The following is an archived collection of our weekly insights throughout the month of April. Those who had signed up to our Interlog Insights newsletter received each week’s update to their inbox on the original release date. If you like what you see below, please feel free to sign up yourself to get these updates right as they come!
This month's insights
- Transatlantic Trade
- Importing Outlook
- Panama Canal
- Blank Sailings
Week 3 - Originally released Apr. 19
Insight: Transatlantic Trade Strengthens, but Labor Uncertainty Looms in Distance
After a dismal 2023, transatlantic trade is poised for a rebound in 2024 following a strong performance in the first quarter. U.S. imports from Europe increased 10 percent year-over-year by the end of Q1 2024, signaling a return rate stability and pre-pandemic volume levels. Surely promising news for the transatlantic market that struggled to overcome anemic conditions following a period of accelerated volumes and astronomical rates in 2021 and early 2022.
Courtesy of data collected by S&P Global’s PIERS, 928,232 twenty-foot-equivalent container units (TEUs) were brought into the U.S. between January and March, closely mirroring the results of Q1 2019, while only 5 percent shy of matching the record-setting performance of Q1 2021.
While January recorded a fall in traffic on the transatlantic westbound route, strong inbound numbers in February and March provided enough momentum to yield a successful first quarter of this year.
Container rates, which were extraordinarily low heading into the new year, have now been stimulated by the resurgence of import activity.
Fortunately, the increase in demand has not prompted any erratic price hike, but rather infused the market with a healthier sense of balance. Europe to U.S. rates are increasing slightly, but mostly have stabilized. This trend is expected to hold as forecasts anticipate demand will continue to rise, gradually propping rates up.
East Coast dockworker talks underway, potential strike in fall
While the transatlantic westbound route has not been as directly impacted by the Red Sea crisis as other global trades, U.S. shippers importing from Europe should heed another area of concern which could directly stymie container handling at U.S. East Coast ports later in the year.
On Sep. 30, the existing labor contract covering over 45,000 unionized dockworkers at ports across the East and Gulf coasts will expire. While negotiations for a new contract are underway, there has yet to be any indication that a deal is close to being finalized.
The International Longshoremen’s Association (ILA), the union representing the workers in the bargaining talks, announced that it will advise rank-and-file dockworkers to strike Oct. 1, a day after the current contract expires, should a deal not be reached by that time.
ILA is negotiating a new contract with the United States Maritime Alliance (USMX), the group representing East and Gulf port employers and ocean carriers.
If a coastwide strike were to occur, the disruptions to freight movement would be significant. If there was not one already, there would be a frantic shift in volumes to the West Coast, forming a lopsided throughway for U.S. trade. For unlucky shippers caught between the work stoppage, delays to their cargo would be imminent.
Of course, this potential scenario is more than five months away, and it is only if, ILA and USMX cannot reach an agreement. While the current progress achieved in the active talks is undetermined, there remains time for a deal to be struck.
Overall, how labor-related issues impact container shipping can be tricky to understand. Last year’s dockworker agreement on the West Coast took 13 months to materialize. However, within that timeframe, no coastwide strike ever occurred. That said, many shippers still rerouted away from the West Coast.
Were they wrong for doing so? Of course, not.
It is important to be prepared and have a contingency plan in place. Most of the time, everything goes swimmingly, but for the one time that it does not, the amount of money and time lost when confronted with a disruption will always be costlier than the amount of money and time invested in having a backup plan in advance.
Interlog USA, through GEMCA, is the first and only to guarantee proactive communication and cost awareness on the 5 milestones that impact your specific business the most.
Insight: Antwerp, Rotterdam Ports Q1 Container Handling, Plus U.S. March Volumes See a Boost
Since the first quarter ended, several reports came out with various data surrounding container volumes and handling activities at ports around the globe.
Over in Europe, at the Port of Antwerp-Bruges, container handling activity saw a nice increase in the first quarter. Data shared by the Port showed volume increase 6% year-over-year to 3,287,000 million TEUs. Additionally, container throughput in March at the port was at its highest in three years.
Another port in Europe, the Port of Rotterdam, edged out the Port of Antwerp-Bruges in total container throughput in Q1, just slightly. Rotterdam saw 2,000 more TEUs in Q1 than the Port of Antwerp-Bruges did at 3,289,000 TEUs.
After a rather bleak 2023, this is welcome news for these ports in Europe, with the hope that the increases continue.
Over on the U.S. side, import statistics for March 2024 show a slight increase (0.4%) from February but a substantial increase from March 2023 (15.7%).
Week 2 - Originally released Apr. 12
Insight: U.S. Import Forecast for First-Half 2024 Upgraded, Carriers Add Capacity
Trade association National Retail Federation (NRF) make considerable revisions to their U.S. import forecast through the first half of 2024, anticipating more inbound volumes through the country’s gateways.
In NRF’s monthly Global Port Tracker report, the group now forecasts U.S. imports for the first six months of the year to increase 11 percent over the same period last year. The updated forecast is over three percentage points higher than NRF’s March GPT expectation of a 7.8 percent rise over the first half of last year’s import activity.
Ocean carrier capacity management shines light on flowery import outlook
As covered in last week’s edition of Interlog Insights, ocean carriers have significantly curbed their use of blank sailings on Asia-U.S. trade lanes.
Last October, the trade saw a capacity of 644,572 twenty-foot-equivalent container units (TEUs) blanked, or canceled. However, in March, that number shrunk to 294,918 TEUs.
As a form of market maintenance, blank sailings, and the extent to which they are invoked, heel on the insecurities of carriers when facing a weaker market. Over the past two years, a demand lull tormented the Asia-U.S. trade, forcing rates to freefall while capacity became oversaturated. As a result, the tactic became commonplace in container shipping in 2023.
However, it seems a new leaf has turned in the market. While the indefinite service detour around southern Africa amid Red Sea turmoil is largely the contributor, projections of stronger import activity have also led to the reduction in blank sailings. In other words, carriers have gradually become comfortable with the strategy of deploying more capacity on Asia-U.S. trade lanes as the market angles upward.
Another sign of faith from carriers has been their eagerness to implement new or relaunched transpacific services. This included an announcement in December from THE Alliance, informing stakeholders that it will deploy additional capacity on several Asia-U.S. services starting this spring.
That said, the shipping alliance did announce on Wednesday (Apr. 10) that it reversed the decision to resume its EC4 service (Asia-U.S. East Coast). Originally suspended last November due to weak demand, the relaunch has been postponed indefinitely as THE Alliance cites current Red Sea hostilities as the reason. The service was slotted to resume mid-April.
Despite ongoing disruptions—whether that’s the Red Sea, the drought-stricken Panama Canal, or the temporary closure of the Port of Baltimore—outlook on import activity remains flowery as U.S. consumer demand is expected to stay strong into the peak season of summer and fall.
Insight: Latest Updates on the Panama Canal
Little bit of an update in regards to the Panama Canal. Dry season is nearing the end with rainy season expected to start in May.
Current forecasts are showing steady rainfall is set to arrive in late April and continue for a few months, the Panama Canal Authority said in their latest press release. If this happens like predicted, the Canal will slowly ease more transit restrictions, with the hope that conditions will be completely normal by 2025.
More transit slots were announced earlier in March and as of March 25th the total daily transits offered is 27.
Of course, any changes to the restrictions will be dependent on how the forecasts turn out. The Canal plans to continue monitoring the conditions and will announce any updates when applicable.
An additional couple of notes:
– average wait time for vessels arriving without reservations this year have been slightly under 2.5 days, the PCA reports.
– ocean carrier Maersk, is set to resume their OC1 service through the Panama Canal, in May.
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Week 1 - Originally released Apr. 5
Insight: Asia-U.S. Blank Sailings Are Decreasing
Blank, or canceled, sailings have been defining features of container shipping over the previous two years. Following historical freight volumes during the pandemic, the Asia-U.S. market experienced whiplash—softening tremendously. By late 2022 and through 2023, there was significantly less demand to move cargo, which left ocean carriers, who supply the trade with vessels, in a tough spot. The market became oversaturated with capacity as carriers frantically looked for ways to correct it.
Among several tactics, including lowering the sailing speed of their vessels, carriers will often utilize blank sailings as a form of market maintenance in times of low demand. By canceling or skipping scheduled calls from their rotations, they forcibly reduce their available capacity in a bid to keep rates stable, if not favorable. Like when issuing general rate increases (GRIs), carriers typically give shippers a heads up in advance of a blanked sailing, however the tactic nonetheless can lead to delays with affected shipments.
Blank sailings are decreasing, prodded by Red Sea crisis
That said, market conditions have relatively strengthened in the present day from the doldrums of the last two years. In a mix between healthier demand and external supply chain events, carriers are having better opportunities of deploying their capacity on the Asia-U.S. route. As a result, instances of blank sailings have notably decreased over the past several months.
Transpacific blank sailings are decreasing on the Asia-U.S. trade.
The chart above shows the amount in twenty-foot-equivalent units (TEUs) that carriers have blanked (in red) and deployed (in green). It is apparent that they have felt less pressure to omit calls from their schedules and, ironically, more pressure to boost their deployable capacity.
While promising trends in demand have contributed to this shift, current hostilities in the Red Sea have been perhaps the largest catalyst. Since December, container ships have been avoiding the Red Sea (which connects to the Suez Canal) due to indiscriminate rebel attacks on commercial fleets. The geopolitical crisis has prompted carriers to indefinitely detour Asia-U.S. East Coast services around southern Africa.
The routing diversion adds ten to 14 days in transit time from Asia to East Coast ports. The longer voyage, which includes weekly services, has required carriers to allocate more vessels to their rotations. In return, they have pulled capacity from other global trades to accommodate the shift.
As it stands, the overall state of Asia-U.S. trade is cautiously balanced. At least, from a simple supply and demand dynamic. Common carrier tactics, like blank sailings and GRIs, have not been as necessary in today’s conditions.
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Insight: Some Carriers Add Service, While Some Delay Service Restarts
Last month, THE Alliance announced they were planning to restart a service between Asia and the U.S. East Coast, now they say they will be delaying that due to ongoing threats to vessels along the Red Sea.
Hapag-Lloyd and Ocean Network Express said in a statement on Wednesday that THE Alliance’s East Coast 4 (EC4) service from Asia would be delayed “until the situation in the Red Sea has stabilized” and not restarted like was originally planned.
ONE and COSCO join CMA CGM on a north-south service on the USEC
COSCO and ONE, along with CMA CGM, are teaming up on a vessel-sharing agreement that will bring their ships into CMA CGM’s north-south service through the West Coast of South America and the U.S. East Coast.
Details of this service include:
– Six 2,200-TEU ships deployed on 42-day roundtrip voyages.
– Ports included in the service are Chile’s San Antonio, Peru’s Callao, Ecuador’s Guayaquil. U.S. calls are Port Everglades, Philadelphia, New York and Norfolk. Colombia’s Buenaventura is also on a call at the southbound part of the trip.
– One of COSCO’s ships will be deployed and replace a CMA CGM vessel in this rotation. After four months in the service, ONE will deploy two vessels, which will replace two other CMA CGM ships
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