May 24 2024

May 2024 International Market Update

AN UPDATE FROM SUNSET’S INTERNATIONAL TEAM:

The following information from Sunset’s International team details 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:
    • The Panama Canal seems to be returning to its pre-drought condition, but the Panama Canal Authority (PCA) anticipates it may not fully regain capacity until early 2025.
    • The prolonged drought had disrupted passage schedules, leading to severe restrictions for ships traversing the canal connecting the Atlantic and Pacific Oceans for over a year.
    • Draft allowances and lock usage were gradually reduced to conserve water, with each ship’s passage losing 190,000 cubic meters of water. Recent rainfall has partially lifted restrictions, relieving shipping companies facing delays or significant costs. At times, up to 100 vessels were anchored for weeks.
    • On April 15, based on the present and projected level of Gatun Lake, the Panama Canal Authority announced an increase in booking slots in the Panamax locks beginning May 16, 2024.
    • In addition, effective June 1, 2024, an additional slot will become available in the Neopanamax locks. Furthermore, effective June 15, 2024, the maximum authorized draft allowed to vessels transiting the Neopanamax locks will be 13.71 meters (45.0 feet) TFW.
    • This adjustment ensures safe navigation through the locks and channels while considering the projected level of Gatun Lake and operational requirements.
  • Red Sea / Suez Canal:
    • Disruption to Red Sea container shipping is rising, Maersk said on Monday, forecasting this will cut the industry’s capacity between Asia and Europe by up to 20% in the second quarter. Maersk and other shipping companies have diverted vessels around Africa’s Cape of Good Hope since December to avoid attacks by Iran-aligned Houthi militants in the Red Sea, with the longer voyage times pushing freight rates higher.
    • “The risk zone has expanded, and attacks are reaching further offshore,” Denmark’s Maersk said via Reuters. “This has forced our vessels to lengthen their journey further, resulting in additional time and costs to get your cargo to its destination for the time being,” it added in an updated advisory to customers.
  • Trans-Pacific Eastbound (TPEB):
    • Allocation is tight, especially to and through the USWC ports. Certain importers are front-loading in anticipation of a possible November USEC port strike.
    • Congestion at U.S. ports are regular, only Oakland is currently facing extended dwell times.
      • 9 days at Oakland Int’l Container Terminal (OICT) and 3 days at TraPac for vessels waiting to berth.
    • LA/LB Rail terminals experiencing import congestion – large influx of inland cargo combined with continued consequences of flooding and rail car shortage leading to continued delays on inland rail.
    • All marine terminals in Vancouver are facing heavy congestion, resulting from an inadequate supply of rail cars from major Class 1 railways.
    • Blank Sailings starting to reduce as carriers normalize sailing schedules around the Panama Canal and the Suez Canal.
  • Trans-Pacific Westbound (TPWB):
    • With no end in sight to the Red Sea crisis, carriers continue to reduce Suez Canal transits and reroute vessels around the Cape of Good Hope. This has had an on-going effect on schedule reliability with increased transit times and off-window port calls. 
    • While the Panama Canal Authority increased the number of daily slots, obtaining appointments continues to pose challenges as carriers seek to resume regular services.
    • Both the re-routing of vessels around the Cape of Good Hope and Panama Canal transit issues, coupled with the specter of labor unrest on the U.S. East Coast, has seen an increase in demand for U.S. West Coast services.
    • Congestion is still an issue at transshipment hubs with some experiencing delays of 10-14 days.
  • Transatlantic Eastbound (TAEB):
    • Space continues to be readily available on most services from both U.S. coasts as capacity, mainly geared toward servicing larger TAWB volumes, has been more than sufficient to meet demand.
    • May 1st, known as May Day, Labour Day, or International Workers Day, has seen a continuation of recent European labor unrest as workers in Greece, Germany, and France use the occasion to stage protests.
  • U.S. International Trade in Goods and Services: March 2024
    • March 2024: -$69.4B
    • February 2024: -$69.5B
    • The U.S. goods and services trade deficit decreased in March 2024 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $69.5B in February (revised) to $69.4B in March, as imports decreased more than exports.
    • The goods deficit increased +$0.8B in March to $92.5B.
    • The services surplus increased +$0.9B in March to $23.1B.

STABILITY

  • April 2024 U.S. container import volumes increased 3% from March, and 9.3% when compared to the same month last year, consistent with a strong and resilient economy in the face of global instability. 
  • Month-over-month and year-over-year, U.S. economy proves to be robust in April 2024 versus April 2023.
    • TEU import volume was up 9.3%, demonstrating exceptional year-over-year performance.
    • April 2024 U.S. container import volumes ticked up from March 2024, increasing 3% to 2,208,849 twenty-foot equivalent units (TEUs). However, in our previous report we noted the effects of the Chinese Lunar Year which impressed upon March’s growth. The effect of this likely softened April’s growth from March 2024. Compared to pre-pandemic April 2019, volume was up 15.1%.
  • As the round-Africa routings normalize and the carriers’ service networks stabilize, schedule reliability has started to improve with March 2024 improving by +1.6 percentage points M/M to 54.6%. However, reliability is still not on-par with pre-crisis.
    • On a Y/Y level, schedule reliability in March 2024 was down by -7.9 percentage points. The average delay for LATE vessel arrivals decreased by -0.52 days M/M to 5.03 days.

Future Lookouts

  • Weekly analysis: May 10, 2024
    • Across major East-West head haul trades – Transpacific, Transatlantic and Asia-North Europe & Med:
      • 32 cancelled sailings have been announced between week 20 (May 13-19) and week 24 (June 10-16), out of a total of 653 scheduled sailings, representing a 5% cancellation rate. 
      • During this period, 53% of the blank sailings will occur on the Transpacific Eastbound, 25% on the Asia-North Europe and Med, and 22% on the Transatlantic Westbound trade.
      • Over the next five weeks, OCEAN Alliance have announced 10.5 cancellations, followed by THE Alliance and 2M with 8.5 and 5 cancellations, respectively. During the same period, 8 blank sailings have been implemented by non-Alliance services.