the U.S. pandemic situation has eased to the point where retailers can pass along higher transport costs to consumers without being accused of price gouging — and “the cost of just about everything is rising.”

Many months after the container shortage first emerged, how bad does the problem remain?

Equipment leasing companies are in a good position to answer that. These companies order containers from the very small number of Chinese manufacturers that build them and lease the boxes to shipping lines, which also order from factories directly.

Generally speaking, the more profitable the market conditions for container lessors, the tighter box capacity is and the more cargo shippers must pay liners for transport. The bad news for U.S. importers and exporters: Equipment lessors see smooth sailing ahead, likely into 2022.

“There’s no indication from the shipping companies that they expect to see any easing of the tightness of supply that they’re dealing with,” said Tim Page, interim CEO of CAI International, on the call with analysts. “So … the horizon looks pretty good for us, at minimum through the end of this year, and likely well beyond that.”

The price of containers is an indication of ongoing scarcity. The price for a new container is now $3,500 per cost equivalent unit (CEU, a measure of the value of a container as a multiple of a 20-foot dry cargo unit) versus $1,800 per CEU in early 2020 and $2,500 per CEU in late 2020. The cost has remained roughly steady at $3,500 per CEU for the past three months.

Chinese factories are not expanding production capacity, with no indication from manufacturers that they’re going to increase container production. In other words, Chinese factories are keeping production in check to keep their newbuild prices high. This negates the hope on the cargo-shipper side that the market might be flooded with excess new containers, thereby bringing freight rates down.

(Read full story via: American Shipper)

May 3, 2021

Back to Work Legislation Passes for Port of Montreal

On Friday, Senate passed Bill C-29, forcing striking workers back on the job. The process established by the legislation will lead to establishing a new collective agreement between the parties, with no possibility of work stoppages.

The Port of Montreal says resuming full operations will take several days — and clients waiting to import or export goods should expect delays. Industry experts are predicting that it could take until June for blacklogs to clear from the port.

A representative of the CUPE local union that represents the dockworkers calls the back-to-work legislation an attack on the workers’ constitutional right to strike and said that the union would take legal action and file complaints with the International Labour Organization.

Approximately $275 million worth of goods moves through the Port of Montreal each day.

Carson is watching the situation closely and will share any updates as soon as they come in.

For any questions, please reach out to air.ocean@carson.ca.

April 28, 2021

Trans-Pacific Trade to Remain Robust Throughout 2021

In 2020, shipping executives predicted the container-shipping capacity squeeze would last until Chinese New Year in February 2021. When that didn’t happen, they said mid-2021. The bar is now moving further out — to the fourth quarter or beyond.

Matson CEO, Matt Cox, shared his outlook with analysts, saying —

“In my nearly 40 years in the business, I have not seen an environment like this, with international trade lanes operating at capacity and widespread supply-chain congestion leading to pressure at U.S. ports, terminals, rail yards and warehouses.”

The “stronger for longer” container-shipping thesis got an even bigger boost from Maersk, as they pre-announced Q1 2021 earnings estimates and sharply upgraded its full-year EBITDA guidance by 36% and doubled its full-year free cash flow guidance to $7 billion.

“The exceptional market situation is now expected to continue well into the fourth quarter,” said Maersk, which raised expectations for 2021 global demand growth to 5%-7% from 3%-5% previously, primarily due to “export volumes out of China to the U.S.”

(Source: American Shipper)

April 26, 2021

Federal Government to Introduce Back-to-Work Legislation for Port of Montreal

The federal government will intervene in the ongoing labour dispute at the Port of Montreal.

Labour Minister Filomena Tassi announced on Twitter on Sunday afternoon that the government has issued a notice to introduce legislation entitled ‘An Act to Provide for the Resumption and Continuation of Operations at the Port of Montreal.’

Tassi called the legislation the government’s “least favoured option,” and that Ottawa believes in collective bargaining.

“The Port of Montreal is critical to the economic well-being of Canadians across the country, particularly those in Quebec and Eastern Canada,” Tassi continued on Twitter.

On Friday, the longshoremen’s union announced plans for more than 1,000 workers to go on unlimited general strike starting today, though they promised to maintain essential services and COVID-related shipments.

The union has been on an overtime and weekend strike since earlier this month. According to the Montreal Port Authority, the weekend strike resulted in “close to 10,000 twenty-foot equivalent units (TEUs) grounded, a backlog and delays in rail convoys, and shipping lines with vessels en route to Montreal obliged to rework their logistics.”

The workers have been without a work contract since December 2018. A strike took place last summer, but a truce was worked out that lasted for seven months.  

In a statement, the Montreal Port Authority said it was aware of the plan to introduce federal legislation.

“After several strike episodes in 2020 and 2021, which have had and continue to have serious economic and logistical impact, it is mission-critical that the Port of Montreal be able to fully and sustainably play its strategic role as an economic engine at the service of the local population and SMEs without interruption,” said Martin Imbleau, President and Chief Executive Officer of the Montreal Port Authority.

In the best case scenario, the expectation is if the legislation is approved, that the Port would re-open April 30th or May 1st.

(Source: CTV News Montreal)

April 23, 2021

Port of Montreal 72 Hour Strike Action

We have received notice from the Canadian International Freight Forwarders Association (CIFFA), that the Longshoremen’s union at the Port of Montreal has given 72 hour notice to the Maritime Employers Association that as of April 26 at 7:00 a.m. the union will be in a legal strike position.  

All work performed by the union members at the port will cease, except for Oceanex services protected as essential.

We are remaining informed of the situation and will share updates with clients as they come in.

For any questions, please reach out to air.ocean@carson.ca.