Ocean Freight: Let’s Talk About the Elephant in the Room
In this week’s global freight updates, we’re bringing readers an ocean freight-heavy report that provides views and news on the current situation, including spikes in rolled cargo, record-level imports, a potential ocean freight rate cap, a challenging shipping container market, and more.
Right now, it’s hard for shippers to even get cargo onto ships. 75 percent of the 20 transshipment ports Ocean Insights surveyed experienced an increase in rates of rolled cargo in December, with an overall 37 percent MoM increase as well. According to Sea-Intelligence, blanked sailings are anticipated to make up between 13 and 11 percent of overall capacity in the third and fourth week of this month, respectively. Carriers are making efforts to add vessels to their networks, however, as a way to combat these issues, so capacity is projected to rise by 21 percent and 34 percent YoY for those same weeks.
According to a recent JOC article, U.S. imports from Asia reached an all-time December high, indicating that the surge in container volumes that’s been overwhelming U.S. ports since June shows no signs of slowing in the near future.
With 1.626 million TEU on the books last month, we’re seeing a 29.9 percent YoY increase in container volumes between December 2020 and December 2019. This also marks the third-highest monthly volume of 2020, which totaled 16.6 million TEU overall. Because of the strong demand for PPE, medical supplies, and e-commerce merchandise, intermodal traffic and port congestion were also a lot more intense in the eastbound trans-Pacific than they normally would be for this time of year.
As for the regulatory measures that are being taken, China’s Ministry of Commerce and the U.S. Federal Maritime Commission are both keeping a close eye on FAK market conditions. There’s even been talk that the former may be looking to start enforcing some antitrust measures to help control container shipping’s excessive rates and equipment shortages.
This help could not come any sooner though because there are essentially no TEUs available to anyone unless they’re willing to pay three times the typical going rate just to get their goods out of the ports of Los Angeles and Long Beach. And those who refuse to pay FEU prices for TEU containers are just getting rolled over and over until air freight becomes their only option, while the number of empties returning to China is up 55 percent YoY. With global demand significantly outpacing equipment availability, added surcharges are only serving to kick shippers and their logistics service partners while they’re down.
To learn more about these ongoing problems and the other top stories of this week, check out the following article highlights:
A big shoutout from the JOC!
In a field where competition is killer and you’re up against advancing e-commerce platforms and various tech startups, the key to surviving lies in investing in new forms of automation.
According to JOC’s Senior Technology Editor, Eric Johnson,
“Individual forwarders and non-vessel-operating common carriers (NVOs) are tackling the mandate to be more technologically proficient head-on … New York-based Jaguar Freight is using a mix of in-house-developed systems and off-the-shelf software to build a framework that helps it attract and retain customers.”
Not only are we happy to receive this shoutout, but we’re also excited to see how far the industry has come as a whole in its embrace of digitization.
Shoutouts aside, here’s what else we’ve found that’s noteworthy this week:
As we encounter cargo-ship charters equating to $350,000 per day, saving on shipping costs is now arguably more important than ever, so it’s no wonder companies are hopping on board the tech train. Not to mention the fact that supply chain risks seem to be amplifying as ocean carrier networks grow smaller and smaller.
With global container capacity and port congestion the most prominent issues facing the ocean shipping industry, one initiative that will theoretically ease some of them for Europe – the Silk Road – is seeing some success. But, it’s not without its own challenges.
And European-based exporters are getting the worst of things between the tight conditions in Asia lanes and Brexit continues to cause problems for the region. With increasing equipment imbalance surcharges, added security checks, complex documentation, and new taxes, the costs of transporting U.K. goods are at an all-time high. According to Bloomberg, the additional fees that are being placed on “flight trucks” can reach up to 3,000 pounds.
To learn more, check out our article highlights below, and click the last link to view some important dates you should keep in mind for upcoming key trade events in 2021.
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With short-term freight snags, limitations against EU regulators, U.K. lockdowns, an avg. of 30 vessels at anchor waiting at the Ports of LA/ Long Beach all last week, increasing supply chain debt, decreasing blanked sailings, and a tight air cargo market 2021 is already off to a rocky start for supply chain all over the globe.
It’s been over a week since public officials finalized the Brexit trade deal otherwise known as the European Union-United Kingdom Trade and Cooperation Agreement. Because of the last-minute nature of the deal, many European manufacturers (especially those in the automotive sector) were given very little notice to adapt their processes to the deal’s lengthier documentation requirements. As border delays continue to get out of hand, the U.K. remains the only country to offer a 6-month grace period.
Unfortunately, the European Commission is pretty limited when it comes to what it can do right now. These limitations are also affecting the organization’s ability to respond to the complaints shippers are lodging against carriers who are violating their shipping contracts. And demand for goods like exercise equipment shows no sign of slowing amid Europe’s recent coronavirus lockdowns and the unprecedented lack of blanked sailings for the Chinese New Year, which is only pushing up shipping rates.
Speaking of high rates, epic delays are continuing for the Ports of LA/Long Beach. And the premiums paid by importers in the Asia/ U.S. trades are unprecedented. From JOC.com:
Spot rates in Asia-North America trade are about $4,000 per FEU to the West Coast and $5,000 per FEU to the East Coast, although carriers and freight forwarders say importers are paying as much as $6,000 per FEU to the West Coast and $8,000 per FEU to the East Coast when the cost of premium equipment and space guarantees are added to the base freight rate.
Shipping demand and rates aren’t the only things in the industry that are spiking, however. According to Bloomberg, bad supply chain loans equating to 25.5 billion euros, or $31.3 billion, are on the rise due to the European Banking Authority cracking down on lenders in the region. Since larger companies typically pay their bills late, the new standard stating that receivables booked on a firm’s balance sheet will be considered past due after 30 days poses a pretty big problem for many businesses.
On a more positive note, what has been a pretty tight market for air freight seems to be finally improving as various airline carriers continue to add more capacity to their fleets. To learn more, check out our article highlights below:
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In the first Weekly Roar of what’s going to be a great new year:
The EU continues to wheel-and-deal, wariness remains for some persistent global supply chain roadblocks, blockchain continues its uphill fight for relevancy, why rail is cool again, and the obligatory international doom and gloom (with a little positive thrown in.)
It’s 2021, so let’s go!
With Brexit checked off the to-do list (sort of), the European Union has struck a trade deal with China. There is a lot of opposition to it, however, both internally within Europe and from the U.S. Notable is that China edged out the U.S. as the EU’s largest trading partner with $590B in two-way trade in 2020 based on the latest figures.
The pandemic is easily the top news story impacting supply chains in 2020, and will continue to be in 2021. But, other issues and opportunities exist as well. A tough global economic outlook, as well as political unrest in many regions mean this year will be anything but easy. But, new technologies, such as 5G, seem poised to start fulfilling their promise.
Speaking of technology and potential… for the first time in a while, there’s been mention of blockchain in the news. It’s not good news, unfortunately, especially for those holding out hope a blockchain-related technology would find its place in the supply chain. A long-standing concern for many tradeable tokens has been if the U.S. Securities and Exchange Commission would flex its muscle, and it’s recently done so with one of the more well-known shipping related offerings. It appears that for the time being, blockchain will continue facing the criticism of being a solution in search of a problem – at least as it relates to shipping.
The underappreciated workhorses of global supply chains are the railroads. And in the U.S., rail is seeing a resurgenc
e, thanks in large part to the growth of e-commerce.
And finally, as much as we want to just make it go away, the rate, congestion, and capacity challenges remain around much of the world. We’ve got JOC’s 2021 outlook for the air cargo marketplace with a little bit of positive news from some California ports.
For more details on all of these topics, see the articles below. And, Happy New Year!
Last Call for those who haven’t received it, we’d like to offer you our 2021 desktop calendar: Claim your 2021 Jaguar desk calendar – click here
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This week’s global freight updates mark the last critical events of this year as we start to officially countdown to 2021. With a Brexit deal done, relief for hundreds of stranded truck drivers, ocean freight madness, soaring airfreight rates, unpredictable freight costs, strong container spot rates, and megamax boxships we’ve got a lot in store for you.
The big news in Europe is a draft EU-UK Trade and Cooperation Agreement is in place with 0 tariffs and quotas on goods shipped (a.k.a the Good.)
And it appears freight madness like this is only going to spill over into 2021, according to The Loadstar’s recent supply chain radar analysis. While many believe that the pandemic-induced disruptions of 2020 have completely altered the industry as we knew it, some anticipate a swift recovery for maritime trade in 2021 in the form of 4.8% growth. One question that’s on everyone’s mind though is: How will the current elevated spot rates end up affecting next year’s contract service negotiations?
For those who haven’t received it, we’d like to offer you our 2021 desktop calendar: Claim your 2021 Jaguar desk calendar – click here
As for the airfreight sector, rates from China to the U.S. have reached $8.02 per kilogram, spiking 58% (a.k.a the Bad) over the last couple of months despite the fact that demand was down by more than 6% YoY in October. With the release of the new COVID-19 vaccine, some expect air cargo demand to increase by 2% YoY, which could potentially raise rates even more over the next six months.
After a new variation of COVID-19 was discovered in the U.K., other nations began closing their borders to the country, at one point leaving more than 1,500 trucks (a.k.a. the Ugly) stuck in empty ports and airports across Britain. Depending on travel restrictions, some fear the strict coronavirus precautions could produce major supply chain disruptions and even lead to food shortages throughout Europe. There appeared to be some improvement in the situation in the past few days, fortunately, but a backlog persists.
To wrap up the last freight updates of the year, we’ll end on Hapag-Lloyd’s $1B investment in six massive LNG container vessels that individually hold 23,500+ TEU container capacity. The carrier will receive these eco-friendly, modernized ships as early as April 2021 and plans to use them to gain a competitive advantage on Europe-Far East routes.
On that note, we hope you enjoyed our Weekly Roars, check out the article highlights below to read more. Happy Holidays!
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EU carbon charges, UK port congestion, surging container freight rates, a whirlwind peak season, the South African Airways lockout, and the new U.S. Transportation Secretary, oh my! We’ve got a lot to unpack in this week’s global freight updates.
But first – We’d like to offer you our 2021 desktop calendar – kindly let us know where we can send it and it’ll be on its way! Claim your 2021 Jaguar desk calendar – click here
Let’s dive in by starting with the European Commission’s plans to make big changes in the shipping carbon market.
As of right now, the Commission remains undecided on whether or not it will include international trips in its ambitious emissions trading scheme plans. Many in the sector, however, are protesting what they believe to be an overreach on the Commission’s part to regulate the industry as it works toward its goal to reduce net emissions by at least 55% over the next 9 years.
Next up, we’ve got the port chaos that’s currently wreaking havoc on UK supply chains for 45% of manufacturers. With the severe strain caused by the impact of leading issues like COVID-19 and Brexit, the nation’s factories are reporting steep rises in lead times and stockpiled goods.
The UK certainly isn’t the only one struggling to overcome massive transportation complications though. Countries around the world are scrambling to manage the distribution of the new coronavirus vaccine alongside the huge spikes in e-commerce imports primarily from China. And the U.S.-China trade war is only making matters worse.
Some ocean shipping lines have even refused to transport U.S. exports in an effort to prioritize taking back empty containers to China. Not to mention the fact that spot rates are continuing to soar everywhere, especially for Asia-North Europe lanes receiving quotes up to $5,000 per TEU.
And airfreight doesn’t have it any easier either. For instance, after declaring bankruptcy and then being forced to ground many flights last year, South African Airways recently put a temporary lockout into effect against 383 pilots due to reluctance over the airline’s new employment terms.
Last, but not least, U.S. President-elect Joe Biden has officially nominated Pete Buttigieg, former mayor of South Bend, Indiana, to lead the country’s Transportation Department. To learn more, check out the following article highlights:
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As we prepare to say good riddance to 2020 and leap into 2021, there are still no dull moments for many parts of the shipping industry. Year-end, peak season, Brexit, and the impact of the pandemic are all (hopefully) coming to a head. We’ll know if this means calmer seas in 2021 soon enough.
In this week’s global freight updates, we’ve got record-level spot rates, port chaos, a commodities slump, thousands of stranded seafarers, outrageous air freight prices, and rising market tension.
According to Sea-Intelligence Maritime Analysis, 2021 base contract rates for Asia-Europe shippers are expected to increase by 23 percent as a result of a surge in spot rates. With freight prices sitting at $2,091 per TEU, unwavering demand, and severe capacity contraints, the tension between shippers and carriers is only growing.
These conditions paired with the impending end of Brexit recently forced Honda to shut down its entire UK plant because of the country’s overwhelming amount of bottlenecks and transportation delays. Britain isn’t the only country experiencing some major setbacks, however. Africa’s exports to China have fallen by 23.6 percent YoY due to COVID-19’s impact on the nation’s economy and a drop in commodity prices.
Because of travel restrictions, the cornavirus has also left roughly 400,000 shipping and transportation workers stranded on ships for over a year and a half. While agencies like the U.N.’s International Labour Organization are working tirelessly to get these people home, crew changes ultimately can’t happen without additional support from countries around the world.
Ocean container shipping isn’t the only sector that’s facing some serious coronavirus-related issues though. As shippers race to secure air freight capacity for medical equipment like dry ice to transport the new vaccines, some airlines are quoting up to 20 times more than the average going rate for this time of year. Despite all of these struggles, one thing that’s for sure is that there’s never a dull moment in this business.
Check out the article highlights below to learn more:
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Worried about recent cyber-attacks? Can’t find containers? Concerned over the Panama Canal’s congestion? Frustrated with rate increases and carrier service? Want to learn more about canceled flights to LA? Dreading the post-Brexit logistics nightmare? Don’t worry. We’ve got the inside info to help you better understand the most pressing issues the shipping industry is facing right now, and there’s no shortage of them!
To start off, here are some ocean container stats we believe are pretty telling for the Port of Long Beach’s 2020 operations provided by Cathy Roberson, President of Logistics Trends & Insights LLC:
“For the July-September period, loaded inbound TEUs to the Port of Long Beach increased 22.6% YoY.
According to USA Trade Online data, some of the biggest YoY gains in terms of volumes (Kg) for Asian import commodities, based on harmonized 2-digit codes, to the Port of Long Beach were:
Miscellaneous chemical products up 404.4%
Tobacco up 368.9%
Wadding, felt, specialty yarn, twine, ropes up 247.8%
Food industry residues and waste 279.5%
Arms & ammunition, parts and accessories 207.2%”
Next up, we’ve got Acronis’ new in-depth review on the risk of cyber threats in the supply chain, which includes detailed analytics on ransomware spikes, 2021 cybersecurity trends, key takeaways, and more. This report makes it clear that ransomware attacks will increase, especially against remote employees; however, traditional solutions won’t be able to provide sufficient protection against advancing malware tactics.
And, the struggle to find containers continues. From the article we’ve included below: “All carriers report severe shortages of the popular 40ft high-cubes (HCs) at their depots, and there has also been a run on 40ft standard boxes – even 20ft containers are sometimes showing as unavailable.”
Not only do we have to deal with rising threats to data security and a container shortage, but we’ve also been facing some pretty major transit delays in the Panama Canal as COVID strikes again and shippers without reservations fight for limited capacity. Adding to that, rates and surcharges on trades from Shanghai to the U.S. West Coast, Australia, West Africa, the East Coast of South America, and Singapore are at all-time highs while carrier service levels have fallen to all-time lows.
And COVID isn’t only impacting ocean freight. According to Loadstar, Air China and China Southern have canceled all flights to LA until Dec. 10 because of the city’s recent coronavirus outbreak, with expectations of other airlines following suit. Last, but not least, we’ll end on the U.K.’s fear of Brexit’s potential to create a domino effect of severe supply chain bottlenecks across the country’s ports and highways. All in all, the industry appears to be right on track to reach its boiling point, but with insight like this on your side, you’ll have a much better chance of preparing your company to take on these challenges.
Check out the article highlights below to learn more:
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Whether you’re interested in ocean freight rates, the race to return empties, cargo rollover ratios, the state of airfreight, international trade deals, or Brexit’s role in logistics (and really, who isn’t?) we’ve got it all.
Here are this week’s highlights of the most influential events that are shaking up the shipping industry:
It looks like ocean freight rates are finally settling down, according to the CEO of Maersk, Soren Skou.
“Global supply chains had quite a lot of bottlenecks and they have driven up prices,” he said in a Bloomberg Television interview on Wednesday, describing the whiplash effect of a steep decline in seaborne cargo in the second quarter followed by a sharp rebound.
This news offers a lot of hope for the many shippers on the other side of the pricing equation that have been dealing with unusually high costs for this time of year, especially on trans-Pacific lanes. While rates appear to be evening out, container volumes are only piling up at the Port of New York and New Jersey.
As trucking demand continues to increase, drivers are having to spend at least three hours just to return an empty container to a different terminal. The sheer amount of congestion at major U.S. ports is causing drivers to run out of time before they’ve even had a chance to touch an import load, resulting in detention charges that are spinning wildly out of control. The increases in cargo rollovers over the month of October serve as further proof that ocean container capacity has simply reached its limit.
Airfreight hasn’t had much luck escaping the whiplash that is 2020 either. Earlier in March when airlines were grounding passenger planes due to a shocking drop in revenue, the sector experienced a 44 percent YoY decrease in cargo capacity. Then came the scramble to transport PPE as quickly as possible, which produced a shift from typical passenger planes to cargo-only flights.
To sum up, with concerns surrounding the ability of supply chains to effectively manage Brexit and the recent formation of the world’s largest trade pact, it’s safe to say that 2020 is not quite done leaving its mark.
If you want to learn more, check out the links below:
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In this week’s international freight updates, we’re covering everything from the shortage of shipping containers, to the transition from ocean to air and rail, to research on supply chain risk management, to El Paso’s new role in trade, to the concerns surrounding COVID vaccine distribution, to efforts to limit detention and demurrage at key U.S. ports. Well, that was a mouthful. There’s clearly a lot going on, so let’s get to it.
Here’s our timely take on the most important issues that are currently affecting the day-to-day lives of logistics professionals everywhere around the globe:
We’re sure you’re already aware of the major container capacity crunch that’s going on in the ocean freight marketplace. While demand remains strong and volumes soar, shippers are pleading with authorities to help them as carriers focus on backhaul empties and rates on less popular lanes climb. Thanks to Chinese regulators discouraging any further rate increases, however, prices on China-U.S. lanes have continued to stay relatively untouched for over two months.
These equipment shortages are even impacting China-Europe rail capacity due to those who are jumping ship as a result of canceled sailings and rising air freight rates. According to JOC, “Rail demand is being driven by shippers balking at the sky-high air freight rates on Asia-Europe with most of the long-haul passenger fleet — source of half the available capacity on the route — still grounded. And unexpectedly high and ongoing peak season demand on the ocean trades is limiting Asia-Europe container shipping space.” Let’s also not forget about the significant disruptions many, especially those managing pharmaceuticals, will face once companies start distributing COVID-19 vaccines.
With their complex cold chain storage and transportation requirements, industry leaders are striving to proactively improve shipping visibility and efficiency by developing strategies that will address critical logistics gaps and stressors. Even if you aren’t directly dealing with these pharma problems, it’s probably a good idea to start reevaluating your shipping reliability and risk management based on the findings of a recent report on manufacturing costs in a post-pandemic world.
A topic every shipper hates is detention and demurrage and it turns out some shippers have finally decided enough is enough. A coalition has gotten the attention of the FMC and the situation at several U.S. ports is being investigated.
Last, but certainly not least, El Paso well-positioned as a key trade portal between the U.S. and Mexico. With a focus on improving logistics infrastructure, many large industry players are making big investments in the area. There is a lot going on at the border.
Want to go straight to the source? We understand. Check out the article highlights below:
Maher Terminal NJ Port Tour
Our team at Jaguar Freight visited the Maher Terminal in New Jersey. Our experience there helped us to see firsthand the inner workings of Maher Terminal. The tour was very informative and impressive to see how the containers are moved around the terminal.
Maher Terminals is one of the largest multi user container terminal operators in the world. As a vital link in the container cargo movement chain, they are responsible for helping customers effectively compete in the global marketplace by handling their cargo as expeditiously and economically as possible. Maher takes this responsibility very seriously and has developed North America’s largest marine container terminal in the Port of New York and New Jersey.
This highly efficient container terminal operation strategically located in the heart of one of the world’s most affluent consumer markets provides ample container throughput capacity to efficiently meet and exceed the current and longer term operating requirements of their ocean carrier customers. The scope and flexibility of their highly automated multi user marine terminal operation truly makes their facilities a “Port within a Port.” This is best supported by the many ocean carriers that have been utilizing Maher’s facilities for decades, ranging from single trade lane operators to the world’s largest global alliances.
The Jaguar team at the Maher Terminals
Maher Terminal Models
Containers at Maher Terminals
Vessel docked at terminal being discharged.
Founded in 1993 in New York and London, our roots are in logistics. As we’ve grown with our customers, we’ve developed state-of-the-art technology expertise that transforms logistics and shipping services into world-class supply chain solutions.
Clear supply chain leadership, expertly coordinated around the globe, backed by an exceptional degree of customer care. That’s what Jaguar delivers.
