Freight Market Update: February 2023
Monthly Highlights
- The US East Coast is still as popular as last year, despite a bit of shifting away from it because of the release in Covid-related port congestion on the US West Coast. Prices have gone down a bit, but they reached the same level before the pandemic for Europe-USEC trips and more than that for Asia-USWC trips.
- Earthquake in Turkey and Syria Prompts Shipping Disruption
The recent 7.8 magnitude earthquake that struck Turkey and Syria has caused significant damage and is anticipated to cause disruptions in shipping and supply chains on a global scale, as reported by The Loadstar. The Iskenderun Port in Turkey has suffered extensive damage, including the collapse of its docks, and experts in the industry predict that power outages will likely impact operations in other ports as well.
- The Port of Los Angeles still has chance for a comeback in the second half
As per FreightWaves, Gene Seroka, the Executive Director of the Port of Los Angeles, forecasts that the port’s volumes will continue to be low for the remainder of the first quarter and all through the second quarter. He expects the second half of 2023 to be stronger as a result of labor negotiations and a shift from East Coast to West Coast ports that will compensate for the reduced volume. According to Loadstar, the ten largest container ports in the United States experienced a decline of 17.9% in January import volumes compared to the record throughput of January last year, with the most significant decreases occurring at the west coast ports.
- Starting from March 18, 2023, the U.S. Customs Border Protection (CBP) is introducing a new requirement that a “postal code” and the “manufacturer identification code” (MID) be included on entries from China. The CBP will perform three new validations when the country of origin is China, and it will include an automated UFLPA detention system with a new public site for trade to upload documentation and submit for CBP review. If you import from China, it’s important to work with your suppliers to ensure that the full name and address (with Chinese postal code) of the actual Chinese manufacturer is shown on shipping documents. Source: JDSUPRA
Ocean Freight Market Update
Asia
The current status of the global shipping sector is complex, as contract rates approach spot rates and container rates decline significantly. Several regions exhibit this pattern, including China and Southeast Asia. Despite the reduction in container rates, shipping demand remains low due to worldwide inflation and restricted demand, resulting in a significant decline in freight prices. The global shipping industry is coping with a difficult situation characterized by falling container prices, weak demand, and a shift in trade routes. Although a revival of the shipping industry is possible in the future, the current picture remains dubious.
Europe
The primary headline in the ocean industry for February 2023 is the earthquake that struck Turkey and Syria, which has had an impact on the industry’s network. Since the Port of Iskenderun has halted operations, we are not accepting any bookings at the terminal until further notice. Additionally, there is an anticipation that supply chains in Europe will be reconfigured through near-shoring and diversification of sourcing this year.
North America
- Descartes Datamyne says that the knock-on effect from China is still causing cargo volumes at US ports to go down. In December 2022, just under 2 million 20-foot containers came into the ports. This was 1.3% less than in November. The volume in December dropped by 19.3% compared to the same month last year. This is about the same as the volume in December 2019, when the COVID-19 lockdowns were just starting. During the pandemic, it was hard for supply chain planners to change network schedules during times of high activity because the networks were already at full capacity. Now, though, things are different.
- The reduced cargo volumes have resulted in lower congestion and shorter container dwell times at major depots and terminals in US ports. We have observed some shortfall locations in Ohio Valley and Houston, but we are actively working on repositioning empty containers within the US and Canada to meet the demand. The existing rail and truck networks are showing lower congestion, enabling us to easily reposition the empties. Consequently, waiting times at some major North American ports are minimal or non-existent, with many terminals now operating at zero waiting time.
Air Freight Update
The air freight industry is experiencing a decline in growth due to the global rise in inflation rates and decreased consumer demand. Given the continued unpredictability, we anticipate that the volume of the European market will remain stagnant in the upcoming weeks. According to reports, there will certainly be more strikes around Europe in February, especially in France and Spain. It is anticipated that the elimination of COVID-19 travel restrictions in China, refinery outages in the United States, and a European Union prohibition on Russian-refined products will all contribute to an increase in jet fuel prices. Nonetheless, given current capacity levels and demand, we do not anticipate large rate increases.
Asia
After an apparent uptick during the Lunar New Year, the situation in North China looks to be leveling down. Cross-border travel, however, has resumed when mainland China loosened restrictions on Covids in the south. After the holidays, the demand for cargo going east in the Korean market has increased, whereas the demand for cargo going west has not yet recovered. At the moment, demand is low and capacity is plenty in Southeast Asia, with the exception of Hanoi, where there was a rush towards the end of last month.
North America
In general, the US market is stable, with airports operating as usual and even expanding their capacity, particularly in Europe. Prices appear to be stabilizing week after week. Nonetheless, there is a growing surplus of capacity, especially in Europe.
Amazon News About Freight Market
Amazon Takes a 50% Cut of Seller’s Revenue
Over the past five years, Amazon’s share of the money that sellers make has increased significantly, now accounting for more than half. This is due to a rise in fulfillment fees and the introduction of advertising fees, which means that sellers are now paying more to use the platform. A typical Amazon seller can expect to pay a 15% transaction fee (referred to as a referral fee by Amazon) as well as Fulfillment by Amazon fees of between 20-35%, which cover storage and other costs. On top of this, sellers may also pay up to 15% for advertising and promotions on the platform. The exact fees will depend on factors such as the product category, price, size, weight, and how the seller chooses to operate their business on Amazon.
Amazon FBA fulfillment accounts for 30% of Amazon FBA sellers’ revenue.
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 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.
