Freight 4 Lunch 🍴⛴ Weekly Insight

Topics: Felixstowe | US out of Court Settlements | US Congestion | Spot Market | iXRT Sneak Peak | Top of Mind: Air

Felixstowe: The UK strike has come to an end after its planned 1-week length, but staff are back to work without a resolution.

• Another strike is very likely
• "Fun" fact: The world's largest container vessel (>24k TEU) Ever Alot set sail on its maiden voyage, and was immediately trapped at Felixstowe port for an entire week due to the strike

Out of Court Settlements: In the US, a case between a US Shipper and Yang Ming was recently settled out of court.

• The shipper alleged unfair treatment and a breach of contract, saying Yang Ming had: “taken advantage of price inflation in container shipping during the COVID-19 pandemic and unjustly and unreasonably exploited customers.”
• This settlement may set a precedence, causing more cases to be brought up and settled in this manner
• The US Federal Maritime Commission (FMC) is cracking down more on carriers charging unfairly high rates and Detention & Demurrage, with lawsuits and new regulation pending (law to be written next month)

US Congestion: The East Coast is seeing another rise in congestion

• The WSJ recently commented on US economy - aligning with Xeneta perspective that a recession is not a certainty - "Gross domestic income, an alternative to gross domestic product as a measure of output, points to a stall instead of a recession"

Spot market: Transatlantic routes remain an outlier to the falling on the spot market, and have been flat for several months

• Congestion at destinations & origins is largely to blame
• Remains at a record high
• Far East - US East/West rates are both falling, but the large gap between the two mostly remains

iXRT Sneak Peak: In the peak of the pandemic, volumes were concentrated in China (containers were brought there to be moved globally). This trend is now coming to an end—a sign of normalization within the market.

• Sea Intelligence predicts a "normal" market by April-Sept 2023; Xeneta is a bit more conservative with a 12-15 month timeline, as more capacity is deployed and congestion eases

Top of Mind - Air: Deteriorating demand outlook for global air freight market

The OECD Composite Leading Indicators (CLIs) continue to fall below 100, sitting at 99.18 in August. The indicators point to a weakened global economy for the next two to three quarters without a clear sign of a turning point currently. Global air cargo demand follows the same trend, suggesting a soft demand for the upcoming peak season. Due to the continued capacity constraints and general transport chaos, air freight rates are expected to remain elevated but lower than last year. 

Source: thanks Dayna Goldman & Peter Sand for their insights.