Navigating the Shifting Tides: Global Freight Market Update for August 2022

Introduction: A Market in Flux

As we move into the second half of August 2022, the global freight market continues to experience significant shifts and challenges. From softening demand to persistent port congestion, freight forwarders and shippers alike are navigating a complex landscape. In this comprehensive update, we'll explore the latest trends across ocean, air, and land freight, and discuss how digital logistics solutions can help address these evolving challenges.

Key data points from recent market reports include:

• Continued decline in spot rates for ocean freight, particularly in the Transpacific Eastbound (TPEB) lane
• Increasing blank sailings as carriers adjust to lower demand
• Persistent congestion at major US and European ports
• Softening air freight demand across most regions
• Fluctuating trucking capacity and rates in the US domestic market

Ocean Freight: Navigating Choppy Waters

Asia to North America (TPEB)

The Transpacific Eastbound route continues to see falling spot rates, coupled with an increase in blank sailings. Carriers are adjusting their capacity to match the lower demand, leading to a complex balancing act for shippers. Schedule reliability remains a challenge, with varied performance among alliances.

Key issues in this lane include:

• Elevated on-street container dwell times
• Inventory reaching maximum capacity at some inland locations
• Insufficient chassis supply and rail traffic imbalances in multiple US cities
• Temporary service pauses and train metering by railroads

To navigate these challenges, we recommend booking at least two weeks prior to the cargo ready date. For time-sensitive shipments, consider taking advantage of currently available space and softer floating market rates.

Asia to Europe (FEWB)

The Far East Westbound route is experiencing a slowdown in demand, with no clear peak season emerging. However, supply remains relatively tight due to blank sailings, vessel sliding, and port omissions. Port congestion in Europe, particularly in Hamburg and Rotterdam, has reached critical levels, causing further delays and late returns of vessels to Asia.

We're also monitoring potential power cuts in Ningbo (Zhejiang province), which could affect production output. As the situation evolves, we'll provide updates on any impacts to shipping schedules or capacity.

Europe to North America (TAWB)

August is expected to see lower demand due to European factory closures, particularly in the Mediterranean area. However, we anticipate a strong return of demand beginning in September. While congestion on the US West Coast has gradually improved, we're now seeing slight worsening at some US East Coast ports.

Equipment availability remains the biggest challenge for all EU origins, particularly in the Mediterranean region. To mitigate these issues, we recommend booking 4 or more weeks prior to the cargo ready date and considering premium services for higher reliability and no-roll guarantees.

Air Freight: Navigating Clear Skies with Caution

The air freight market is currently experiencing softer demand across most regions, leading to rate decreases and increased capacity availability. However, challenges persist in certain areas, and the industry faces potential headwinds in the coming months.

Asia

In North China, sufficient capacity is available for both Transpacific Eastbound (TPEB) and Far East Westbound (FEWB) lanes, with no significant flight cancellations announced. South China and Taiwan markets remain soft, with slight rate decreases. However, Shenzhen-Hong Kong cross-border operations continue to be affected by Covid surges and capacity quota reductions.

Europe

Demand in Europe continues to trend at lower levels, with expectations of a slow pickup from mid-September. Transatlantic belly capacity ex-European hubs remains strong, helping maintain lower rate levels despite high fuel prices. Ground handling operations in major European hubs have improved compared to July, although the situation in Frankfurt remains volatile.

Americas

Export demand remains steady from all markets, with US airports running at a normal pace. Capacity is opening up further, especially into Europe, where most carriers have increased passenger flights for their summer schedules. However, shipments into Europe could experience additional destination dwell time due to labor shortages in some western European hubs.

Trucking and Intermodal: Navigating the Road Ahead

The trucking and intermodal sector is facing a mix of challenges and opportunities, with varying conditions across different regions and market segments.

US Import/Export Trucking

Congestion continues at Montreal and Toronto terminals and inland ramps, with a surge in volume coming into Toronto coupled with a decrease in available drivers. Chassis shortages persist in several key locations, including Chicago, NY/NJ, Memphis, and LA.

East coast and gulf congestion is expected to continue through August, with vessels at anchor in New York, Norfolk, and Savannah. The situation at LA/LB and Oakland has deteriorated, partly due to AB5 strike action.

US Domestic Trucking

The domestic full truckload (FTL) market is facing challenges due to an inventory glut, global inflation, high diesel fuel prices, and a sharp drop in container imports. Key trends include:

• Decreased tender rejections by carriers (down 67% year-over-year)
• Spot rates at a 16-month low, down approximately 35% year-to-date
• Load-to-truck ratios down about 30% year-over-year
• Tender volumes from customers down 20% year-over-year

Customs and Compliance: Staying Ahead of Regulatory Changes

Several important developments in customs and compliance require attention from freight forwarders and shippers:

CTPAT Trade Compliance Program Updates

As of August 1, U.S. Customs and Border Protection (CBP) has reopened the application process for new members to the Customs-Trade Partnership Against Terrorism (CTPAT) Trade Compliance program. New applicants must satisfy recently released minimum security criteria, including expanded compliance obligations around forced labor. Current members have until August 1, 2023, to implement the new forced labor requirements.

USMCA Auto Rules of Origin Investigation

The U.S. International Trade Commission (USITC) has announced a new fact-finding investigation on the USMCA automotive rules of origin. This investigation will review the impact of these rules on the U.S. economy, automotive production, and trade competitiveness. A public hearing is scheduled for November 3, 2022.

New CBP Public-Private Partnerships

CBP has announced tentative selections for new partnerships that will allow approved private sector and government entities to reimburse CBP for expanded services. These partnerships aim to increase CBP's ability to process increased cargo volumes and provide enhanced services at ports of entry.

Factory Output News: Global Production Shifts

Recent developments in factory output across various countries highlight the ongoing shifts in global production patterns:

• Mainland China: China-Europe freight trains are breaking new records in both the number of trains and volume delivered.
• Vietnam: Over 100 Vietnamese international flights have been affected by China's military drills near Taiwan.
• Cambodia: The country's first $300 million tire factory highlights increasing production capacity.
• India: Ford India's manufacturing plant is set to be sold to Tata Motors.
• Bangladesh: Demand for Ready-Made Garments (RMGs) continues to drop due to inflation, with retailers deferring shipments or delaying orders.
• Pakistan: Maersk and Seed Ventures have signed an MOU to improve the quality of Pakistan's agricultural produce and expand its export network.

Conclusion: Embracing Digital Solutions in a Dynamic Market

As the global freight market continues to evolve, it's clear that adaptability and digital innovation are key to success. At FreightAmigo, we understand the challenges faced by freight forwarders and shippers in this dynamic environment. Our Digital Logistics Platform is designed to help you navigate these complexities with ease and efficiency.

By leveraging our advanced technology, you can:

• Compare and book door-to-door freight quotes for various transportation modes
• Track shipment status in real-time across multiple carriers
• Streamline customs clearance, cargo insurance, and trade finance processes
• Automate shipment documentation
• Access 24/7 expert support for all your logistics needs

As we continue to monitor and adapt to market trends, FreightAmigo remains committed to providing innovative Digital Logistics Solutions that empower our clients to thrive in any market condition. Stay tuned for more updates and insights as we navigate the ever-changing landscape of global freight together.