- As a result of the high demand and effect of the Chinese New Year, air freight rates have increased around by %10. After the Chinese New Year period air market returns to a slack condition.
- The Chinese government has recently begun to relax its strict zero-Covid policy that it has implemented for almost three years. This has led to a spike in cases, with a more than 60% increase in the number of reported COVID-19 cases in China. This in turn has resulted in challenges for factories as they face difficulties in maintaining normal production schedules due to staff shortages.
- The pickup rates from factories have seen a significant increase, in some cases reaching ten times more than usual, due to both the ongoing COVID-19 pandemic and the Chinese New Year.
- In most shipping line, demand for ocean freight continues to fall or remain flat, with shipping rates following the same pattern.
Ocean Freight Update
The Chinese New Year, which typically sees an increase in demand for spring commodities and a corresponding increase in volumes and rates, is shaping up to be quite different this year. Market demand remains uncharacteristically soft, and there have been no significant increases in volume or rates for trades in and out of Asia. This means that the typical “frontloading” effect, where shippers bring forward their shipments to beat the holiday rush, is not expected to happen this year.
To slow or stop price drops, steamship lines continue to streamline their services and use blank sailings to match their capacity to demand. At the moment, the reliability of schedules around the world is 50%, but it could be better to reach the more typical range of 70% to 90%. Carriers are also continuing to remove trade capacity with blank sailings. Key trade lanes use their capacity in different ways. Asia-Europe is full (because capacity has been taken away), but the rest of the trade is still open.
Global Schedule Reliability
Several shippers are waiting to negotiate contracts until after the holidays, so shippers can expect more rate cuts after the Chinese New Year. Blank sailings are also expected to increase during the holidays, as some shippers are closed and will stay closed longer. Export space availability is improving at North Asia ports, particularly in 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 by up to 50% on this trade after the Chinese New Year.
The congestion at European ports is gradually improving as the volume of shipments decreases due to a decline in consumer demand. This drop in volume is expected to result in smoother operations at ports during the first quarter of 2023. However, carriers may opt for more blank sailings on these trades if the fall in demand continues to escalate.
Inflation and normalizing demand from the largest importers, such as retail, furniture, electronics, and home improvement, which account for more than half of U.S. imports, keep imports low from one year to the next.
Ports and rails in the U.S. are less crowded now, but Houston and Savannah ports, as well as Omaha and Santa Teresa rails, are still having trouble. 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.
Air Freight Update
Due to the high demand leading up to the Chinese New Year, air freight rates have experienced a 10% increase. However, after the holiday period, the air market is expected to return to a less active state. Many important factories will close for a short time in the middle of January and start making things again in early February. This may be one reason why demand is falling. Even so, rates are likely to stay the same, and there are no major capacity problems right now, other than the usual flight cancellations around Chinese New Year. Now that restrictions on passenger travel have been lifted, demand for passenger flights is expected to slowly rise over the next few months. This will lead to more passenger flights and more capacity. Additionally, restrictions on crossing the South China/Hong Kong border have been greatly reduced, and cargo is flowing smoothly.
Inland Drayage Update
The lift of COVID-19 restrictions across China has led to a rapid increase in the number of infected individuals, resulting in labor shortages and the closure of some logistics parks towards the end of December. The less-than-truckload market is expected to shut down during the Chinese New Year. However, customs clearance between Shenzhen and China is improving for both imports and exports. Congestion in the Pingxiang port from China to Southeast Asia is currently at 2-3 days, and customs will be closed during the new year’s holiday.
A new agreement between about 160 rail traffic controllers in Canada and the Teamsters Canada Rail Conference has been ratified. The agreement went into effect on January 1, 2023, and will expire on December 31, 2025.
Carriers in the Charleston market are facing challenges with finding open parking for their trucks. Although volumes have remained steady, congestion has moved to the areas surrounding the terminals. This could potentially lead to local capacity moving away from this market as drivers become more frustrated with the added cost and lack of space.
In Savannah, dwell times are still getting better, especially for larger Class II ships, where the average wait time has gone from seven days to four.
Partly because the port congestion surcharge went away on January 1, 2023, the amount of shipping in the Northeast has gone down. Port wait times in this region are now only expected occasionally rather than on every shipment. Even though there isn’t a lot of equipment, there may still be problems with refrigerated cargo, but standard cargo should have few problems.
Freight Market and Amazon News
- Amazon announces a new streamlined FBA capacity management system, and here is a1 summary of the changes.
- Starting March 1, no more weekly changing restock limits
- There will be a new “Capacity Monitor” that will be announced every 3rd week for the following month.
- Estimates will be given about future capacity up to three months out.
- Amazon Sellers will be able to request higher limits based on a “reservation fee.”
- Limits will be based more on cubic feet usage instead of number of units
- Starting January 31, all U.S. merchants will have access to the “Buy with Prime” feature, which enables Prime members to shop on external websites, utilizing their stored checkout information and receiving Prime perks such as free shipping and returns. This option was initially introduced in April 2022 and was limited to select merchants by invitation only.
Please keep in mind that the information in our publications has been assembled from a number of sources and is based on the information we had at the time. This content is provided to our community and partners for informational purposes only, and we don’t expect them to rely on it or hold us accountable if they do.
Forceget Digital Freight Forwarder is a leading NVOCC licensed global logistics company that specializes in parcel, air and ocean shipping. With offices in key locations such as the USA, China, Hong Kong, Turkey, Israel and Colombia, we are well-positioned to assist you with all your logistics and brokerage needs, no matter where you are located. We take care of all the complexities of international shipping, allowing you to focus on what you do best – competing in your local market. Additionally, we pride ourselves on being the number one Amazon FBA focused freight forwarder, ensuring that your products are delivered to Amazon warehouses in a timely and cost-effective manner. With Forceget, you can have peace of mind knowing that your global logistics needs are in expert hands.