January 30 2024

January 2024 International Market Update

AN UPDATE FROM SUNSET’S INTERNATIONAL TEAM:

The following information from Sunset’s International team details the current International market conditions. Customer communication is vital with the instability of international trade. 

Sunset is here to help with the most basic or complex shipments.  Email [email protected] to speak further about how to manage any International needs that arise.

Ocean Industry

  • Panama Canal – increase in daily transits announced.
    • In a Notice to Shippers, the ACP said it will increase the number of daily transits to 24 as of January because “the November rains were not as deficient as those in October, coupled with the results of the water saving measures and restrictions implemented.”
    • The measure will be effective January 16, 2024 and remain in place until further changes in condition.
    • Currently, 22 vessels transit daily, divided into six neopanamaxes and 16 panamaxes as a restriction measure due to the low water levels of Gatun Lake, provoked by the drought caused by the El Niño phenomenon. The move up to 24 transits in mid-January while an improvement is still well below the normal number of 36 daily.
    • Maersk has announced it will begin using a freight railroad to bypass the drought-stricken Panama Canal, as low water levels have forced authorities to limit the number of large ships passing through. The shipping container giant said Wednesday its Oceania-Americas (OC1) service, which normally uses cargo ships to transit the canal, will instead utilize the Panama Canal Railway, a 47-mile railroad running adjacent to the canal that connects the Atlantic and Pacific oceans.
  • Suez Canal – Red Sea crisis boosts shipping costs and delays
    • Diversions from Egypt’s Suez Canal, which feeds into the Red Sea, are hurting capacity.  Rerouting vessels around the Cape of Good Hope adds two to four weeks to round-trip voyages.  Ocean alliances need more ships on each Asia-East Coast route to maintain an efficient network schedule.  However, about 20% of vessel capacity isn’t being used due to a massive drop in manufacturing orders, according to industry experts. Instead, ocean carriers continue to cut their sailings while tight capacity and longer travel times are fueling rate increases.
  • Trans-Pacific Eastbound (TPEB):
    • USEC-bound ships are taking longer routes, affecting capacity. To cope, SSLs must add 2-4 more vessels per string to compensate for a 14-21 day transit increase and maintain weekly services.
    • Due to extended transit times, importers are shifting cargo to WC services, causing congestion and tight space, especially on PSW strings.
    • Post-holiday congestion is back to normal, thanks to extra workdays during Christmas and Christmas Eve.
    • Savannah: vessel berth waits are up to 2 days, depending on size.
    • New York: No wait expected at Maher Terminals LLC, but up to 1.5 days at APM Terminals, and 3 days at Port Liberty Terminal Bayonne.
    • LA/LB: dwell time averages 4-5 days. Oakland Int’l Container Terminal and TraPac see up to 3 days of wait.
    • Tacoma has a 3-day wait, while Seattle has none. Import deliveries take 4 days at HUSKY due to rail car imbalances, 2.4 days at Washington United Terminal, and 1-3 days at T18. Dwell times are decreasing as rail companies catch up.
    • In Vancouver, all marine terminals are operational, and berth congestion is no longer an issue.
  • Trans-Pacific Westbound (TPWB):
    • Ongoing low demand in the TPEB trade is making carriers use blank sailing/slow steaming programs, reducing vessel capacity by 10%-20%.
    • In 2024, we will see an increase in new vessel capacity as carrier vessel orders are filled. The expectation is that most of the newbuilds will be added to Asia lanes, potentially exacerbating the supply/demand imbalance.
    • Transshipment ports like Singapore and Busan continue to see congestion delays.
    • Drought conditions persist at the Panama Canal. Canal transits have been reduced as a result and carriers have enacted emergency surcharges to account for additional costs incurred.
    • Due to higher threat levels in the Red Sea, carriers are diverting ships. Instead of using the Suez Canal, vessels will now go around the Cape of Good Hope, adding 1-4 weeks to transit times depending on the destination.
  • Transatlantic Eastbound (TAEB):
    • While no major blank sailing programs or cancellations have been announced to address overcapacity, carriers may use smaller vessels on some routes to balance supply and demand.
    • Services from the U.S. West Coast still have higher usage compared to those on the U.S. East/Gulf Coasts. However, due to low water levels at the Panama Canal, emergency surcharges will now be applied.
    • Low water levels on the Rhine River are affecting barge traffic. Carriers have introduced a low water surcharge, applying it to both imports and exports.

  • U.S. International Trade in Goods and Services: October 2023
    • November 2023: -$63.2B
    • October 2023: -$64.5B
      • The U.S. monthly international trade deficit decreased in November 2023 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $64.5B in October (revised) to $63.2B in November, as imports decreased more than exports. 
      • The goods deficit decreased $0.6B in November to $89.4B.
      • The services surplus increased +0.7B in November to $26.2B.

STABILITY

  • December 2023: U.S. container import volumes increased 0.4% from November 2023 to 2,107,012 twenty-foot equivalent units (TEUs). Versus December 2022, TEU volume was higher by 9.2%, and up 10.6% from pre-pandemic December 2019. The growth in import volume for all of 2023 is within 4.6% of the same period in 2019, but down 11.7% versus 2022..
  • Global Schedule Reliability recorded the first proper MoM decline in November 2023, -2.5 percentage points to 61.9%.

Future Lookouts

  • Weekly analysis: January 10, 2024
    • Across major East-West head haul trades – Transpacific, Transatlantic and Asia-North Europe & Med:
      • 77 cancelled sailings have been announced between week 03 (January 15-21) and week 07 (February 12-18), out of a total of 650 scheduled sailings, representing a 12% cancellation rate.
      • During this period, 48% of blank sailings will occur on the Transpacific Eastbound, 10% on the Transatlantic Westbound, and 42% on Asia-North Europe and Med trade.