Navigating the 2023 Freight Market: Trends, Challenges, and Opportunities

Introduction

As we navigate through the early months of 2023, the global freight market continues to evolve, presenting both challenges and opportunities for shippers and logistics providers alike. In this comprehensive market update, we'll explore the latest trends across ocean freight, air freight, trucking, and customs compliance. We'll also discuss how FreightAmigo's digital logistics platform can help businesses adapt to these changing market conditions.

Key highlights from recent market data include:

• Softening demand and increasing capacity in ocean freight markets
• Fluctuating air freight rates due to Lunar New Year impacts
• Ongoing congestion issues at certain North American ports and rail ramps
• Evolving customs regulations, particularly related to the Uyghur Forced Labor Prevention Act (UFLPA)

Let's dive deeper into these trends and their implications for the logistics industry.

Ocean Freight Market Update

Transpacific Eastbound (TPEB) Trade Lane

The Transpacific Eastbound (TPEB) trade lane, connecting Asia to North America, is experiencing a notable shift in market dynamics. Capacity is on the rise, while rates remain relatively flat following the Lunar New Year period. Here are some key observations:

• U.S.-bound shipments are seeing increased capacity, with expectations of more blank sailings in the coming weeks.
• Canada-bound shipments are facing similar market conditions, with Vancouver experiencing stable vessel dwell counts (3 vessels) and berthing delays (9 days, 10 days for rail dwell).
• Rates remain soft on most origin-destination combinations.
• Space and equipment availability are generally open.

For shippers utilizing the TPEB trade lane, we recommend booking at least 2 weeks prior to the cargo ready date (CRD) and keeping upcoming blank sailings in mind when planning shipments.

Asia to Europe (FEWB) Trade Lane

The Far East Westbound (FEWB) trade lane is experiencing easing conditions post-Lunar New Year, with a considerable drop in volume levels as China resumes work. Key points to note include:

• Rates are moving downwards due to low demand post-Lunar New Year.
• Generally reduced or extended rates for the first half of February.
• High post-Lunar New Year blank sailings in weeks 6/7/8 to adjust for the decrease in demand.

Shippers on this trade lane should allow flexibility when planning shipments due to anticipated congestion and delays.

Transatlantic Westbound (TAWB) Trade Lane

The Transatlantic Westbound (TAWB) trade lane, connecting Europe to North America, is seeing some interesting developments:

• Minimal blank sailings despite lower demand.
• Capacity is set to increase as MSC and Maersk add more vessels in Mediterranean loops.
• Rates continue a downward trend, expected to last for the coming months.
• Space availability is improving for both U.S. East Coast (USEC) and U.S. West Coast (USWC) due to easing congestion.
• Equipment availability is getting better, though some inland depots still face low empty stacks.

For TAWB shipments, we recommend booking 2-3 or more weeks prior to CRD and considering premium services for higher reliability and no-roll guarantees.

Indian Subcontinent to North America Trade Lane

The trade lane connecting the Indian Subcontinent to North America is facing some challenges due to the Lunar New Year impact:

• Blank sailings and equipment issues due to lack of Chinese imports.
• Rates continue to drop week over week.
• Space is generally open, but capacity is being removed as carriers implement blank sailings.

Shippers on this trade lane should consider procuring equipment from wet ports instead of inland container depots and diversify their carrier strategy to mitigate the impact of blank sailings.

North America to Asia Trade Lane

The North America to Asia trade lane is experiencing a significant imbalance between supply and demand:

• Capacity is widely available across all major services.
• Very low capacity utilization levels with no space constraints.
• Congestion has cleared across most North American container yards.
• Equipment is ample in most major markets.
• Rates are trending slightly downwards month-over-month and quarter-over-quarter on certain lanes.

Shippers can take advantage of this situation by booking 1-2 weeks prior to CRD on all coastal to Asia-based port lanes, and 2-3 weeks prior to CRD on all inland to Asia and feeder port lanes.

North America to Europe Trade Lane

The North America to Europe trade lane presents a mixed picture:

• Capacity from the U.S. East Coast (USEC) is available, while services from Gulf and U.S. West Coast (USWC) remain tight.
• USEC to North Europe (NEU) and Mediterranean (MED) services have low capacity utilization levels.
• Gulf Coast to NEU and MED services have medium to high utilization levels.
• USWC to NEU and MED services are very limited in options.
• Rates are trending slightly downward on USEC to NEU lanes, while Gulf and USWC rates remain stable.

For this trade lane, we recommend booking 2 weeks prior to CRD on all EC to NEU and MED lanes, 3 weeks prior to CRD on all Gulf to NEU and MED lanes, and 4 weeks prior to CRD for all PSW to NEU lanes.

Air Freight Market Update

The air freight market is showing varying trends across different regions:

Asia

• North China: Market rates decreased significantly during the Lunar New Year holiday period.
• South China: Cross-border traffic is expected to gradually resume with the lifting of Covid measures.
• Taiwan: The market is operating normally, with potential cargo offload due to high passenger demand before Lunar New Year.
• Korea: TPEB market demand is picking up before the long holiday, while FEWB market is trending downwards.
• Southeast Asia: Demand remains low with widely available capacity, except for Hanoi experiencing a pre-holiday rush.

Europe

• Demand has increased as production operations return to normal after the holiday period.
• Rate levels have increased in line with demand.
• Lead times are stable with high airline utilization.
• No major disruptions or congestion across main EMEA hubs.

Americas

• Export demand remains steady from all markets.
• U.S. airports are running at a normal pace.
• Capacity is opening up further, especially into Europe.
• Rates remain stable week over week.

Trucking & Intermodal Update

Europe

The European trucking and intermodal market is facing several challenges:

• Expected GRI for 2023 around 10-15% due to inflation and soaring operational costs.
• Capacity remains fragile despite declining container volumes, caused by a continuous shortage of drivers and delayed delivery of newly ordered trucks.
• Increasing interest from trucking carriers in alternative fuels to decrease CO2 footprint.

North America

The North American trucking market is experiencing varied conditions:

• Ongoing congestion at Canadian ports and rail ramps, particularly in Vancouver, Toronto, and Montreal.
• Excessive rail dwell times and congestion in Memphis, Dallas, and Chicago (>14 days).
• Increased congestion, vessel bunching, and multiple vessels at anchor in Savannah, Houston, and Oakland.
• Highway diesel prices have dropped month over month across all regions.

U.S. Domestic Trucking Market

The U.S. domestic trucking market is showing signs of weakness:

• The national Outbound Tender Rejection Index (OTRI) failed to rise above 6% during the Christmas week for the first time in its five-year history.
• Rapid demand erosion due to overstuffed inventories and eroding consumption.
• These conditions are forecast to persist through the first half of 2023 at a minimum.
• The spot market is expected to be filled with discounted freight during typically the slowest time of the year for domestic trucking.

Customs and Compliance News

Several important developments in customs and compliance are worth noting:

U.S. Appeal of WTO Ruling on Hong Kong Marking Requirement

On January 27, the U.S. submitted a notification of appeal challenging the World Trade Organization (WTO) dispute settlement panel's decision regarding the marking of goods made in Hong Kong as "made in China". This appeal is currently in legal limbo due to the WTO Appellate Body's inability to hear cases.

CBP's UFLPA Region Alert Deployment

U.S. Customs and Border Protection (CBP) has announced the deployment of the Uyghur Forced Labor Prevention Act (UFLPA) Region Alert enhancement to the Automated Commercial Environment (ACE) on March 18, 2023. This update will add new validations to ACE that may impact Cargo Release and Manufacturer Identification Code (MID) applications where a valid Chinese postal code is required.

CBP Reviewing First UFLPA "Exception Requests"

CBP is currently reviewing the first two "exception requests" under the UFLPA. These requests allow importers to seek release of goods detained under the UFLPA that have a connection to Xinjiang or to an entity on the UFLPA Entity List.

Freight Market News

Declining Europe-US Rates

Despite recent declines, Europe-USEC spot rates remain almost triple their pre-pandemic levels and more than triple the rates in the Asia-USWC market. The shift in popularity towards USEC ports, driven by pandemic-related congestion along the USWC, is expected to persist.

Capacity Control to Stabilize Rates

Recent research suggests that container freight rates will be determined more by how liner operators control their shipping supply rather than cargo demand. Shipping lines agree that stabilizing freight levels would maximize profits over increasing market share.

How FreightAmigo Can Help

In light of these market trends and challenges, FreightAmigo's Digital Logistics Platform offers several solutions to help businesses navigate the complex freight landscape:

• Real-time rate comparisons: Our platform allows you to compare door-to-door freight quotes for various shipping modes, helping you make informed decisions in a rapidly changing market.
• Shipment tracking: With connections to over 1000 reputable airlines and shipping lines, we provide real-time tracking of your shipments, crucial in managing potential delays and congestion issues.
• Customs clearance assistance: Our platform can help streamline customs processes, including navigating complex regulations like the UFLPA.
• Automated documentation: Simplify your shipping processes with our automated document generation feature, reducing errors and saving time.
• 24/7 expert support: Our logistics experts are available round-the-clock to assist with any queries or issues that may arise in your shipping journey.

By leveraging FreightAmigo's digital solutions, businesses can better adapt to the current market conditions, optimize their shipping strategies, and maintain a competitive edge in the global logistics landscape.

Conclusion

As we continue to navigate the evolving freight market in 2023, staying informed about the latest trends and leveraging digital logistics solutions will be crucial for success. FreightAmigo's comprehensive Digital Logistics Platform is designed to help businesses of all sizes adapt to these changing conditions, providing the tools and support needed to optimize shipping operations and drive growth.

Stay tuned for more updates as we continue to monitor and analyze the global freight market. For more information on how FreightAmigo can support your logistics needs, don't hesitate to reach out to our team of experts.