Month in Review – August 2024

Maritime

August 2: Flexport Data Shows Sailings from China to U.S. West Coast 20 Days Faster than to East Coast Ports – American Journal of Transportation

Sailing times from China to U.S. West Coast ports are averaging 20 days faster than to U.S. East Coast ports, according to the supply chain logistics platform Flexport.

On July 29th, Flexport reported: “This week, the Ocean Timeliness Indicators (OTI) for China to the U.S. East Coast and China to the U.S. West Coast have decreased, falling from 61 to 60.5 days and 40.5 to 39.5 days, respectively. The OTI for China to Northern Europe also decreased, dropping from 69.5 days to 68 days. The reason? Port congestion on all trade lanes is slightly improving.”

The reason for the large gap between sailing times to U.S. East Coast and U.S. West Coast ports was explained by Nerijus Poskus, Vice President of Global Ocean Procurement at Flexport. He said that, due to the Suez Canal closure: “All vessels that typically sail to the U.S. East Coast via the Suez Canal are diverted to the Cape of Good Hope, which takes longer than normal routing. Global port congestion is further increasing transit times [due to vessel bunching, equipment issues, blank sailings, weather delays, etc.].”

August 5: Panama Canal Authority Increases Capacity as Water Levels Return – gCaptain

The Panama Canal Authority (ACP) has increased the number of daily transits and maximum draft of the expanded neopanamax locks, bringing the waterway one step closer to normal operations following last year’s historic drought.

Effective immediately, vessels transiting the neopanamax locks are now allowed a maximum authorized draft of 14.94 meters (49.0 feet) Tropical Fresh Water. The ACP said the decision is based on the current and projected water levels of Gatun Lake for the upcoming weeks.

Meanwhile, as of August 5, the number of daily transits has been adjusted to 35, up from 34 as of July 22nd and 32-33 earlier in the month.

The changes bring the canal’s capacity closer to its design specifications of approximately 36 daily transits and a maximum draft of 50 feet for the neopanamax locks.

August 8: U.S. Container Ports Face Record Cargo Surge Ahead of Possible Port Strike – gCaptain

Monthly inbound cargo volume at major U.S. container ports is expected to approach record levels as retailers expedite shipments ahead of a potential strike at East and Gulf Coast ports, the National Retail Federation (NRF) announced on August 8.

“Retailers are concerned by the possibility of a strike at ports on the East and Gulf coasts because contract talks have stalled,” said Jonathan Gold, NRF Vice President for Supply Chain and Customs Policy. “Many retailers have taken precautions, including earlier shipping and shifting cargo to West Coast ports.”

The contract between the International Longshoremen’s Association and the United States Maritime Alliance, covering East Coast and Gulf Coast ports, is set to expire on September 30. With negotiations at an impasse, the ILA has threatened to strike if a new contract is not reached by the deadline.

August 9: Explosion at Ningbo-Zhoushan Port in China Raises Serious Safety Concerns in Ocean Container Shipping – American Journal of Transportation

A major explosion occurred on August 9 on a container ship berthed at the port of Ningbo-Zhoushan in China in another incident that raises serious safety concerns.

Video footage shows a massive explosion onboard the YM Mobility. There are no reports of casualties.

Peter Sand, Xeneta Chief Analyst, said: “This type of incident should never happen and is another example of how one failure in ocean container shipping can have catastrophic consequences.

“Had this explosion happened at sea rather than at berth in port then the crew and ship would have been in even more perilous danger.

“An investigation will take place and the industry must learn from it. Container ships are used to transport hazardous and potentially explosive cargo, so it is of paramount importance that robust safety measures are in place.”

August 19: Cargo Backlog at Bangladesh Eases as Carriers Bring in More Ships – The Loadstar

Container lines serving strained Bangladesh supply chains are making every effort to clear up the cargo backlogs at Chittagong Port.

The cargo chaos began amid recent political upheaval that brought businesses across the country to a standstill.

A few carriers have deployed additional vessels to lift stranded exports at Chittagong, according to industry sources.

August 26: Chittagong Port Pay-Order Crisis Stalls Import-Export Operations – Jago News

Following the fall of the Sheikh Hasina government in Bangladesh, major shipping agents at Chittagong Port have stopped accepting payment orders from nine banks, causing delays in the release of import goods and complications in shipping export goods.

Exporters are fearing this disruption may lead to missed lead times, potentially harming the country’s economy.

The situation arose after the Hasina government fell on August 5, with an interim government led by Dr. Muhammad Yunus taking over on August 8. Subsequently, the top positions at Bangladesh Bank began changing, uncovering long-standing irregularities. As a result, Bangladesh Bank ceased providing cash assistance to banks embroiled in loan corruption, further exacerbating the situation.

August 29: Transpacific Rates War Breaks Out as New Arrivals Undercut Major Liners – The Loadstar

A rates war on the Asia-U.S. West Coast tradelane is under way, as newcomer transpacific carriers offer lower rates to gain market share.

This has forced the established mainline operators to drop their rates to hold onto customers.

According to Linerlytica’s report this week, while the Shanghai-U.S. West Coast rate on August 23 stood at $5,955 per 40ft, down 10% from the previous week, actual rates are more than $1,000 lower.

Linerlytica said: “Several of the smaller carriers and recent newcomers on the trade are slashing their rates to boost volumes, forcing their large rivals to match.”

August 30: Ocean Carriers ‘Fire Blanks’ Ahead of China’s Golden Week Holiday – The Loadstar

Fearing another container spot rate crash, ocean carriers have blanked a number of export sailings from Asia to Europe and Asia to the U.S., prior to the Chinese national holiday in early October.

A carrier contact said last week he expected to see “many more” void sailings this year in the key soft-demand weeks of the slack season.

“We are determined not to get sucked into another rates war this year, and as long as the Red Sea diversions continue we think we will be ok,” said the contact.

Drewry’s latest blanked sailings assessment puts the notified cancellation rate in September for scheduled sailings on the transpacific, Asia-Europe and the transatlantic at 10% to date.

Air

August 2: Air Rate Anger from Bangladesh Exporters as Carriers ‘Cash In’ on Logjams – The Loadstar

Airfreight rates from Bangladesh to major western destinations have shot up in a span of two weeks as export cargo piles up at the country’s main airfreight gateway, Dhaka.

Student-led protests in the third week of July prevented some 3,000 tonnes of exports leaving after the government responded to chaos and blocked highways with curfews and an internet shutdown.

As soon as the internet connection was restored, on July 24, businesses rushed to send export boxes to airports and seaports, intensifying a shortage of space, which in turn saw freight rates spiral.

Now, exporters are claiming carriers were taking advantage of the demand spike, raising rates by as much as $1.50 per kg to a variety of destinations.

August 8: Shippers ‘Running Out of Options’ to Get Their Peak Season Goods Out of Asia by Air – The Loadstar

Cargo owners that haven’t made firm arrangements to move peak season cargo out of Asia by air are running out of options, warns logistics provider Dimerco.

Most direct, reliable freighter capacity has already been snapped up, it said.

Capacity on long-haul routes out of China and other countries in East and South-east Asia has been tight, driven by strong demand for e-commerce and a shift of container traffic from ocean to air, a result of extended transit times, congestion, limited capacity and soaring container rates, Dimerco notes in its latest airfreight market report.

August 14: Alert to Shippers as Airfreight Capacity Becomes Scarce and Rates Increase – The Loadstar

As air cargo’s peak season approaches, shippers are faced with limited capacity, allowing forwarders to up their sell rates on major trades.

The Loadstar previously reported how airlines were bracing for a busy Q3, as the steady drum of ecommerce traffic beats alongside the extra capacity taken up by modal switch to avoid the Red Sea and the usual pre-holiday volumes. 

And market analytics platform Xeneta noted that, as the north-east Asia-to-Europe trade heats up, freight forwarder air cargo sell rates have hit their highest level in nearly a year-and-a-half. According to Xeneta, newly contracted long-term general cargo sell rates have reached $4.42 per kg, up 30% on the same period last year.

“Peak season surcharges introduced in May and June have now been removed, but the increasing base rates were clearly enough to elevate the market,” said the analytics platform.

August 14: Bangladesh Air Cargo Logjams Ease but Delays Still Expected – Air Cargo News

The Bangladesh air cargo market continues to report delays to shipments following weeks of protests but the situation is beginning to ease.

At the height of the protests, cargo was taking around 10 days to be exported out of Dhaka Airport to the U.S. and Europe.

Maruf Khan, the chief operating officer of Bengal Airlift’s freight division, said the situation has eased over the past week. He said origin processing times at the airport are now down to around five days, although on August 13 there were around 200 trucks waiting in line at the airport.

August 27: Forwarders and Shippers Push for Longer-Term Air Cargo Deals – Air Cargo News

Freight forwarders and shippers are continuing to push for longer-term air cargo deals as they look to avoid potential rate hikes due to the risk of supply chain disruption.

A half-year market report from analyst Xeneta shows that contracts of more than six months accounted for 54% of the market in the second quarter of 2024 compared with 30% a year earlier.

Spot deals (one-month contracts) in the second quarter accounted for 10% of the market against 12% for the period in 2023, three-month deals are at 18% of the market compared with 23% last year and six-month deals are at 18% compared with 35%.

The analyst said the move towards longer-term deals has been ongoing since last year, but the motivation for doing so has evolved.

August 28: Foreign Airlines React to Sudden New U.S. Rule Tightening Air Cargo Security – The Loadstar

Foreign airlines are said to have reacted strongly to an emergency security change to U.S. Customs regulations on airfreight, at least one carrier reportedly suspending cargo services as it seeks more clarity on the sudden additional requirement.

According to sources, an emergency amendment – with restricted access – has been passed by the U.S. Transportation Security Administration (TSA) requiring carriers to submit additional details of shippers and consignees to the U.S. Customs and Border Protection agency.

The new requirement became effective on August 21.

Rail

August 20: U.S. Agriculture Groups Urge Trudeau to Step in to Avert Rail Strike – American Journal of Transportation

Some of the biggest U.S. agriculture trade groups are urging Canada’s prime minister to step in to avert a rail strike in the country that could disrupt the flow of North American commodities.

“We request that you take action to ensure railroad operations continue before a lockout or strike occurs to prevent serious damage to the Canadian and U.S. economies,” 35 U.S. industry groups wrote in a letter to Prime Minister Justin Trudeau.

“Operational railroads are essential on both sides of the border for the integrated North American supply chain,” the groups wrote in their letter. “While we believe a negotiated solution is always the preferred outcome, your government should be prepared to move quickly if negotiations fail.”

August 28: Train Movements in Canada Close to Normal, ‘Complete Recovery to Take Several Weeks’ – American Journal of Transportation

Train movements at Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. are almost back to normal after a short lockout of unionized workers, according to RailState, a provider of real-time rail data.

Canadian National train movements were at 96% of pre-lockout levels as of August 27, while Canadian Pacific was at 95%, RailState said.

The data doesn’t necessarily indicate that the volumes of goods shipped are close to normal. Train movements are indications of trains in motion, including those with empty cars; the figures don’t provide information on the loads being transported. RailState based its average daily volume on train movements between August 1 and 21.

“Our recovery plan is underway,” CN Railway said in an emailed statement. “We expect complete recovery to take several weeks to catch up the impact that supply chains have been dealing with since April.” CPKC did not provide any details on operating levels.

August 30: Canada Rail Union Launches Court Challenges to Back-to-Work Order – Reuters

The union representing workers at Canada’s two main rail companies said on August 30 it had filed court challenges against rulings by the country’s industrial labour board that forced them back to work.

The union had already said it would appeal the rulings on the grounds that they were a win for the railways and could lead to the imposition of future contracts, eroding workers’ bargaining power.

“These decisions, if left unchallenged, set a dangerous precedent where a single politician can bust a union at will,” said Paul Boucher, president of the Teamsters rail union.

“The right to collectively bargain is a constitutional guarantee. Without it, unions lose leverage to negotiate better wages and safer working conditions for all Canadians,” he said in a statement.