MARKET UPDATE – June 2022
The global economy is fluctuating rapidly in response to the government regulations influencing the financial market. Much of the world is back to normal after more than two years of a pandemic. The global effect on the world economy, especially in commodity markets, manufacturing industries and supply chain have contributed to perceptions of a slowdown in global growth. In our June Market Update, we discuss the shift in consumer behavior which is influencing the global economy and its impact on the manufacturing industries and international supply chain and logistics space.
More than two years after the start of the pandemic, most parts of the world are already transitioning to a post-COVID era as life returns to the way it was before the virus outbreak. With more countries having fully opened and preparing to welcome international travelers again, the pre-pandemic way of life that countless people have been longing for has brought a major shift in consumer behavior. The resurgent spending on consumer services fueled the economic recovery during the second quarter, with further acceleration in appetite for tourism- and dining-related services. According to the latest industry data, the activities in consumer services industries are far outpacing other major industry categories, with the global PMI output index for consumer services seeing a strong rebound at about 57, indicating expansion of the sector as compared to previous months.
On the other hand, the manufacturing industries continue to see subdued performance as a result of supply chain bottlenecks, inflation, and as aforementioned, the shift in spending toward services. Global PMI indices show that the manufacturing sector saw the most modest month-on-month growth in recent years. While the global manufacturing PMI inched up from 52.3 in April to 52.4 in May, reduced factory output reached the second-lowest level in the last 20 months, with the downturn in Chinese factory production being the major cause of the steep production decline.
For those in the international supply chain and logistics space, the uncertainty surrounding the continued strength in consumer demand for retail products has caused ocean freight rates, especially the spot rates, to decline considerably and continue to edge downwards. Premium rates that some shippers grudgingly accepted last year are now reportedly fading and are coming close to the FAK rate level.
According to the industry index which excludes premiums and surcharges, as of week 26, transpacific container rates for exports from East Asia/China to USWC and USEC remained at US$7,599/FEU and US$10,113/FEU, respectively. On the spot market, we have also seen softened freight rates following the Lunar New Year. Data from our NVO department shows that the Eastbound Transpacific freight rate for cargo originating from China took a further dip to $8,095/FEU to USWC and $10,869/FEU to USEC. the softened demand following the Lunar New Year also further moderated the freight rates.
While the talk of a slow-down in orders and the projections of spending shift may suggest a decrease in demand for retail goods, the effect has not been a reflected in the consistently strong volume throughput processed at U.S. ports and the ocean bookings that many freight forwarders handle. With the earlier-than-expected peak fast upon us, Century would like to reiterate the importance of timely vendor bookings and advance cargo planning for hitting your the target ETD. Your Century Account Managers or Sales representatives remain at your disposal for how we can best support you in the fast-approaching seasonal peak!
- Ocean carriers have announced GRIs (US$1,000 for 40’ standard and US$1,125 40’HC containers) effective from July 15, for cargo from Asia to the United States and Canada. MSC has also announced a rate restoration (US $500/TEU) for cargo moving from Europe to Australia, effective from July 1.
- Ocean Network Express has enlarged its sea network and launched a new service connecting China and the Middle East with Mozambique in East Africa. This direct MIM service will follow an outbound sailing route from Nansha to Maputo via Jebel Ali, with a transit time of 31 days.
- Taiwanese carrier Wan Hai Lines has launched a new service Asia America 9 (AA9), which will be the first direct service connecting Asia with the Port of Philadelphia. The first vessel sailing is scheduled from Haiphong on July 8, with the port rotation as follows: Haiphong – Shekou – Kaohsiung – Qingdao – Charleston – Philadelphia – New York– Haiphong.
- MSC has launched a new weekly Asia-US Gulf Coast and South Atlantic service named Zephyr. This weekly service will provide importers sourcing from China and South Korea with additional capacity to the Atlantic and Gulf Coasts. The first sailing will commence on July 20 with the following port route: Shanghai – Ningbo – Busan – Cristobal – Houston – Port Everglades – Savannah – Lazaro Cardenas – Shanghai.
- MSC has revamped its existing Santana services on its Asia-U.S. network with the addition of Da Chan Bay, Baltimore, and Boston on the port rotation. The additional port calls will be offered as a direct linkage from Asia to the USEC and no longer via transshipment. The first sailing by MSC ELLEN, will sail from Haiphong on the following revised port rotation: Haiphong – Da Chan Bay – Shanghai – Busan – Panama Canal – Charleston – Baltimore – New York – Boston – Suez Canal – Singapore – Haiphong.
- OOCL has launched a new service called Transpacific Latin Pacific 6 (TLP6) to offer direct linkage between Northeast Asia and the West Coast of South America. Set to commence from Hong Kong on June 28, the transit time of TLP6 will be 22 days from Shanghai to Puerto Quetzal, Guatemala, and 32 days to San Antonio, Chile. The port rotation will be as follows: Hong Kong – Shekou – Ningbo – Shanghai – Manzanillo (Mexico) – Puerto Quetzal – San Antonio – Hong Kong
- Maersk has launched a new dedicated coastal service in New Zealand to bring additional capacity to the New Zealand supply chain. Two 2,500 TEU vessels will be deployed to provide weekly port coverage of Timaru, Tauranga, and Lyttelton, and fortnightly coverage in Auckland and Nelson from July 12.
CENTURY EXPRESS – YOUR TRUSTED NVOCC PARTNER
Century Express holds contracts with multiple ocean carriers and helps you realize schedule flexibility for your shipments. With Century Express as your NVOCC partner, you will have complete visibility of your shipments in VMS® as our NVOCC division leverages VMS® as the operating platform. We also consolidate NVOCC invoicing with your existing invoicing, keeping the number of documents issued for multiple services transparent and at a minimum. We engage with each carrier alliance and other independent carriers to ensure that we can provide choices and backup options to our customers. In addition, you can even leverage our LCL freight forwarding services to explore new sourcing opportunities in countries where you are not currently shipping to/from or have a contracted carrier. Contact your Century Representative today to learn more!
- The contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) started on May 10. The union contract for more than 22,000 dockworkers employed at the 29 West Coast ports, which handle around 42% of shipments from Asia, will expire by the end of this month. In a joint statement released by ILWU and PMA, the union and the employer group said they are not “preparing for a strike or lockout, contrary to speculation and news reports.”
- The Port of Oakland announced that its landlord free dwell time for containers will be reduced from 7 days to 4 days before tariffs are applied, starting July 1. While the port reduced the fare-free period in hopes of accelerating the pick-up of import containers, the decision of applying any higher demurrage charges still lies in the hand of the ocean carriers.
- As of week 25, there were 44 cargo vessels waiting outside of the Port of Savannah, the second-largest port on the East Coast. Currently, the vessel berthing time is 7 to 9 days and the terminal capacity stands at 87%. While the Georgia Ports Authority added 900,000 TEUs of annual capacity to the Garden City Terminal, an additional 300,000 TEUs are expected to come online in July ahead of the summer peak, boosting the terminal container handling space up to 7 million TEUs.
- There were 10 cargo vessels at anchor outside of the Port of Houston as of week 25. The current vessel waiting time ranges from 2 to 14 days due to late-arriving vessels as well as high volumes at the terminal and inland rail facility. Contributing to the congestion is also a deficit in chassis as the longer street dwells have slowed down container pick-ups and deliveries to/from the port.
- In south China, Yantian Port is maintaining the acceptance of export laden delivery 7 days prior to estimated vessel berthing time, whereas in Shekou, the gate-in rule for export laden containers is ETB-5. The average vessel waiting time is 0.5 to 1.5 days.
- The labor shortage at major European gateways such as Rotterdam and Hamburg continue to lead to lower terminal productivity. In Germany, dockworkers initiated a 24-hour labor strike which adversely affected the terminal operations. As of week 25, the estimated vessel waiting time is 3 and 6 days at Bremerhaven and Hamburg, respectively.
Please refer to the below illustration of Century’s assessment of the operating status at the major origin ports throughout Asia.
- Cargo transportation in South Korea has resumed after eight days of strike initiated by truck drivers in mid-June. The truckers returned to work after reaching an agreement with authorities who agreed on extending the minimum pay guarantees and possible expansion of fuel subsidies for truckers.
ASIA PACIFIC LOCAL UPDATE
- China is reporting the lowest number of COVID cases since early February. The authorities have gradually relaxed COVID-related restrictions from early June as the pandemic situation stabilizes. The virus outbreak in major Chinese cities has been bought under control following the strict COVID measures imposed by the local government. All Century CFS facilities in China have been permitted to gradually resume operations to accommodate resumed factory output. Click here to read our latest China COVID-19 update.
- In Bangladesh, due to the upcoming EID cargo rush and massive fire at the container depot in Chittagong in early June, the CFS waiting time has increased by 24 hours. Our local team is notifying vendors and customers to do the advance preparations as per the work schedule. The estimated vessel berthing time is 1-4days.
- Sri Lanka is experiencing a fuel shortage due to the ongoing economic crisis. on June 26th, the fuel price is increased by 15%-22%. The government has indicated that a steady fuel supply will be reinstated by July 10, 2022. In the meantime, fuel services will only be provided to the essential services, particularly ports, airports, food distribution, and agriculture. Our local team has confirmed there is no supply chain impact, and we continue to operate without any disruptions.
TRADE & ECONOMIC HIGHLIGHTS
- According to the latest data released by China’s National Bureau of Statistics, the country’s manufacturing PMI slipped below 50 in May, falling to 49.6% which indicates contractions rather than expansion. The drop in factory output and manufacturing activities was largely attributed to the ongoing COVID-19 restrictions which continue to impact factory production in some areas of China.
- The Uyghur Forced Labor Prevention Act (UFLPA) officially came into effect on June 21. Signed by President Biden on December 23, 2021, a key assumption of the act is that any goods fully or partially produced in the Uyghur Autonomous Region of the People’s Republic of China were produced with forced labor, and so cannot enter into the United States for consumption. The burden of proof is on the importer to prove that the goods were not produced with forced labor. Details of the UFLPA can be found in USCBP’s website.
Besides our suite of tools in VMS® that power your supply chains every day, the following solutions we offer provide you with alternatives to maximize the efficiency in your supply chain operations and mitigate the ongoing industry challenges.
- Warehouse Storage – Besides the normal CFS cargo flow through our warehouse network, we can also work with you to take on dedicated storage space to accept vendor deliveries based on their production schedules. This can help to alleviate pressure at vendor facilities while also ensuring that your cargo can be dispatched as soon as carrier space becomes available.
- Value-added Services – The wide range of value-added services we provide at origin CFS, such as pick and pack, consolidation, labelling, and palletization, gives you a one-stop solution for greater supply chain efficiency. Century can build direct store loads from our Asia CFS facilities to bypass transloads/DCs and streamline inbound delivery.
- Origin Trucking Solution – With support from your carriers, we can arrange trucking to alternate ports where carrier space is more readily available, allowing for greater flexibility in space planning to achieve forecasted departure dates.
- Destination Services – Our physical network in North America extends beyond the primary shipping hubs in California. Our coverage in the Pacific Northwest and the East Coast gives you alternative storage and transload options, as well as other destination services such as pick and pack and cross-dock services throughout the United States and Canada.
- Customs Clearance & Brokerage – Our team of licensed brokers and compliance experts will handle your documentation and clearance process directly with US Customs. As your trusted trade compliance partner, we help you avoid costly delays at the border and penalties for misfiling.
Talk to your Century Account Manager or contact a sales representative today to understand how we can develop a customized solution to meet your supply chain needs! We will continue to work together with your logistics teams to navigate these unique shipping times through every step in the supply chain.
Disclaimer: The information contained in this newsletter was provided by our partners across Asia and referenced from online sources that were not specifically authorized for third-party usage. The aim of this publication is for informational purposes only. While Century endeavors to validate the authenticity of the stipulated information, Century is not responsible for its accuracy and completeness and does not accept liability or responsibility for any actions taken upon reliance.
Comments are closed.