Trans-Pacific

Facing the prospect of low-single-digit volume growth through the Lunar New Year in February, carriers so far this month have effectively reduced almost 22% of trans-Pacific capacity through blank sailings, according to Sea-Intelligence Maritime Analysis.

Efforts by carriers to mitigate overcapacity via blank sailings amid depressed container spot rates spell sustained deterioration in container service in general for the foreseeable future, writes Journal of Commerce Executive Editor Mark Szakonyi.

The normalization of container shipping markets is being accelerated by a surplus of capacity, with predictable results on the profitability of ocean carriers.

Both Hongkong International Terminals and Modern Terminals confirmed cargo handling operations at their facilities at Hong Kong’s Kwai Chung container port were halted for about 33 hours, gradually resuming late Monday afternoon.

The Cosco subsidiary reported mostly positive volume metrics for both the third quarter and nine months through September, although revenues were down sharply.

Marine terminal operators in Los Angeles-Long Beach and the Pacific Northwest are dealing with an increase in rail container dwell times owing to an east-west imbalance in rail equipment that has worsened in recent weeks.

While the costs of meeting shipping’s net-zero 2050 target are expected to run into the trillions, Europe’s emissions trading system presents a more immediate decarbonization cost that awaits European cargo owners in the new year.

For importers and forwarders, the blank sailings mean the resulting schedule disruptions and “rolling” of cargo they are already experiencing at Asian load ports will force them to book more of their cargo with carriers they can count on to maintain schedule integrity.

New forwarding and ocean services are being added to South American trade lanes as service providers move to capture rising trade growth in the region.

The phased implementation of Europe’s emissions trading system on the shipping industry beginning next year will generate significant costs for carriers that will be passed on to customers in the form of new charges.

The decision to suspend a service outright may represent a new leg down in terms of ship capacity, which is expected to grow sharply this year and next.

Carrier executives and others say the draft limitations imposed due to a shortage of rainfall are creating a more difficult economic rationale for the so-called all-water route to the East Coast of North America.

The top four US ports, which accounted for 68.2% of US imports from Asia through August, experienced greater than 20% declines in Asian imports in the first eight months of 2023 whereas imports through Houston, the dominant port on the Gulf Coast, declined only 3.7%.

Although importers can look forward to paying low freight rates at least into 2024 due to weak volumes and significant overcapacity in the trans-Pacific, aggressive capacity reductions through blank sailings will disrupt service levels, this week’s IANA conference was told.

The gains in spot rates for ocean freight are eroding again as US importers see little need to book more space ahead of the holiday shopping season.

As many have observed in disparaging the notion of a “digital” forwarder, of which Flexport was the prototype, forwarding at its core is a business of people solving real-world problems for which there is not — and probably never will be — a technology solution, writes Peter Tirschwell.

Facing an operating loss of up to $500 million for 2023, Zim hopes the sharing arrangement with its larger competitor will help drive efficiencies “amidst continued near-term headwinds.”

US retailers historically stock up for the spring season and top off inventories following winter holiday depletion and before the Chinese New Year, but forwarders and carriers admit there’s no guarantee this time around.

The ports of Vancouver and Prince Rupert experienced a series of labor disruptions in July during longshore contract negotiations, while the Panama Canal implemented draft restrictions amid a severe drought.

But in its interim earnings announcement, Cosco Shipping Holdings also maintained a cautious outlook due to challenges it cited, including the global economy, inflationary pressures in Europe and America, and the delivery of new vessels.

Supply overcapacity coupled with mediocre freight demand has the top 25 trans-Pacific non-vessel-operating common carriers deciding whether to chase lower margin business or suffer volume losses.

MSC, which has implemented large-scale network realignments in recent months, halted Indian calls on the Sentosa service in April when it opened a standalone intra-Asia loop.

Blank sailings during August held largely steady from July as the outlook for US import demand remains unclear, according to forwarders.

The Cosco Shipping subsidiary noted that significant uncertainties over economic growth prospects and the huge injection of capacity into major trade lanes made forecasting difficult.

The fresh data also showed — starkly — how the West Coast’s share of imports from Asia eroded during the 13 months of contentious contract negotiations between the ILWU and waterfront employers.

Getting shippers to commit to premium-priced, low-emissions shipping services is a hard sell for ocean carriers and forwarders as cargo owners enjoy rates that are now mostly below pre-pandemic levels after two years of record highs.

Despite the stability offered by contracted volume, the Israel-based carrier decided against locking in long-term rates at unsustainably low levels.

A sharp increase in new vessel deliveries over the coming weeks is forecast to put more pressure on ocean carriers to blank sailings — or face falling rates.

Spot rates in the eastbound trans-Pacific continue to move higher, although a planned general rate increase this week could be the last one for a while, as carriers are scheduled to add a significant amount of new capacity into the global fleet beginning later this year.

The first-half results of Hapag-Lloyd and HMM mirror those reported by their peers, with earnings severely challenged by the rapidly normalizing market.

The disruption laid bare the limits the Trudeau government will exercise to push both sides to a deal that was ratified Friday by longshore union membership at the ports of Vancouver and Prince Rupert.

While the magnitude of peak season in any given year may have macroeconomic significance in shedding light on the strength of consumer spending and the economy overall, it is only one factor driving the market conditions that affect the physical movement of goods, writes Peter Tirschwell.

The rulemaking has underscored sharp divisions in the industry on whether the maritime regulator needs to take a heavier hand with liners following complaints by shippers.

The financial results of the Singapore-based carrier reflect a return to a more normal container shipping market, albeit one characterized by weak demand from inflation-hit destination markets.

The membership of the International Longshore Warehouse Union Canada has rejected a four-year contract at the ports of Vancouver and Prince Rupert, which employers say would have included a 19.2%. compounded wage increase.

CN said it will take up to eight weeks to clear the cargo backlog at the ports of Vancouver and Prince Rupert as the industry waits to see if ILWU Canada’s rank and file will accept terms of the tentative deal reached last week.

The Georgia Ports Authority has acknowledged the added berth capacity was sorely needed during the worst of the pandemic-driven port congestion when Savannah’s queue hit more than 30 ships in September 2021.

GSC intends to combine its expertise in servicing containerized imports in the retail sector with MacMillan-Piper's experience in warehousing and transloading of primarily export commodities.

With a significantly shorter peak season expected this year, the ability of carriers to match capacity to demand will be tested over the next six months as they seek to keep spot rates from dipping below contract levels.

New and expanded auto imports landing at the Northwest Seaport Alliance come as carriers take advantage of its proximity to Asian ports during a time of scarce ro/ro tonnage.