Navigating Global Freight Challenges: August 2022 Market Update

Introduction

As we move through the second half of 2022, the global freight market continues to face significant challenges and changes. From declining spot rates to persistent congestion issues, the logistics industry is navigating a complex landscape. In this comprehensive update, we'll explore the current state of ocean and air freight markets, trucking trends, and key developments affecting global trade.

Ocean Freight Market Overview

Asia to North America (Transpacific Eastbound)

The Transpacific Eastbound (TPEB) trade lane is experiencing a notable shift in market dynamics:

• Spot rates are continuing to fall
• Blank sailings are on the rise as carriers adjust to lower demand
• Schedule reliability among alliances remains low and varied
• Container dwell times are elevated, with inventory reaching maximum capacity at some inland locations

Several inland locations are facing challenges with ground-stacked containers due to insufficient chassis supply and rail traffic imbalances. These areas include Chicago, Dallas, Kansas City, Memphis, Denver, St. Louis, Santa Teresa, and Omaha. As a result, railroads have implemented temporary service pauses and train metering.

Asia to Europe (Far East Westbound)

The Far East Westbound (FEWB) trade lane is also experiencing shifts:

• No apparent peak season, with demand slowing down
• Supply remains relatively tight due to blank sailings, vessel sliding, and port omissions
• Critical port congestion in Europe, particularly in Hamburg and Rotterdam, causing further delays
• Potential power cuts in Ningbo (Zhejiang province) may affect production output

Europe to North America (Transatlantic Westbound)

The Transatlantic Westbound (TAWB) trade lane presents a mixed picture:

• Lower demand expected in August due to European factory closures
• Anticipation of high demand return beginning in September
• Gradual improvement in U.S. West Coast congestion, but slight worsening at some U.S. East Coast ports
• Rates remain stable at high levels, with no signs of steep decline in the near future

Air Freight Market Update

Asia

The air freight market in Asia is showing signs of softening:

• North China: Sufficient capacity for both TPEB and FEWB lanes, with weak overall demand leading to rate decreases
• South China: Market demand remains soft for both TPEB and FEWB lanes, with slight rate decreases
• Taiwan: Market continues to be soft, with rates remaining similar to previous weeks
• Korea: Demand continues to be very slack with no signs of picking up soon
• Southeast Asia: Soft demand continues with rates maintaining similar levels

Europe

European air freight market trends include:

• Lower demand levels, expected to pick up slowly from mid-September
• Strong transatlantic belly capacity ex-European hubs, helping maintain lower rate levels
• Improved ground handling operations in major European hubs compared to July
• Volatile situation in Frankfurt, with contingency plans in place to avoid significant delays

Americas

The air freight market in the Americas remains relatively stable:

• Steady export demand from all markets
• U.S. airports running at a normal pace
• Increased capacity, especially into Europe, due to increased passenger flights for summer schedules
• Stable rates week over week
• Strain on infrastructure at major Canadian airports (Toronto and Vancouver) due to heavy travel season

Trucking and Intermodal Update

U.S. Import/Export Trucking

The U.S. trucking market is facing several challenges:

• Continued congestion at Montreal and Toronto terminals and inland ramps
• Persistent chassis shortages, notably in Chicago, NY/NJ, Memphis, and LA
• East coast and gulf congestion expected to continue through August
• Deteriorating conditions at LA/LB and Oakland ports
• Highway diesel fuel prices dropping but remaining well above the start of the year

U.S. Domestic Trucking

The domestic full truckload (FTL) market is experiencing shifts:

• Inventory glut affecting market dynamics
• Decreased tender rejections by carriers (down 67% YoY)
• Spot rates at a 16-month low, down ~35% YTD
• Load-to-Truck ratios down ~30% YoY
• Tender volumes from customers down 20% YoY

Customs and Compliance News

Several important developments in customs and compliance include:

• CTPAT Trade Compliance program reopened to new members with new rules
• USITC investigation into USMCA auto rules of origin
• New public-private partnerships announced by U.S. Customs and Border Protection

Factory Output News

Notable factory output news from various countries:

• China: Record-breaking China-Europe freight train numbers and volumes
• Vietnam: International flights affected by China's military drills near Taiwan
• Cambodia: New $300M tire factory highlights production capacity
• India: Ford India's manufacturing plant to be sold to Tata Motors
• Bangladesh: Dropping demand for ready-made garments due to inflation
• Pakistan: Maersk and Seed Ventures sign MOU to improve agriculture produce quality and expand export network

Freight Market News

Key developments in the freight market include:

• Gradual decline in container shipping spot rates
• Air cargo industry facing looming challenges, including high fuel prices, staff shortages, and capacity issues

Economic Insights

Recent economic reports highlight:

• Ongoing impact of Section 301 tariffs on supply chains
• Challenges facing the German economy
• Robust July jobs report in the U.S. indicating continued economic strength

Conclusion

As we navigate through these complex market conditions, it's crucial for businesses to stay informed and adaptable. At FreightAmigo, we understand the challenges faced by freight forwarders and logistics professionals in this dynamic environment. Our Digital Logistics Platform is designed to help you navigate these market fluctuations efficiently, providing real-time data and insights to make informed decisions.

By leveraging our comprehensive Digital Logistics Solution, you can streamline your operations, reduce costs, and improve your overall supply chain performance. From comparing freight quotes across multiple modes to tracking shipments in real-time, FreightAmigo offers the tools you need to stay competitive in today's challenging market.

As we continue to monitor these market trends, we remain committed to providing you with the most up-to-date information and innovative solutions. Together, we can transform the way you experience logistics, ensuring a more resilient and efficient supply chain for your business.