Baltimore Bridge Disaster
On the 26th of March the collision of the “Dali” vessel with the Francis Scott Bridge in Baltimore, resulted in the collapse of the Bridge, and the Halt of Port Activities for one of the largest ports in the USA, causing Redirection of cargo to alternate ports and adjustments for upcoming vessels. This will inevitably affect the imports and Exports between New Zealand, Australia, and USA. We Will continue to keep you updated as we receive further details. Our Team will monitor this closely and keep all our partners and clients that is affected up to date with regular updates and alternatives. Please Expect delays for any cargo in or out of the East Coast of USA.
Key considerations to handle global delivery disruptions in 2024
Plan for ocean rates to change with capacity.
With so much of the Suez Canal’s capacity being diverted to the Cape of Good Hope since December, transit time has increased dramatically—by as much as 30% according to some estimates. Similar effects are seen on the Panama Canal due to historically low water. Diverting from the Panama Canal adds 7 days via Suez Canal and as many as 15 days via the Cape of Good Hope.
Although additional vessel capacity entered the market in 2023, absorption by re-routeing has mitigated its impact. As global ocean carriers build on their understanding of the impact to other trade lanes from the re-routeing and shifting of vessels, expected shipper demand and their costs, ocean rates may decrease. Geopolitical conflicts, demand and other supply chain disruptors will also play a large role in rates for the rest of the year.
Expect port and rail terminal delays
Extended transit times have affected arrival schedules, leading to higher vessel congestion, equipment shortages and driver availability challenges. At the same time, reduced demand has lead ports to experience an upswing in empty containers at port and rail terminals, causing an equipment imbalance between the United States and Asia. Make sure that you closely monitor trends in daily demurrage and detention fees when creating contingency plans.
While risks vary by market, certain terminals in Los Angeles are already restricting daily dray appointments and empty returns, causing higher charges for chassis and storage. This, combined with recent removals of inland point intermodal (IPI) service offerings may mean increased demand for transloading and long-haul drayage services.
Finally, East Coast union contracts expire 30 September 2024. This may slightly affect rerouting between the coasts in the second half of the year. Fortunately, the risk of disruption will likely be limited as Montreal labour negotiations ratified on 18 February, 2024.
Optimise surface transportation with smart port selections
As capacity exits the U.S. surface transportation market, expect capacity to tighten in the second half of the year. California will likely be heavily affected by capacity shortages when produce season begins in late spring. Make sure that you consider this if switching from East to West Coast ports in the second or third quarter.
Switching from the East to West Coast may improve ocean transit times, but it could also increase inland transit times and costs due to available truckload capacity and lasting port congestion from Red Sea and Suez Canal disruptions.
Because intermodal market dynamics tend to follow those of truckload, incorporating an intermodal strategy into your supply chain may mean you’re better positioned to secure capacity that helps maintain predictability when the market enters its next cycle.
Plan for resilience in 2024
Even when one conflict ends, a ripple effect could be felt across supply chains for years to come. While disruption levels this year will likely be better than those experienced during the COVID-19 pandemic, make sure that you take these complex events into consideration and adjust your 2024 strategy accordingly. By working with a logistics expert, you can stay on top of trends and develop strategies to enhance flexibility and mitigate risks.
Airfreight Update
Asia
After the end of Lunar New Year holiday, workers are gradually returning to factories, but most report a slow resumption of production activities with some restarting fully only in early March.
The Suez Canal crisis continues to persist. Rates will likely stay elevated for the Asia to European trade lanes and may moderately increase through the end of Q2 2024.
While the Panama Canal restrictions aren’t as severe, expect pressure to similarly build up in late March, affecting Trans-Pacific routes.
Overall capacity seems adequate, but with production momentum picking up in anticipation for the end of Q1 rush and ecommerce cargo demand growing ahead of Good Friday/Easter, expect pressure on capacity and rates to peak in the last week of March/early April.
LATAM
The LATAM region is exhibiting signs of stability across all major trade lanes, with perishable cargo continuing to drive demand for air exports from South America. This demand places capacity pressure on certain days for general cargo customers.
In terms of air imports, there’s noticeable availability for major destinations, especially from U.S. origins, as airlines adjust their pricing strategies to align with capacity offerings in the market.
North America
The U.S. export market remains stable. There are no indications of any changes in the coming months. Capacity will increase on the Trans-Atlantic route as the summer schedule comes into effect in the second quarter.
Imports into the United States are in a different situation. Labour actions throughout the first quarter in Germany have created some unusual capacity challenges for this time of year. These conditions will most likely remain for the balance of March and potentially into April. Capacity additions will help offset these challenges as passenger travel demand picks up in the second quarter.
From India, the market is challenged by ocean-to-air conversion cargo related to the Red Sea. Backlogs exist and spot market rates are high. This will likely remain through March.
Out of China, demand is increasing as manufacturing has come back online following the Lunar New Year, with ecommerce acting as the primary driver. As a result, spot rates are climbing quickly and should stay elevated at least through the end of March.
South Asia, Middle East, and Africa
Air freight faces significant challenges when transporting goods to the U.S. and Europe from SAMA, primarily due to the Red Sea disruptions. These disturbances have interrupted normal
ocean freight operations, leading to increased costs and transit times. Consequently, there has been a notable shift from sea to air cargo as shippers strive to mitigate delays in their supply chains.
Prices to the EU have escalated sharply, nearly tripling across major airports. Similarly, prices to the U.S. have surged, up to double compared to last month. Several major airlines have closed bookings to these destinations, exacerbating departure delays, which now extend up to seven days.
Ocean Freight Update
Ocean carrier alliances
Set to expire in 2027, the Ocean Alliance (OOCL, CMA, COSCO, Evergreen) announced they will extend the agreement for an additional five years, through 2032. Some speculate this was an effort to reassure the market of the alliance’s stability after the upheaval in the other two major east-west
alliances scheduled for early next year.
Maersk and Hapag-Lloyd announced the formation of the new Gemini Alliance, which will
start in January 2025. Hapag-Lloyd will leave THE Alliance by the end of January 2025.
THE alliance members (Hapag-Lloyd, ONE, HMM, Yang Ming) reassure the market that business will continue as usual for 2024. But there will still be significant changes and disruption to vessel services in early 2025.
Asia
There is no indication on when the Red Sea crisis will end. The number of ships diverted to the Cape route hit a new high with no signs of reduction. Currently, there are 5 million TEUs on the Cape route. This number has remained steady with an increasing trend. The Cape diversions and incremental capacity needed to maintain regular services to the Red Sea and European ports is soaking up more than 7% of the global containership fleet.
Asia-Europe spot rates continued to drop following the Lunar New Year. Spot rates are still significantly higher than Q4 2023. Spot rates for both U.S. West and East Coasts on the Trans- Pacific trade lane are also dropping, while the rates to IPI are dropping at a slower pace. Carriers are trying to hold onto the higher spot rate levels as they are now starting the crucial 2024 contract rate negotiations with beneficial cargo owners (BCOs).
There is no reduction in the number of Houthi rocket attacks in the Red Sea. All major international delivery lines have diverted delivers to the longer routeing via Cape of Good Hope for the safety of crews and cargo.
LATAM
West Coast
There is high demand for routes to the U.S. Maersk has unexpectedly suspended its service from the West Coast to Oakland, California, leading to a reduction in available space. Despite the high demand, this has not led to a reduction in tariffs to the United States.
Most carriers are actively seeking cargo for Northern Europe and Mediterranean routes. A minor reduction in bunker surcharges for the U.S., LATAM and Central America has been reported in the market.
Brazil
Carriers are implementing general rate increases (GRI) across all lanes, even though capacity remains stable with room for negotiation based on regular volume commitments.
Ports in the Santa Catarina state, including Navegantes, Itajai, Itapoa and Imbituba, are facing
significant delays and omissions, with Navegantes and Itajai being the most affected after Santos (São Paulo). These ports are operating at approximately 30% below full capacity due to various challenges.
Itajai faces constraints due to a public tender process, while Navegantes is undergoing repairs to a vessel operator. CMA has announced a shift of the Navegantes stop to Imbituba, with other carriers adapting based on port conditions.
For imports, these challenges also affect the capacity of depot terminals to receive all empty containers, potentially leading to demurrage charges. If you traditionally export through Santa Catarina, consider developing a robust forecast and diverting some volume through the Paranaguá Port.
Frequent delays at southern ports have made the scheduling at Santos highly irregular, preventing carriers from adhering to their schedule windows accurately. Often, delivers arriving at Santos need to find suitable window slots, causing cascading delays throughout the entire logistics chain, including vessels, gate in/out operations and trucking.
North America
Exports
United States-Oceania
Carriers with direct services to Oceania continue to go through the Panama Canal from the U.S. East Coast (USEC).
Carriers with transhipment services via Asia into Oceania will route via the Panama Canal or the Cape of Good Hope, depending on their port of transhipment. Routings via Cape of Good Hope continue to affect transit times.
Direct service (e.g., U.S. West Coast (USWC)) to Oceania is relatively open and rates are stable.
United States-SAMA
Space to the ISC and Middle East from some ports (e.g., USEC and U.S. Gulf Coast (USGC)) have been significantly affected due to the risks of piracy attacks by Houthi rebels while transiting through the Suez Canal. All carriers are now diverting vessels via the Cape of Good Hope, increasing transit times, and creating blank sailings.
Services into Red Sea ports are currently suspended with many carriers and for those carriers still offering service, significant surcharges are being added to freight costs.
Imports
The situation around the Suez Canal will continue to be fluid. Since mid-December, most maritime carriers have announced they are temporarily pausing or rerouting vessel traffic through the Red Sea and Suez Canal following a sequence of attacks on container vessels launched from an area of Yemen.
Many vessels travel around the Cape of Good Hope, which adds, on average, 14 days to transit time. Rerouting or pausing even a portion of those vessels can have a significant impact, not just to trade that moves via the Red Sea, but across all global trade lanes.
The Panama Canal Authority plans to maintain the current draught and number of vessels transiting per day until further notice. Most inbound service from North/Central Asia have resumed using the Canal, but steamship lines maintain Panama Canal surcharges.
Freight from Asia is entering slack season and demand is slower, but steady. Rates are trending down, but upcoming yearly contract negotiations, which leverage spot market rates, will keep the market volatile.
From SAMA, rates are expected to settle, albeit on the high side, as a lot of capacity is still absorbed by the extra distance to sail around Africa. Yet, carriers have gradually adapted their services to the longer transit, allowing for a decrease of blank sailings for March.
From EU, demand is showing a slight uptick as seasonally happens before Easter. Capacity is enough to accommodate the demand. Due to the Cape of Good Hope diversion of global services bringing equipment to the EU, there may be equipment shortages in certain areas, (e.g., South Germany) and potential congestion at the ports.
Oceania
The Trans-Tasman market will see some change following the removal of a service. Overall demand is currently soft and full impact the reduction will have on the overall trade lane is unknown.
The Europe to Oceania market is most affected by disruption in the Red Sea/Suez Canal with most carriers implementing contingency surcharges and ongoing ripple effects causing port congestion and increased demand on air freight. This also affects transit time with all carriers now transiting via the Cape of Good Hope adding approximately 14 additional days to overall transit time.
Supply from Northeast and Southeast Asia continues to tighten as carriers increase blank sailing/port omissions and implement GRIs due to issues surrounding the Red Sea and the recent Australian-wide Protected Industrial Action at DP World. Although an agreement has been made, expect to see a continued effect for several weeks until the backlog is cleared.
With all the global trade issues, there is concern around equipment availability including the rightful return of empty equipment, globally.
Export rates are under pressure with strong load factors creating competition and rate increases.
SAMA
India’s grape season and the financial year end in March 2024 mean strong cargo demand for the region. Equipment shortages are caused by vessel delays and rerouting via the Cape of Good Hope.
Carriers continue to prioritise premium freight and intend to raise rates for North America, North Europe and LATAM in March. Rates for India to most other destinations remain stable.
ISC to North America and North Europe faces some blank sailings and minor space challenges. India to LATAM, Africa and Oceania schedules are stable, with some space challenges to Oceania.
Expect slight price increases for U.S., Europe and LATAM services. Transit delays and dynamic market conditions will likely persist until normal Suez Canal routeing resumes.
Inland Drayage Update
Asia
After the Spring Festival holiday, the inland trucking market has been in recovery since the end of February. The supply of
vehicles is estimated to grow continuously while the demand is stable and improving in March. The fright index has rebounded slightly and may continue to be relatively stable in the short term.
Transit time in the Ping Xiang port from China to Southeast Asia is gradually extending to
around 4-5 days due to increasing cargo volumes. However, there are various ways to shorten transit times, such as utilising the green channel. Meanwhile, expect 1-2 days of congestion for import trucking from Southeast Asia to China.
North America
There is growing concern about the future of East and Gulf Coast ports as the labour contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) expires in September.
The ILA, representing around 70,000 dockworkers and the USMX, representing employers at 36 coastal ports, including major ones such as the Port of New York and New Jersey, Port of Savannah and Port of Houston, have faced challenges in negotiations, particularly regarding
wage increases. The ILA warned of a potential coastwide strike in October 2024 if an agreement is not reached by the expiry date. Harders will continue to monitor this situation and provide additional information as it become available.
Recently, the Federal Maritime Commission (FMC) voted in support of an administrative law judge’s ruling that ocean carriers’ exclusive chassis designation violates federal law. Currently, this is only affirmed in a few major hubs (e.g., Savannah, Los Angeles, Long Beach, Memphis, and Chicago), but it will likely spread to all markets throughout the year, pending potential
appeals from either side. This is a win for most, but especially motor carriers that have struggled to navigate a fragmented chassis industry. It means fewer restrictions on what chassis can sit under which box, which equates to more efficient throughput at container yards.
Southeast
There are considerable challenges and congestion at CSX Fairburn in the Atlanta market with long dwell times, usually due to inoperable cranes. At times, carriers are only able to schedule containers that have been pre-mounted because drivers cannot sit inactive waiting for a live mount. There means an increase in rail storage and driver wait time fees as some are sitting up to five hours.
There are similar challenges at the NS Austell ramp as carriers continue to work through the new appointment scheduling process for empty terminations and load acquisitions. With containers arriving late on Friday or Saturday with 24 hours of free time, carriers are not able to get appointments, causing an increase in rail storage and demurrage.
East Coast drayage and logistics provider PortCity is developing an on-terminal transload facility at the Port of Wilmington in North Carolina to capture new north-south business now moving through other gateways. The planned 25,000-square foot facility is due to open by
the end of March and would provide an alternative to a long-haul dray from Wilmington, reducing transportation costs for shippers.
Northeast
The Port of Virginia is expanding the delivery channel for larger vessels. The delivery channel is now open for two-way transit of ultra large vessels with the goal of lowering inactive time. This expansion, in addition to the Norfolk Harbour deepening project to be completed Q3 2025, will make Norfolk the deepest and largest waterway on the USEC.
Central/Ohio Valley
Container shortage challenges continue to persist in markets such as Cleveland and Columbus, along with Minneapolis, St. Louis, Kansas City and Omaha.
Additionally, in Kansas City, multiple carriers report congestion and delays at the BN Edgerton, KS ramp, with wait times exceeding six hours in many cases.
In Omaha, carriers report a lot of containers in stacks at the rail ramps, causing delays and congestion.
West/Gulf
Port of Seattle and Tacoma International rail service through the Northwest Seaport Alliance (NWSA) continues to be fluid. Rail dwell for import containers across all on dock railyards has averaged 2.5 days for the last eight weeks.
Oceania
Australian port logistics and landside container transport services are operating at levels below optimum as they continue to deal with a backlog of vessels and vessel bunching across major ports.
DP World Brisbane Terminal is experiencing further strain due to the protected industrial action with the Electrical Trade Union (ETU) that services/maintains the terminal’s Automatic Stacking Cranes (ASCs). The ETU are separate from the Maritime Union of Australia (MUA), which had the previous industrial action from November 2023 to February 2024.
There continue to be delays of dehiring empty containers in Fremantle, Western Australia and now building in other states. With the imbalance of import vs. export, expect this to continue throughout March and into April.
Melbourne, Victoria, requires increased lead times due major infrastructure road works as transport companies deal with delays in and around the port precinct.
Customs Update
Oceania
The Australian government will abolish around 500 nuisance tariffs in the biggest unilateral tariff reform in two decades, aiming to boost productivity, reduce compliance costs for businesses and ease the cost of living for Australian families by over $120 million over the next four years.
Beginning July 2024, tariffs will be abolished on a range of imported goods including household necessities such as toothbrushes, tools, fridges, dishwashers and clothing. These
tariffs do nothing to protect Australian businesses because they apply to goods that often arrive under a concessional rate.
The Department of Agriculture, Fisheries and Forestry anticipates its ability to meet the published client service standards timeframes for the assessment of import documentation of non-urgent commodities will come under further pressure in the short to medium term. Timeframes in relation to urgent commodities are expected to continue to be met.
In New Zealand, customs and processing times are currently operating at levels within capacity with no reported delays.
Customer Advisory
Dangerous Goods Surcharge 1st May 2024
Following customer feedback, the implementation of the Dangerous Goods Container Surcharge on import containers (outlined in November) was placed on hold so we could undertake further consultation on the DG Surcharge.
These discussions have concluded, with the two Trucking Industry Associations providing a view on how the Port of Auckland could recover specific costs associated with administering dangerous goods. After consulting with the industry, the port has decided that a ‘Dangerous Goods Container Surcharge’ will be applied.
Port of Auckland will continue to meet all its legal requirements pertaining to dangerous goods handling and administration across rail, road and sea, Effective 1 May 2024.
We will update you as soon as we have more information regarding this.