Trans-Pacific

Denmark’s DSV collected record profits for 2022, but the forwarder says a return to a more “normal” market has begun.

The return of US ports to normal cargo flow is demonstrated starkly in the year-over-year comparisons of vessel schedule reliability in the Asia-US trade.

Data shows US importers are walking the walk when it comes to sourcing diversification, slowly moving trade flows away from China and toward Vietnam, India, and South Korea, writes Journal of Commerce Executive Editor Mark Szakonyi.

The first 2022 financial results from ocean container carriers are filtering in, revealing the impact of collapsing rates and demand on profitability levels.

The premium rate that importers had been paying to ship Asian imports through the US East Coast has dropped considerably over the past few months, allowing the spread between East and West coast spot rates to narrow to pre-pandemic levels.

The move raises questions whether the carriers will seek new alliance partners, potentially setting off another round of musical chairs involving the other two networks, THE Alliance and the Ocean Alliance.

While there are encouraging signs regarding general merchandise retailers seeing their inventories-to-sales return toward pre-COVID levels, data suggests many sectors have a long way to go before their inventories-to-sales come back to pre-pandemic levels.

With an increased focus by importers on geopolitics and “friend-shoring,” carriers are shifting an increasing volume of deep-sea vessel capacity away to Vietnam — and away from China.

Dirtier products are the unintentional winners in global trade where cleaner finished goods pay higher tariffs, resulting in an effective “subsidy” of polluting commodities, according to the World Trade Organization.

Scrutiny over Flexport’s job cuts earlier this month points to a long-term issue for the venture-backed logistics company: a perceived lack of identity in a market that has long been skeptical of its differentiation.

Even as weak economic conditions prevail during the annual service contract negotiating cycle, it does not automatically mean shippers will be driving the hardest possible bargains with newly vulnerable carriers.

The softening outlook from niche carrier Matson foreshadows that the decline in US imports from Asia and the softening freight rates that began last fall are likely to continue through the first half of 2023.

The pandemic-induced supply chain disruptions in China have left importers searching for more resilience and flexibility in their existing supply chains rather than racing for the exits.

The narrowing spread between East and West coast spot rates in the eastbound trans-Pacific comes as spot rates to the East Coast have fallen by 18 percent over the past six weeks while West Coast rates have ticked slightly higher.

Shippers are generally willing to share in the cost of reducing carbon emissions, but they worry a lack of transparency in pass-through charges could allow shipping lines to continue burning fossil fuels.

Despite the fourth-quarter crash in revenues, all three Taiwan-based carriers still booked record revenues for the full year, suggesting they will report bumper profits for 2022.

The West Coast’s share of US imports from Asia will continue to deteriorate in the first quarter and beyond until terminal operators and the International Longshore and Warehouse Union agree on a new contract, sources say.

Despite the collapse in spot rates, ocean carriers are fundamentally in a stronger position than in the past, and shippers would be wise not to confuse a temporary downcycle with the liners’ structurally stronger long-term position, writes analyst Lars Jensen.

Falling demand for ocean and air freight services is driving headcount cuts across the logistics sector, with forwarder Flexport the latest to announce layoffs.

The collapse in ocean freight rates is a clear signal that the market is reverting to its pre-pandemic state, but the burning question for 2023 is whether that reversion is temporary.

Maersk’s new executive lineup covers 15 areas of responsibility within the carrier and is a combination of long-term company leaders and those with experience from outside the group.

US retailers now forecast double-digit year-over-year declines in imports for each month through May as the eastbound trans-Pacific trade returns to pre-pandemic cargo volumes.

Some factors, such as the sharper attention both multinationals and smaller mom-and-pop sellers are paying to their supply chains, seem to be charting a new trajectory and are poised to help shape the freight sector this year.

Inflation and high interest rates mean consumers have less buying power and will spend less, driving shipping profits down in the year to come.

Congestion and vessel queues at Chinese ports could worsen in the run-up to the start of the Lunar New Year on Jan. 22 as COVID-19 infections continue to surge, affecting the number of dockers turning up for work.

Globally, schedule reliability in November increased in 31 of the 34 trade lanes measured by Sea-Intelligence Maritime Analysis, with 56.6 percent of vessels arriving on time overall.

After a messy 2022, the West Coast is starting 2023 nearly congestion-free as worries rise about how much market share has been lost to the East and Gulf coasts.

Contract rates will be lower this year, shippers, carriers, and analysts agree, but no one knows yet just how much lower reduced demand will take rates in the end.

The acquisition of a majority share of three terminals in Los Angeles and Oakland will allow Ocean Network Express to better coordinate vessel operations with those terminals and, in turn, improve cargo flow.

The cap-and-trade emissions cutting system being implemented in Europe will have a “positive influence” on decarbonization agreements at an international level, according to the European Shippers’ Council.

Long-term rates on major trade lanes out of Asia have fallen steadily through Q4 as shippers sign fewer contracts and instead ride the collapsing spot markets.

Shippers locked into long-term contracts at elevated rate levels on trades out of Asia are feeling “burnt” as the spot market collapses, according to the Global Shippers’ Forum.

How the new vessel carbon intensity rating measure will be applied from January continues to rile the global shipping community, with BIMCO facing the latest maritime industry broadside.

Danish power company Ørsted says policymakers must provide a regulatory environment that allows companies to commit to the huge investment required in developing shipping’s fuel of the future.

Carriers, forwarders, and shippers say there will be no pre-Lunar Year bump in rates because they expect US demand to remain weak while exports from China decline further.

China’s exports fell almost 9 percent in November, while carriers continue to pull significant levels of capacity on trans-Pacific and Asia-Europe services.

The decline in US imports from Asia is expected to accelerate in the coming months as earlier-than-usual Lunar New Year factory shutdowns in China cause production to plummet.

Shipping’s transition to zero-carbon energy sources will be costly, but shippers are showing a growing willingness to pay to decarbonize their ocean transport supply chains.

The expanding platform provided by shippers seeking green transport has allowed Maersk to ramp up its ocean sustainability efforts, with greening landside logistics the next target.

Sources with knowledge of the Port of Oakland’s operations called Monday’s action by the ILWU an obvious attempt to exert pressure on stalled contract negotiations with the Pacific Maritime Association.