Navigating the Shifting Tides: June 2022 Freight Market Update

Introduction

As we enter the second half of 2022, the global freight market continues to evolve, presenting both challenges and opportunities for shippers and freight forwarders alike. In this comprehensive update, we'll explore the latest trends across ocean, air, and ground transportation, highlighting key developments that are shaping the industry. We'll also discuss how FreightAmigo's digital logistics platform can help businesses navigate these dynamic market conditions.

Here are some key highlights from the June 2022 freight market:

• Spot rates have fallen below long-term fixed rates for the first time since April 2020 on the transpacific eastbound (TPEB) routes.
• East coast congestion and intermodal challenges persist in North America, while European ports face ongoing disruptions.
• Air freight capacity from Asia has almost returned to pre-lockdown levels, with increased demand for far east westbound (FEWB) lanes.
• The Uyghur Forced Labor Prevention Act (UFLPA) took effect on June 21, impacting imports from China's Xinjiang region.
• The U.S. announced plans to impose 35% tariffs on certain Russian imports, effective July 27.

Ocean Freight Market Update

Asia to North America (TPEB)

The transpacific eastbound market is experiencing a significant shift, with spot rates falling below long-term fixed rates for the first time in over two years. This development presents an opportunity for shippers to potentially take advantage of softer floating market rates. However, challenges persist:

• East coast congestion and intermodal issues continue to impact operations.
• Chassis shortages and long-dwelling containers at ports and rail yards hinder inland operations.
• Carriers are expected to balance supply and demand through blank sailings.
• International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association (PMA) labor negotiations are ongoing as current agreements expire on July 1.

At FreightAmigo, we understand the importance of adaptability in such a dynamic market. Our Digital Logistics Platform provides real-time visibility into shipping options, allowing our clients to make informed decisions based on the latest market conditions. We recommend booking at least two weeks prior to the cargo ready date (CRD) to secure optimal rates and space.

Asia to Europe (FEWB)

As we enter Q3, volumes are picking up on the Far East Westbound routes, though the market remains relatively stable. Key points to note include:

• Economic and political uncertainty in Europe is influencing consumer confidence and demand for goods.
• Rates are mostly extended going into the first half of July.
• Congestion in European ports is causing sailing delays and some blank sailings.

To navigate these challenges, FreightAmigo's Digital Logistics Solution offers advanced planning tools that allow for flexibility in shipment scheduling. This feature is crucial given the anticipated congestion and delays in European ports.

Europe to North America (TAWB)

The transatlantic westbound market remains tight, with many service strings at 100% utilization. While vessel congestion in North America is beginning to improve, it has not yet returned to normal levels. Key observations include:

• Most June rates have been extended through July, with no signs of steep rate declines in the near future.
• Space remains very tight, with some signs of improvement on certain loops for both U.S. East Coast (USEC) and U.S. West Coast (USWC).
• Equipment availability continues to be the biggest challenge, particularly in the Mediterranean basin.

FreightAmigo's Digital Platform offers comprehensive visibility into equipment availability and space constraints, helping our clients make informed decisions about their shipping strategies. We recommend booking at least four weeks prior to CRD and considering premium services for higher reliability and no-roll guarantees.

Air Freight Market Update

The air freight market is showing signs of recovery, particularly in Asia, as capacity returns to pre-lockdown levels in some regions. However, market conditions vary significantly by region:

Asia

• North China: Capacity ex-Shanghai (PVG) has almost returned to pre-lockdown levels, with increased demand and rates for FEWB lanes.
• South China: The TPEB market is strengthening, with increasing rates compared to the previous week.
• Taiwan: Strong month-end and quarter-end demand, with TPEB space to San Francisco, Chicago, and New York becoming congested.
• Korea: Market demand remains soft, especially for the FEWB tradelane.
• Southeast Asia: Demand varies by country, with Thailand stable, Malaysia soft, and Vietnam decreasing.

Europe

European air freight is experiencing stable demand with increased capacity, leading to some reduction in rate levels, especially on the transatlantic trade lane. Jet fuel prices are expected to increase, likely affecting carrier fuel surcharges in July.

Americas

Demand and capacity remain stable, with consistent export volumes leading to busy ground handlers in Los Angeles, Chicago, and New York. Capacity into Shanghai has normalized, with carriers resuming normal operations and schedules.

FreightAmigo's Digital Logistics Platform offers real-time air freight rate comparisons and booking capabilities, allowing our clients to quickly adapt to changing market conditions and secure optimal routing options. Our 24/7 logistics expert support ensures that you have assistance whenever you need it, regardless of time zones or market fluctuations.

Trucking & Intermodal Update

The trucking and intermodal sectors continue to face challenges, particularly in North America:

U.S. Import/Export Trucking

• Several major ports, including New York, Savannah, Houston, and Norfolk, have experienced vessels at anchor during May.
• Increased volumes have led to chassis shortages and empty return difficulties, especially in NY/NJ.
• Oakland and Seattle/Tacoma are experiencing 12+ day port dwell times.
• Toronto rail ramps continue to face high volumes of import containers on the ground, causing additional lifts and longer wait times.

U.S. Domestic Trucking

• Contract business is gaining more interest from carriers than spot loads.
• Diesel prices remain at record highs, peaking at $5.62/gallon in May.
• Tender volumes climbed back at the end of May due to the Memorial Day push, but overall volumes are still down 20% year-over-year.
• Capacity has tightened in the South & Southeast markets due to produce season.

FreightAmigo's Digital Logistics Solution includes advanced trucking and intermodal options, allowing our clients to seamlessly integrate their ocean or air shipments with inland transportation. Our platform provides visibility into chassis availability and port congestion, helping to minimize delays and optimize routing decisions.

Customs and Compliance News

Two significant regulatory changes are impacting global trade:

Uyghur Forced Labor Prevention Act (UFLPA)

The UFLPA took effect on June 21, 2022. This new law presumes that all goods made in whole or in part in China's Xinjiang region, or by entities on the UFLPA Entity List, are made with forced labor and are prohibited from importation into the U.S. Importers must comply with due diligence requirements to overcome this presumption.

U.S. Tariffs on Russian Imports

On June 27, President Biden announced that the U.S. will increase tariff rates to 35% for over 570 groups of Russian products, effective July 27, 2022.

FreightAmigo's Digital Platform includes up-to-date customs and compliance information, helping our clients navigate these complex regulatory changes. Our system can flag potentially affected shipments and provide guidance on necessary documentation and due diligence requirements.

Factory Output News

Several developments in factory output across Asia are worth noting:

• Taiwan is considering further opening up to foreign visitors by raising the cap on weekly arrivals.
• Vietnam is positioned to potentially replace China as the "factory of the world" in the near future.
• Thailand's car manufacturing for export from January to May has declined by 40% amid a dip in orders.
• Malaysia is set to establish a drone factory.
• Singapore's manufacturing sector surged in May 2022, driven by semiconductor production.
• Intel announced the expansion of its design and engineering footprint in India with a new state-of-the-art facility in Bengaluru.
• The Port of Colombo in Sri Lanka is losing volume, benefiting the Port of Mundra in India as container prices climb.
• Bangladesh opened its longest bridge, the Padma Bridge, connecting with India to improve the nation's development index through road, rail, and ports.

FreightAmigo's Digital Logistics Platform offers insights into these regional developments, helping our clients make informed decisions about sourcing and shipping strategies. Our network of global partners ensures that we can provide comprehensive logistics solutions regardless of origin or destination.

Freight Market News

Spot Rates Fall Below Contract Prices

Spot container freight rates on east-west lanes continue to soften as demand dips among western consumers. Interestingly, long-term contract rates are now higher than spot rates, a situation that hasn't occurred since the early days of the pandemic.

Shippers Continue Airfreight Spend

Despite increased costs, many brands are continuing to opt for airfreight to meet demand. This strategy is being employed to bolster supply for the second half of the year, in anticipation of ongoing supply chain challenges and delays.

FreightAmigo's Digital Logistics Solution provides real-time rate comparisons across multiple modes of transportation, allowing our clients to make informed decisions about whether to ship by ocean or air. Our platform's analytics tools can help identify cost-saving opportunities while ensuring timely delivery of goods.

Conclusion

As we navigate the complex and ever-changing freight market landscape, it's clear that adaptability and informed decision-making are key to success. The current market conditions present both challenges and opportunities for shippers and freight forwarders alike.

At FreightAmigo, we're committed to providing our clients with the tools and insights they need to thrive in this dynamic environment. Our Digital Logistics Platform offers:

• Real-time rate comparisons and booking capabilities across multiple modes of transportation
• Advanced planning tools for flexible shipment scheduling
• Comprehensive visibility into equipment availability and space constraints
• Up-to-date customs and compliance information
• 24/7 support from logistics experts

By leveraging these powerful features, businesses can optimize their supply chains, reduce costs, and improve overall efficiency. As we move into the second half of 2022, FreightAmigo stands ready to help our clients navigate the shifting tides of the global freight market.

For more information on how FreightAmigo can support your logistics needs, please don't hesitate to reach out to our team of experts. Together, we can chart a course for success in today's challenging freight environment.