Freight market conditions remained firm despite some softening in supply and demand. While steady cargo movements continued in July, a sudden decline in transport demand occurred in August and September.
On the supply side, port congestion improved in some areas, but supply chain disruptions continued across the world with port congestion in US East Coast and Europe continuing. Due to ongoing deterioration in market conditions, freight rates started to decline throughout the third quarter compared to the same period last year.
In fact, heard of a rate from Yantian, Shanghai or Ningbo to Los Angeles or Long Beach at $1,850 for a 40ft-high cube, valid to mid-November and available via MSC, Maersk, ONE, Hapag-Lloyd or Yang Ming.
And the market is continuing to weaken, suggesting rates could fall below the 2019 levels of around $1,500 in the coming weeks.
Spot rates to the US east coast are proving more resilient, however, with, for example, Drewry’s WCI reading last week edging down a modest 3%, to $6,034 per 40ft, having shed around a third in value since the summer.
And for the record, from the same Chinese ports and with the same shipping lines for discharge at New York, Savannah, Charleston or Norfolk the rate was $5,450 per 40ft.
Carriers are hoping the early Chinese New Year in 2023, falling on 22 January, will boost demand in late November and December, but until then they will have to remove more capacity, either by more blankings or by the temporary suspension of services.
Meanwhile, Asia-Europe headhaul spot rates also came under intense pressure last week, with the WCI North Europe component slumping 13%, down to $3,845 per 40ft, and the Mediterranean reading falling 9%, to $4,200.
I heard from a UK-based freight forwarder last week who reported receiving offers for prompt shipment from China at $4,000 per 40ft or below, with further discounts available for volume.
There were also ‘tongue in cheek’ complaints from some industry insiders that containers were arriving “too fast” from Asia. Indeed, importers are having to adapt to a ‘new normal” of boxes arriving on time at ports, after suffering two years of lengthy delays to their supply chains.
The bottom line is a mixed bag. Shipments are starting to arrive on time and service is starting to return to normal, but at the same time, so rate. While this does mean less profit per shipment, it does provide opportunities to those who are able to deliver on service as customers start to shop around for better rates, AND better service. Those that can deliver on the latter, stand to profit, and those that don’t… will become collateral damage of the thinning of the herd.
Having an effective international logistics partner ensures the timely delivery of your customer’s goods and provides them with safe shipping options. It helps build a positive brand image in the customer’s mind, and by Universal being your customer’s International provider, you get a better understanding of their needs, leading to satisfied customers worldwide!
It’s time to update your CUSMA/USMCA Certificates of Origin!
With 2022 coming to a close, Cavalry Logistics Intl. would like to take this opportunity to remind its clients to complete and/or obtain new 2023 CUSMA/USMCA Certificates of Origin covering applicable products being imported into Canada and the U.S. Without updated certificates on file, importers may face higher duty rates on imported goods. Please visit CBSA’s website for official CUSMA guidelines, or contact us if you need any assistance.
China, “the factory of the world,” is losing manufacturing and export dominance:
Recent data shows China is losing more manufacturing and export market share to Asian neighbours such as Vietnam, Malaysia, Bangladesh, India and Taiwan. The nation’s ‘Zero Covid’ policy is a significant factor leading to the nation’s erosion in its long-time dominance of global trade.
Antidumping duty orders to be issued on US imports of Russian sodium nitrate:
The United States International Trade Commission (USITC) determined on October 17th that U.S. industry is injured or threatened by imports of sodium nitrate from Russia, and will published a public report by November 14th. The Department of Commerce has determined this product is sold in the U.S. at less than fair value.
U.S. imports headed to lowest level since early 2021:
Imports at the nation’s major container ports expected to fall to their lowest level in nearly 2 years by the end of 2022. Recent cuts in carriers’ shipping capacity reflect falling demand for merchandise from retailers. Despite this, retail sales continue to grow.
Members seek to advance transparency decision for non-preferential rules of origin: WTO members have agreed to ask the chair of the Committee on Rules of Origin to consult with delegations and propose a way forward on an initiative aimed at enhancing transparency regarding non-preferential rules of origin.
Buy American Requirements Tightened: The Biden administration has finalized a regulatory change that will increase U.S. content requirements for products purchased by the federal government. This rule will take effect Oct. 25.
WTO marks 75th anniversary of the General Agreement on Tariffs and Trade: On the occasion of the 75th anniversary of the General Agreement on Tariffs and Trade (GATT), WTO Deputy Director-General Anabel González and Douglas Irwin, the John French Professor of Economics of Dartmouth College, participated in a webinar to discuss the origins of the GATT, what it achieved and how it fits within the multilateral trading system. WTO Director-General Dr Ngozi Okonjo-Iweala provided introductory remarks, highlighting the key role of trade in lifting people out of poverty since the birth of the GATT.
CBSA signs Mutual Recognition Agreement with the European Union to enhance supply chain security and facilitate trade: Today, the Canada Border Services Agency (CBSA) announced the signing of a Mutual Recognition Agreement with the European Union’s (EU) Taxation and Customs Union (TAXUD) to honour each other’s Trusted Trader programs.
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