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Important Shipping Updates

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Auckland Empty Container Yard Congestion

Empty shipping container congestion has spiked significantly for Auckland bound cargo in recent weeks, leaving importers and their transport providers incurring added costs from de-hire delays, yard storage of empties, futile truck trips, and additional administration.

Auckland container yards are at maximum capacity and only looking to accept empty containers as containers leave the yard for exports.

This is causing a significant backlog of containers waiting to be de-hired. Transport providers are forced to divert empty containers back to their own yards while waiting for an available slot to de-hire, however, transport providers are also running out of space on their own depots trying to deal with a large volume of empty containers. 

Shipping lines are trying to put in place alternative de-hire options, however the alternative depots are unable to manage the vast number of containers waiting to be de-hired.

Some shipping lines are starting to state the containers are to be de-hired in either Hamilton or Tauranga at the importers cost. 

We highly encourage importers to check the bill of lading for your consignments. Pauline Davies has made the following comment to CBAFF (Customs Brokers & Freight Forwarders Federation of NZ Inc): 

I just checked the MSC bill of lading form. The obligation on cargo interests is to return containers to the place nominated by the carrier, within the free period. It seems to me that if a place of redelivery is either not nominated by the carrier, or if it is impossible to return containers to that place, the right to charge detention does not arise.

Contractual performance is simply not possible. If MSC continues to nominate a place that won’t accept empties, arguably the nomination is invalid.

The following feedback have been received by the CBAFF: 

If there are any queries on detention invoices the individual companies should take this up with us directly. We are happy to review these and adjust where there is an issue beyond their control. This is the approach we have generally being taking in any of these circumstances. 

The team have been talking to the lines and we do now have evacs occurring over the coming days plus some of the new services to NZ have started to use their stock. The update is that Oak will be able to receive again early next week, we have capacity in Hamilton and to some extent in our Panmure and Wiri Inland port yards.

Tauranga remains just about coping albeit the greater export volumes expected next year may be difficult unless we can move some of our operations to the Te Puna site we are developing when the consents arrive. 

Whilst our depots are quite full, we have not refused acceptance according to our team. However they did note and it seems depot have communicated extensively with trucking industry the need to pre book VBS slots at least 3 days prior to drop off.

As I understand it there are no delays in pickup at port however again the need to plan ahead is crucial. Happy to look at any specific concerns but think it’s just a matter of planning well ahead which is the new norm it seems. 

Certainly, a number of the depots have reached maximum capacity this week for the variety of reasons you mention below and Oak Rd in particular actually had to make the call to not open the gate due to the capacity pressures creating a safety issue.

The key issue has been a lack of truck drivers to deliver containers for empty evacuation to the port with covid playing a factor in this. With all the depots being full it was difficult to nominate an alternate depot that had the ability to accept containers however we have arranged for empty containers to be accepted at the Link facility at Ports of Auckland and have been advising clients to deliver there. 

The advice from our depot provider earlier today is they’re confident they will be able to open again for receivals from Monday as they have a large number of containers scheduled for evacuation today & tomorrow, with more drivers available to get these moved. In the interim we believe there is sufficient capacity at Link to accept the container returns required today and tomorrow and also Saturday.

We’ll keep communicating with the clients to ensure they’re aware of the Link option and believe we will see improvement in the situation early next week. 

T.S. Lines 
Yes, all depots are struggling, and all Lines are having this issue. If your container is currently set to de-hire at Containerco – please send us a mail and we will direct to Metrobox -which is also struggling but looks to improve faster. 

Please keep track of de-hire period where you are struggling and send us a mail if you receive a detention invoice with the period you were trying to de-hire from. I will then apply to waive any detention incurred. However, please actively keep looking for slots availability. 

Henning Harders will actively work with transport providers and shipping lines to find solutions for our clients, however, cannot be held liable for any detention fees arising for delayed container de-hires because of depot congestion issues. We appreciate your patience during this time as we understand the issues this is causing to our clients. 

If you are importing FCL shipments into New Zealand under pre-paid freight terms (CFR, CIF, CPT, DAT, DAP, DDP), please ensure your supplier requests additional free time at destination when placing bookings to minimize potential detention charges. Henning Harders will request the same when placing bookings on behalf of our clients. 

Flat Spot Rates, High Blank Sailings 

Analyst Drewry’s World Container Index (WCI) remained largely stable over the past week at USD 2,132.49 per FEU, down 0.1% on the previous week, which had seen the first rise in the index for some 43 weeks.

The latest Drewry WCI composite index of USD 2,132.49 per 40-foot container is now 79% below the peak of USD 10,377 reached in September 2021. It is 21% lower than the 10-year average of USD 2,695, indicating a return to more normal prices. 

But while spot rates have finally flattened out there is little for lines to celebrate about as the sector heads into the seasonal lull that traditionally is seen after Chinese New Year on 22 January. 

Even ahead of the holiday period carriers have already blanked much larger numbers of sailings compared to the last pre-pandemic year of 2019.

According to Xeneta lines have blanked 220,489 TEU capacity worth of sailings on the Asia – West Coast trade in the four weeks leading up to the holiday, compared to 29,796 TEU in the same period in 2019. 

On the Asia – North Europe trade blanked sailings have increased 715% against 2019 figures to stand at 226 000 TEU, while those from the Far East to the US East Coast climbed by 340% to 140 000 TEU. 

“This really does demonstrate the low level of demand gripping the industry at present,” said Peter Sand, Xeneta’s Chief Analyst. “In a normal year, we tend to see very few blanked sailings in the run-up to this major Chinese holiday as shippers stock up on their inventories. So, this is a worrying development for carriers and, no doubt, a bad omen of what’s to come for the year ahead.” 

For the week of Chinese New Year itself blanked sailings so far announced are running at some 57,970 TEU of capacity compared to 6,800 TEU in 2019. 

Ocean Terminal Update

Airfreight Update 

There were no signs of a significant pre-Chinese New Year demand increase this year. Key manufacturing sites expected to shut down in mid-January and resume production in early February.

Rates remain stable with no capacity issues outside the usual flight cancellations during the Chinese New Year holiday period. Passenger travel restrictions have largely been lifted and passenger demand should gradually increase in the coming months, leading to new passenger flights and capacity.

The South China/Hong Kong border crossing restrictions are greatly reduced, and cargo is flowing without issue. 

Eurocontrol, Europe’s air traffic manager, anticipates that challenges meeting capacity demand and managing delays could make 2023 a very challenging year as air travel recovers to normal levels. 

Capacity continues to be added to the market with further rate reductions expected to continue. As is typical for this extended holiday season (including Christmas, New Year’s, and summer breaks, collectively), some freighter rotations are removed for maintenance. However, with the softer demand, spot rates are more available. 

Global Freight Update

Demand for ocean freight in most trades continues to decrease or remain flat, with shipping rates following the same pattern. 

Traditionally, volumes and rates increase ahead of the Chinese New Year as market demand increases, particularly for spring commodities. However, this year, market demand remains uncharacteristically soft, with no significant volume or rate increases for trades in and out of Asia. As such, the typical frontloading effect is not expected to happen this year. 

In an attempt to slow or prevent rate decreases, steamship lines will continue to rationalize services and use blank sailing to adapt capacity to demand. Global schedule reliability finally reached 50%, with room for improvement to reach the more typical 70–90%. 

Carriers continue to remove trade capacity with blank sailings. Capacity utilization across the key trade lanes remains varied, with Asia-Europe standing out as full (due to capacity removal), while the rest of the trade remains open.

Further rate reductions are expected after the Chinese New Year, as several shippers delay contract negotiations until after the holidays.

Expect increased blank sailings during the holidays. In addition, some shippers are closed and will stay closed longer. 

Export space availability is improving to North Asia ports, in particular China and Japan, especially with respect to direct export services from U.S. West Coast (USWC) ports.

However, due to expected lower demand on the transpacific eastbound trade, vessel capacity may be cut up to 50% on this trade after the Chinese New Year. 

Congestion at transhipment ports in Asia remains significant, with 10–14-day shipment delays at most major transhipment ports, including Busan, Kaohsiung, and Singapore. Busan congestion has been more significant due to the 10-day trucker strike in December 2022.

Congestion at China ports also increased due to COVID-19 outbreaks reducing the port labour pool. All the delays and congestion at transhipment ports are leading carriers to push for business on direct services only. Congestion is expected to ease in the coming months as volumes on the Asia trades continue to decline. 

Congestion at Europe ports is easing as volumes start to fall due to reduced consumer demand. This drop in volume should improve port fluidity over the course of Q1 2023. There may be more blank sailings on these trades if the fall in demand increases. 

North America
Imports remain soft year-over-year due to inflation and normalizing demand from the largest importers, including retail, furniture, electronics, and home improvement, representing over 50% of U.S. imports. 

U.S. congestion improved at ports and rails, though some locations— including Houston and Savannah ports, as well as Omaha and Santa Teresa rails—continue to struggle. 

On the USWC, congestion at the Los Angeles/Long Beach port is improving with less than 10 vessels on average waiting outside to berth. The current congestion level is expected to remain stable. 

Latin America
Exports demand remains steady. Schedule reliability, limited carrier options, and blank sailings keep supply and demand fairly balanced to most destinations, with exports to Europe and Oceania remaining the most challenging. 

South Asia, Middle East, Africa
Overall demand for exports out of this region is stable, but softer compared to the past two years. There is more capacity than demand, and space is generally available with stable or decreasing rates. 

Space to the India subcontinent (ISC) and Middle East markets is very tight across all U.S. ports, but most readily available for U.S. East Coast (USEC) port exports, where there are more direct services. Among USEC ports, space is more available for New York and Norfolk.

Severe congestion at Bangladesh ports continues. Many carriers have either suspended or severely limited available space to this destination. Ocean carriers are applying congestion surcharges at Chittagong/Chattogram port that must be paid at origin. 

Space continues to be very short to meet U.S. export demand to ISC and Middle East locations. It is very important to book four-to-five weeks in advance on this trade. However, several carriers announced they are re-opening space and service into this market, so space availability should greatly improve throughout Q1 2023. 

The Trans-Tasman market softened over the holiday period. With customers reopening in mid-January, this should pick up . The new shuttle service out of Sydney and Brisbane has added tonnage to the lane, while the Focus Container Line to the Trans-Tasman service introduction has increased options. Rates are expected to remain stable through Q1 2023. 

U.S. to Oceania
The market is likely to further weaken, and rates will continue to slowly decline as carriers compete for market share. However, the demand for refrigerated containers remains strong. Space is tight but is starting to ease on the USWC.

Some steamship lines reduced their capacity on certain services in December, causing tighter space on exports from the USEC. The traditional peak season on the U.S.-Oceania trade is expected to wind down by the end of February, easing space issues. 

Port calls to New Zealand for exports from the USWC continue on a two-week basis, and transhipment service options are increasing. 

The Europe export market remains stable, with space and equipment readily available for dry cargo. 

Northeast Asia to Oceania continues to be in flux. Carriers are attempting to increase rates, but demand is not at a level to sustain increases. The period after the Chinese New Year will likely be the next indicator as to whether carriers attempt more increases or resort to blank sailing programs. 

Southeast Asia is in steady decline as demand weakens. Carriers are now looking at amending services, such as rationalizing port calls, to limit space and increase demand. 

There are currently no reports of congestion in Singapore and Malaysia, with feedback from the lines reporting operations are normal and without major delays. 

We will continue to evaluate all market options and work with you to provide individual solutions for your business. 

For more details on any of these articles please contact your Henning Harders Key Account Manager. 

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