MARKET UPDATE – May 2022

On a path towards economic recovery, businesses and exporters in Shanghai are now eagerly awaiting return to normalcy after daily life and commercial activities were brought to a halt two months ago. With China’s financial capital set to gradually reopen from June, the attention of many supply chain professionals now turns to the aftermath of the two-month COVID lockdown and the earlier-than-usual peak season. In our May Market Update, we discuss the COVID impacts on containerized trade volume from Shanghai and carrier capacity outlook in the coming months.

 

CENTURY SPOTLIGHT

As the daily infection numbers continue to decline and remain consistently stable, Shanghai has unveiled plans to finally loosen its strict lockdown and allow shopping malls and department stores to re-open conditionally in batches from June 1, followed by in-person teaching at junior and senior high schools from June 6. As home to the world’s largest container port, all eyes are now on how Shanghai will cope with the anticipated cargo spike once more factories resume production and ship out backlogged orders to make up for lost time.

Despite operational constraints and labor shortages, maritime terminals in Shanghai have maintained normal operations and shown signs of rebound in container throughout. According to the data from the Shanghai International Port Group, the port processed 3.1 million TEU in April, down 24.3% from 4.1 million TEU from the previous month and 16.2% from the 3.7 million TEU recorded in the same period in 2021. As the city prepares to reopen next week, operations at Shanghai’s ports have also been almost fully restored. According to Chinese state media, officials of China’s Ministry of Transport said the daily container throughout at Shanghai Port has seen a strong rebound from the previous month and achieved 95.3% of the normal level, as container throughput recorded in Chinese ports between May 1 and May 24 recorded a 4.2% growth from the same timeframe in April, with a mere 1% drop compared to 2021.

With Shanghai progressively reopening, the seasonal cargo rush is expected to arrive earlier than usual with summer merchandise and back-to-school shipments set to flood into North American ports. The anticipated early arrival of the peak season is backed by latest industry data which shows a much earlier sharp increase in offered capacity compared to the previous year. According to reports from industry market intelligence, based on current vessel deployment, there will be a sharp increase in the weekly transpacific capacity starting from week 20, at least three to four weeks earlier in comparison with the previous year. Deployed capacity for the transpacific trade lane is expected to rise from 535,200 TEU from week 20 to 646,500 TEU in week 22. The increase in space offering is largely attributed to non-alliance carriers who are growing their fleet by 20% to 35% as opposed to carrier alliances who are only recording up to 6% in their capacity growth.

With the summer peak season fast upon us, advance cargo planning, timely vendor bookings, and flexibility will continue to be the key for hitting your target ETD. Your Century Account Managers or Sales representatives will continue to work with you on your every need.

OCEAN UPDATE

  • Eastbound Transpacific freight rates took a further dive due to softened demand but still remain at an elevated level. On the spot market, ex-China rates to USWC and USEC are $9,450/FEU and $11,985/FEU respectively, whereas ex-East Asia rates are at $13,075/FEU and $14,923/FEU to USWC and USEC respectively. According to the industry index which excludes premiums and surcharges, as of week 20, transpacific container rates for exports from East Asia/China to USWC remained at $11,455/FEU, and the rate is 44% higher as compared to the same period last year. As for the China/Asia-USEC freight rate, prices are at $14,570/FEU, which represents a 99% YoY increase.

  • Ocean carriers have announced GRIs are $1,000 for 40’ standard containers effective from June 15, for cargo from Asia to the United States and Canada. ZIM has announced GRIs of USD 200 / TEU for ex-China cargo to Australia with an effective date of June 1.
  • ANL (CMA CGM Group), COSCO, and OOCL have launched a new weekly express service between China and Australia. Sailing between central China and Australia’s east coast, five vessels each with 4,300 TEU capacity will be deployed for this new A3 Express service with the first voyage beginning from Shanghai on May 31. The port rotation is as follows: Shanghai – Shekou – Brisbane – Sydney – Shanghai
  • German carrier Hapag Lloyd has launched a new regular service Maputo Express (MAX) to expand its African network. This bi-weekly direct service will operate between Jebel Ali (UAE), Mundra (India) and Maputo (Mozambique), with an inbound transit between Maputo and Komatipoort (South Africa). The first westbound voyage is expected to depart from Jebel Ali on June 4 and arrive at Maputo on June 19.

 

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!

PORT UPDATE

  • The number of vessels waiting at anchor outside of the twin ports of Los Angeles and Long Beach continues to decline, falling to 17 vessels as of week 21. Currently, the estimated vessel waiting time at LA/LB is approximately 10 to 17 days. The twin ports have once again delayed the assessment of the “Container Dwell Fee” until June 3. The ports said the aging cargo on the docks has almost halved since the program was first announced in late October last year.
  • The negotiation between International Longshore and Warehouse Union, representing more than 22,000 workers employed at 29 US West Coast ports, and the Pacific Maritime Association (PMA) representing the employers, officially kicked off on May 10. Both parties expressed confidence in reaching an agreement before the current labor contracts expire on July 1.
  • On the U.S. East Coast, the Port of Charleston has shown signs of improvement in vessel waiting time. As of week 21, there were 14 vessels currently waiting outside for a berthing window at anchor with an estimated waiting time of 1 to 2 days. The continued shortage of chassis on the East Coast has resulted in delays in container pick-ups and transportation to/from intermodal facilities.
  • Currently, the waiting time for vessel berthing is up to 2 days at the Port of Norfolk and 5 to 7 days at the Port of Savannah. Higher import volume, vessel bunching, and ongoing port construction are amongst the reasons contributing to extended berthing wait time. With the improved congestion at East Coast ports, 2M and ZIM will reinstate their Newark and Savannah calls on Asia-USEC loops from June. The carriers cancelled or transferred the usual calls at Newark and Savannah to other service loops since January due to port congestion.
  • The vessel waiting time in Canada has further increased due to extremely high yard utilization. Currently, vessel waiting time averages 2 weeks in Vancouver and 4 days in Prince Rupert, with 17 and 7 vessels waiting outside the ports respectively.
  • Currently, the estimated vessel berthing time at Shenzhen’s Yantian Port is 1 to 3 days and the yard utilization is at 77%. The port is maintaining its policy of accepting laden container delivery 7 days prior to vessel ETB, with a daily 4-hour window reserved for laden containers with vessel ETB-4. The port has increased the daily export container delivery quota from 12,000 to 13,000 for Wednesday to Friday each week, starting May 25.
  • In Shanghai, the average waiting time for vessel berthing is 2 to 3 days at both Yangshan and Waigaoqiao terminals. Yard capacity for DG cargo is at over 90% capacity. On the other hand, in Ningbo, the terminals continue to suffer from severe yard congestion due to diverted Shanghai cargo. The current waiting time at CMICT is up to 3.5 days while the waiting time at NBSCT and NBCT averages 1 to 2 days.

Please refer to the below illustration of Century’s assessment of the operating status at the major origin ports throughout Asia.

LANDSIDE UPDATE

  • Trucking operations in China are gradually recovering:Trucking capacity is continuously improving with the Ministry of Transport of the People’s Republic of China’s various actions. Trucking services are supporting areas considered low risk based on the local COVID situation. Highways are all open for trucking arrangements. Efficiency might be impacted due to local regulations calling for mandatory Covid testing before completing various activities. Market rates are still high due to COVID prevention restrictions in each city. Especially in East China, transportation permits to Shanghai are still very challenging to obtain.
  • China and Hong Kong’s cross-border transportation has resumed by 50%, but the trucking fee is much higher than normal. Century will review any cross-border trucking requests on a case by case basis to confirm feasibility.

ASIA PACIFIC LOCAL UPDATE

  • Ocean terminals (SAGT, CICT and JCT) in Sri Lanka continue to operate as usual despite the various issues the country has been facing. Our local team has confirmed that ports, airports warehouses, are maintaining normal operations without disruption. However, sporadic demonstrations in the island country may interrupt normal cargo transportation and are leading to continued equipment deficits. Century Colombo team will continue to work remotely and remain reachable via VMS®, e-mail, and telephone.
  • More southern Indian exporters are turning to direct carrier services via Nhava Sheva because of limited trucking capacity at transshipment port Colombo. CMA CGM has begun a new block train services connecting New Mangalore Port (NMPT) to the country’s major gateway in Nhava Sheva. The 90 TEU block train will be operated by the state-owned CONCOR every two weeks.
  • China is set to gradually reduce COVID-related restrictions from June 1 as the pandemic situation stabilizes. Local authorities will end the work-from-home arrangement in some parts of Beijing, while the Shanghai government will start to reopen shopping malls and other premises. Our CFS facilities in Shanghai have been permitted to gradually resume operations to accommodate resumed factory output. Click here to read our latest China COVID-19 update.

TRADE & ECONOMIC HIGHLIGHTS

  • Israel and United Arab Emirates (UAE) have signed a free trade agreement on May 31 where  customs duties will be reduced by 96% on products including food, agriculture, cosmetics, medical equipment, medicine, services and government procurement. This is the first time Israel has reached such a wide-ranging economic arrangement with an Arab state.

CENTURY SOLUTIONS

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.

Sources:

  1. Shanghai Port Rebounds as Lockdown Loosens But Backlog Remains

  2. Sea-Intelligence
  3. Freight Rate Index
  4. Hapag-Lloyd
  5. Israel signs first Arab free trade agreement with UAE

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