Market Insights – Week 4, 2021

• Container Depots
  • Sydney
  • Melbourne
• Global Space and Container Shortage
• Global Port Congestion
  • Chittagong
• Industrial Action and Port Updates
• Dalian – Service Suspension & Emergency Reefer Surcharge Application
• Market, Space and Schedule delays:
  • South-East Asia
  • North Asia
  • Blank Sailings
• GRI / RR / PSS / IMBALANCE Announcements
• Market News – Other
• Market Commentary
• Tables:
  • Shanghai Containerized Freight Index (SCFI)
  • World Container Index
  • Spot Freight Rates

 Chinese New Year traditionally is the commencement of capacity reductions in the Asia to Australia Trades. This year, all indications are that carriers will utilise this time to clear the backlog of volumes out of Asia. At this stage, we have witnessed only one blank sailing, indicating export volumes are still strong out of Asia.

Strong demand is expected to last at least till June 2021. The World Bank has predicted average global GDP to be around 5-6% this year. Based on latest report from Alphaliner, container supply capacity is expected to increase 2.4%.

Container Depots

SYDNEY – The DCN reports that NSW PORTS has issued a port operator direction to all truck drivers on the roads around Port Botany to address lengthy truck queues on port roads outside empty container parks, with additional temporary dedicated truck queuing areas assigned

MELBOURNE – As reported last week, Melbourne is now facing a build up of empty containers causing congestion. This can be further explained in this article reported in the DCN.

Global Space and Container Shortage

Carriers are looking to capitalise on the global demand and the large increases in freight rates across all services. Any available vessel that is sitting idle is being deployed into their services, and as a result, less containerships are being sold for scrap.

Alphaliner concluded at the end of 2020 that the inactive fleet was at just 2.5%, and more than half of that (62%) represents ships that are in shipyards for repair and other services.

It is an interesting situation. According to The Loadstar, although the scrap value of a vessel has soared, carriers are opting to deploy older vessels at higher daily rates as not only have their current market values exceeded what they can earn via scrapping, they are looking to capitalise on low bunker prices and high freight rates due to global demand.

This article in The Loadstar highlights the impact that lack of equipment and vessel space is having, even on backhaul legs from Europe to Asia, as carriers prioritise the movement empties back to China to capitalise on freight rates on the headhaul legs.

Global Port Congestion

Five significant areas of congestion and the impact can be summarised as follows:

Port: Auckland

Position: Carriers are introducing a raft of port swaps and omissions to protect schedule integrity. Some carriers have stopped accepting cargo to Auckland.

Auckland Port Congestion Surcharges remain as previously advised.

Port: Sydney

Position: DPW Terminal – Current vessel waiting time / delay: 6 days. Terminal Situation expected to improve by late January/early February

Patrick Terminal – Current vessel waiting time / delay: 7-8 days on services where no contingencies have been employed. For on time vessels; 3-4 days delay. Improvement expected by late January/early February.

Sydney Port Congestion Surcharges remain as previously advised.

Port: Singapore

Position: Vessel berth delays of between 5 & 7 days, and an estimated three-week delay for transhipment cargo. Warehouses are suffering from the congestion due to overflow, impacting LCL distribution to final destination.

Port: UK (and Europe)

Position: Some carriers are not accepting cargo to UK due to port congestion at major ports Felixstowe, Southampton and London Gateway. Cargo acceptance only on case by case and at premium levels.

Restriction of cargo acceptance also on the basis of serious shortage of haulage and the lock down due to COVID-19.

In Europe, as carriers restrict cargoes to UK ports, we are witnessing congestion at Rotterdam. Export and import dwell time are 6days and 2 days respectively.

North America

Port: Los Angeles and Long Beach

Position: All terminals continue to be congested due to the spike in import volumes and the same is expected to last until February 2021.

Prolonged terminal waiting time and limited drivers are impacting delivery rates. Waiting for a berth takes in average 5 days and waiting at ports takes 6 days.

Port: New York

Position: Increased dwell times for import volumes, and large inventories of empty containers continue to impact operations at all terminals. Gate turn times for truckers have increased slightly due shortened work weeks and volumes.

Terminals have been extending gate / terminal hours when necessary to accommodate import deliveries.

Port: Canada

Position: Heavy congestion at all terminals due to the spike in import volumes and the same is expected to last until the end of Q1 2021.

CHITTAGONG 

Due to ongoing congestion in Chittagong and severe delays experienced on cargo arrival in Chittagong, the CMA CGM Group will temporarily STOP accepting new shipments to Chittagong effective from 19th Jan 2021.

Navia will keep an eye on developments and advise if any other carriers will follow suit.

Industrial Action and Port Updates

DP WORLD FREMANTLE

A yard meeting has been called to be held 19 January 2021. Please find official notice.

DP WORLD WEST SWANSTON

DP World has advised that the MUA has an approved yard meeting from 1300hrs to 1500hrs on Friday 15 January.  Terminal operations will be impacted during this time, including transport operator stack runs.

For the road, this will mean the last zone is 1100hrs, and the first returning zone 1500hrs.

Svitzer Industrial Action –

Please note that Svitzer Australia has received a strike notice from the MUA for the below listed dates and locations,

Dates:

• Tues 12 Jan 0001hrs until Fri 15 Jan 2359hrs
• Tues 19 Jan 0001hrs until Fri 22 Jan 2359hrs
• Tues 26 Jan 0001hrs until Fri 29 Jan 2359hrs
• Location: BNE, SYD, MEL, ADL, FRE

Svitzer is working on alternate arrangements in order to mitigate the impact to their services.

Dalian — Service Suspension and Emergency Reefer Surcharge Application

Due to the terminal yard density for reefer units at Dalian reaching critical levels, carriers have either announced surcharges on containers, or suspended bookings. Please find a summary as follows:

Carrier: MAERSK

• Method: Emergency Reefer Additional | Eff 5/1/2021
• Comment: USD1,000 / Reefer Container (Frozen)

Carrier: HSUD

• Method: Emergency Reefer Additional | Eff 5/1/2021
• Comment: USD1,000 / Reefer Container (Frozen)

Carrier: MSC

• Method: Port Congestion | Eff 12/1/2021
• Comment: USD1,500 / Reefer Container

Carrier: MAERSK

• Method: Temporary Cease
• Comment: Effective 15/1/2021

Carrier: ANL

• Method: Suspended
• Comment: Effective 14/1/2021

We will keep you informed as to further developments.

Market, Space & Schedule Delays: Southeast Asia

Feeder ports such as Ho Chi Minh City, Haiphong and Jakarta are facing chronic equipment shortages, especially 40ft containers. Due to strong demand, feeder space is also extremely tight. Cargoes from these feeder ports are transshipped in major hubs such as Singapore, Port Kelang, Shanghai and Busan, which are facing huge port congestion, caused by vessel bunching.

Mainline vessels calling these hubs are either delayed or must “cut and run” to maintain the service integrity. This results in misconnection between vessels from feeder ports and mainline vessels connection in Singapore, Shanghai, and Busan. Even if space is secured from origin, containers can lay over in transshipment hubs for long as 1-2 weeks to connect on to the mainline vessels.

Colombo and Port Kelang are other transshipment hubs which are also facing chronic port congestion. Containers have been piling as carriers do omit these ports to avoid delay in their schedule. In West Port Terminal (Port Kelang), yard capacity has hit 90% and it takes a week for vessel to berth. This has a knock-on effect in Singapore, as carriers dump their transshipment boxes, which were initially meant for Colombo or Port Kelang. Around 50,000 boxes are currently lying in Singapore, initially planned for transshipment using Colombo and Port Kelang.

Space and equipment position per COUNTRY ex South Asia

Port: Middle East Gulf (MEG)

Position: Booking availability is very low owing to issues at Singapore. Carriers YML, COSCO, HAPAG and PIL are not accepting bookings. All other carriers are reviewing space.

There are challenges to get space with carrier under prepaid basis.

Port: Malaysia

Position: Port Kelang is facing a critical congestion issue, impacting vessel berth and long anchorage times. Space to Australia should be OK after Min Jan 2021, although container stock is an issue. Port Kelang is a major transhipment port for routes ex Middle East, India Sub Continent and South Asia. At present, Port Kelang is also suffering congestion, hampering connections to Australian Ports.

The states of Selangor, Penang, Malacca, Johor, Sabah and federal territories of Kuala Lumpur, Labuan, and Putrajaya will undergo a 14-day lockdown with effect from 13 January 2020.

Port: Philippines

Position: Normal capacity but vessel delays at transhipment port affecting berthing in Manila and Cebu ports.

Port: Thailand

Position: Space is full. Although Cosco had opened up its service in mid Jan 2021, there is no more space left until FEB 2021.

Port: Indonesia

Position: All Indonesian ports to Australia are full. There is minimal space allocation for Australia destination due to heavy congested at Singapore transhipment Port. Some carriers are fully booked until JAN 2021.

Port: Vietnam

Position: The space situation is still very tight, with most carriers rejecting bookings to Australia. For space in early December, bookings need to be submitted early to ensure space. Rates to Australia in December have increased due to the shortage of equipment to serve cargo out of Vietnam.

Port: India

Position: All India ports have severe space issues and equipment shortages. Transhipment ports also have congestion issues. Getting a shipment out of India is very hard, and we are seeing extensive transit times to Australia of more than two months.

Space and equipment position per CARRIER ex South Asia

Carrier: ANL/CMA

Position: 40GP/40HC equipment shortage at SE Asia become serious. Shipper needs to reserve time to pick up empty equipment in advance.

ANL has increased its Sea Priority Surcharge to USD700/Container effective 1/12/2020.

Carrier: COSCO

Position: COSCO space control team at origins strictly limit space and equipment released for BCO/Fixed deal.

Carrier: EVERGREEN

Position: 40GP/40HC equipment shortage is very serious in SE Asia/ISC region.

Carrier: HMM

Position: Limit FAK space release for SE Asia ports in view of tight space, need to check space under premium surcharge.

Carrier: OOCL

Position: Equipment availability at SE Asia need to check on case-by-case basis.

Capitalising on their full vessels, carriers are only taking cargo at Premium Rate levels, renegotiating on current contracts at FAK levels.

Carrier: YML

Position: SE Asia origins rollover at least 3-4 weeks, reject new bookings unless has regular support record.

Overall

Equipment issues continue in most South East Asia ports.

Market, Space & Schedule Delays: North Asia

CHINA, KOREA & TAIWAN 

Rates out of China remain relatively stable. In referencing the Shanghai Containerized Freight Index (SCFI), rates have in fact dropped slightly over the last 2 weeks. We have found that although what is historically the busiest time of year leading up to Chinese new year, carriers are extending rates to the end January 2021.

Ocean carrier schedules show delays in weeks 3, 4 and 5 of almost 5-12 days. Shippers are therefore forced to push their orders to after CNY sailings. Export volume in the last two weeks is not as hot as expected, but of course still enough to fill the ships, but not enough to force increases.

It is reported that vessels are fairly full up until and including the first week of February 2021, but it is not intended to create a surplus of bookings to force cargo rollings during CNY like prior years, so rates are forecast to remain stable rather than drop considerably. The traditional blanking program is also not disclosed as yet.

For cargo destined to the West Coast of Australia, this is a different story. Due to shortage of equipment and continuous port congestion in Singapore, rates have increased and transit times have increased to take around 32 days  from China main ports to Fremantle and 45 days to Adelaide.

Some COVID-19 cases have occurred in Northeast China, which has affected production and delivery in this region, especially Hebei Province. We have received some notices saying that production and delivery has been suspended in this region.

To summarise, please note the current situation in China main ports:

1. Lack of containers is still a big problem. Shippers are facing increased costs to enable container collection when available.
2. The queuing situation at warehouses in main ports is getting worse. Drivers are forced to wait at the warehouse for at least 1 to 2 days, which leads to collection and delivery costs.
3. Vessel delays are creating inaccurate sailing schedules, especially in Shanghai port, which has in turn increased storage charges imposed.
4. Notices from feeder companies in PRD have indicated that almost all the feeders will suspend services from 20 January 2021 which will lead the chaos in Shenzhen port.

Space and equipment position per CARRIER ex North Asia

Carrier: ANL/CMA

Position: Will only accept cargo under Sea Priority Premium which has higher priority to obtain equipment and space.

ANL has increased its Sea Priority Surcharge to USD1000/Container effective 1/12/2020, along with implementation of a Sea Priority cancellation fee ex China of USD150/Container effective 9 December 2020.

Carrier: COSCO

Position: Space control team at origins strictly limit space and equipment released for BCO/Fixed deal.

Carrier: EVERGREEN

Position: Due to the serious port congestion in Sydney port, will not accept bookings to Sydney from January until CNY.

Carrier: HMM

Position: Space and equipment shortage becoming severe even for Asia direct ports.

Carrier: HAPAG

Position: Cargo under FAK rate needs to book 21-30 days in advance. Equipment prioritised for FAK + Premium cargo additional payment.

Carrier: HSUD

Position: Only FAK rate ex NE Asia based ports can release space. Limited space on BCO/Fixed deal, in some cases, bookings were rejected. Prioritising space for FAK + Premium at Shenzhen.

Carrier: MSC

Position: Space needs to be confirmed if bookings placed 3-4 weeks in advance. Book under Diamond Tiers Product to secure space, equipment and priority loading.

Carrier: MAERSK

Position: Unless with space allocation, all bookings released subject to equipment and space availability.

Carrier: ONE

Position: No space and equipment released unless with Account Plan (AP) offered by ONE or pay premium surcharge. Prioritising space for FAK + Premium at Xiamen.

Carrier: OOCL

Position: Need to place bookings at least 3 weeks in advance to obtain booking.

Carrier: ZIM

Position: Severe 40GP/40HC equipment shortage at all Asia based ports. Higher chance of securing equipment for premium rates. Prioritizing space for FAK + Premium at Shanghai.

Overall 

Reefer shipments prioritised as against FAK cargoes.

No vessel space until the beginning of January 2021 ex Korea.

Equipment issues continue in most parts of China.

Market, Space & Schedule Delays: Blank Sailings

Please note the following Blank Sailings announced in the market due to Chinese New Year and the reduced demands Southbound. The full blanking program has not been disclosed as yet. We will be sure to advertise once known.

Service: ANZEX

• Vessel/Voyage: Northern Guild v339S/340N
• Capacity: 4250 – 5150TEU

Ex Fremantle, ONE Line have announced that due to recent heavy congestion in Singapore resulting in both the SWAN & MARGARET RIVER BRIDGE vessels being heavily delayed, it has become necessary to slide the vessels down to return them back to proforma schedule. Full notice and particulars can be found here.

GRI / RR / PSS / Imbalance Announcements

There have been a number announcements on General Rate Increases, Rate Restoration, Peak Season and Container Imbalance adjustments on rates to Australian Ports from 1 January 2021 as follows:

FCL SHIPMENTS – Navia will adjust FCL rates accordingly.

Carrier: Hapag Lloyd

• Amount: USD 300/TEU
• From: North Asia
• Effective: 1 January 2021

Carrier: Hapag Lloyd

• Amount: USD 150/TEU
• From: MEG/ IPAK
• Effective: 1 January 2021

Carrier: Hapag Lloyd

• Amount: USD 150/TEU
• From: South-East Asia
• Effective: 1 January 2021

Carrier: Hapag Lloyd

• Amount: USD 200/TEU
• From: USA and Canada
• Effective: 1 January 2021

Carrier: Hapag Lloyd

• Amount: USD 400/TEU
• From: North Europe, Mediterranean and Black Sea
• Effective: 1 January 2021

Carrier: Hapag Lloyd*

• Amount: USD 200/TEU
• From: Europe (excluding UK and Ireland)
• Effective: 1 January 2021

*Equipment Imbalance Surcharge, 40GP and 40HC containers only

Carrier: MSC

• Amount: USD 300/TEU
• From: North Asia, Japan, South Asia
• Effective: 1 January 2021

To NZ Ports as follows:

Carrier: Hapag Lloyd

• Amount: USD 200/TEU
• From: USA and Canada
• Effective: 1 January 2021

Carrier: MSC

• Amount: USD 500/TEU
• From: North Asia, Japan, South Asia
• Effective: 1 January 2021

LCL SHIPMENTS 

Please refer to this notice sent outlining Rate Restoration (RR) and General Rate Increases (GRI’s) for both import and export traffic effective 1 January 2021

Although the majority of rates to/from Australian Ports are stable (with the exception of Singapore to Australia), the impact is felt by the congestion on services to/from our Transshipment hubs of Singapore, Hong Kong and Port Kelang.

Any additional announcements will be updated in our next notice.

Market News — Other

• Average container turnaround times have increased to 100 days, up from 60, according to the CCIA, with European and US ports struggling to handle inbound goods and delaying outbound container movements.
• In Singapore, Terminal operator PSA International reported 36.6m teu throughput at the port, down 0.9% year on year, but in comparison, the group’s international volumes rose 3.7%, to 50m teu.
• Brexit has led to a decrease in transport capacity levels between the European continent and the UK while prices on are soaring.
• China-Europe rail freight traffic is severely impacted due to the COVID-19 restrictions in China, resulting in a price increases of up to approximately $5,000 per teu. The equipment shortage and allocation on the China to Europe lane means eastbound traffic from Europe to China is also affected, according to The Loadstar.

Market News — Carrier

• OOCL – Q4 revenue up a substantial 51.2% on the same quarter of the previous year, to $2.42bn, with liftings up by 23.7%. The carrier will also add to their order book of five 23,000 teu ULCVs last March with a November order for an additional seven, for delivery in 2023 and 2024. This is all according to The Loadstar.

Market Commentary

Beware the Increasing BAF – Read here

TABLE: Shanghai Containerized Freight Index (SCFI)

Reflects the fluctuation of spot freight rates on export container transport market from Shanghai. The freight rate of individual routes of SCFI is the average all-in price which considers the spot ocean freight and related seaborne surcharges.

Down by USD45 / TEU, from USD2451 / TEU (Week 2) to USD2406 / TEU (Week 3).

 TABLE: World Container Index

World Container index increased by 0.3% to $5,237.83 per 40ft container.

Updated Thursday, 14 January 2021.

The main driver of this percentage increase are the steep rises in freight levels on the Asia-Europe and Asia-USA services.

The average for year-to-date, is $5,229 per 40ft container, which is $3,646 higher than the five-year average of $1,583 per 40ft container.

TABLE: Spot Freight Rates by Route

Weekly analysis and latest freight rate assessments for eight major East-West trades.

Updated Thursday, 14 January 2021.