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The Transatlantic trade lane is about to go through a drastic slump in freight rates. They are expected to collapse following the injection of serious amounts of capacity by carriers. The operating capacity will jump by 20% on North Europe-North America East Coast lane in mid-December and it will keep growing all the way to February 2023, experts predict.  Containership demolitions are expected to be the main trend of the coming year which will be triggered not only by overcapacity in the context of worsening demand but also by the new carbon regulations. 

Reefer container rates have started following suit with the sliding spot rates. They have fallen from $5,000 per unit to $4,300, a long-term average of rates on the key North Europe to China trade. The decline is expected to continue. 

FMC is calling on the top companies to provide proof of compliance with prohibitions on retaliation established by the Ocean Shipping Reform Act of 2022. Any allegation of illegal behavior will be prosecuted. The requirements are strict: even a simple verbal threat to a shipper from an ocean carrier employee could undermine US law and will not be tolerated. In the meantime, Maersk and Hamburg Süd have filed their defense against Florida furniture shipper OJ Commerce’s complaint alleging breach of contract, collusion, and retaliation. MSC is under attack too: CCMA, LLC filed a case against it concerning MSC’s transportation of containers loaded with high-carbon ferrochrome from Durres, Albania to Seattle, Washington.

The UK rail freight has been severely affected by strikes this year, data confirms. Around 30% of all freight movement was canceled on strike days.

French union SUD-Rail strikes from Dec 15 to Dec 19 following the failed negotiations with SNCF. 

Routes and services 

• Supply chains in China are expected to become smoother following up the ease of COVID restrictions especially when it comes to rail freight. There is already a boost in the middle corridor, both from China-Europe and the Caspian rail networks. 
• The fees to transit through Kazakhstan in 2023 will remain stable. It was confirmed by the general manager of Kazakhstan International Logistics. 
• Medway Portugal starts a new service for AutoEuropa. There will be five departures per week that will connect the AutoEuropa factory, south of Lisbon, with the port of Leixoes, south of Braga.
• Another vessel has been added to the Caspian Sea to ease the bottleneck on the corridor between Europe and China. With one additional departure per week, the fleet could handle 6600 TEUs of cargo per week, facilitating around 70 trains.
• PIL launches a new weekly direct service connecting the ports in South China to the Philippines. It concerns the ports in South China – Xiamen, Nansha and Shekou, and links them to Manila and Cebu in the Philippines.

Other  

• The BM Container depot in Chittagong, Bangladesh caught fire. There were some disruptions afterwards.
• Australian Competition & Consumer Commission will keep a close eye on companies whose profits have skyrocketed this year to identify the causes of it and foresee future development. For now, the commission is expecting to see margins fall as the circumstances that caused congestion and delays globally return to levels seen before the pandemic.
• For the time being, CMA CGM Air Cargo has stopped providing its service in the U.S. so it can lease the aircraft to other cargo airlines in an effort to achieve profitability faster amid weakening market conditions. 
• Union Pacific faces strong criticism about the excessive use of embargoes on the rail. This year it has already been more than 1,000 embargoes on freight, which is a harmful practice in the context of congestion. 

These are only several changes that occurred in more than 250 bn freight rates across 25 million routes with more than 1 million market players. Want to share some news about your company, services, and routes? Just post them on MAXMODAL, a multimodal network that digitally connects routes and rates worldwide to automate sales and operations across container transportation & logistics industry. Join to innovate.

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Against a background of extremely weak demand forecasts, ocean carriers are preparing to blank around half their advertised sailings from Asia to North Europe and the US after Chinese New Year on 22 January.

High inventory levels in Europe and the US, coupled with uncertainty surrounding future consumer demand, has seen orders cancelled or postponed, resulting in Chinese factories preparing to shut down well ahead of the CNY holiday.

For example, apparel marker Inditex said in its earnings call this week its inventory levels on 31 October were 27% higher year on year, and 15% higher on 8 December. It would not be drawn on its orderbook for next year.

In its latest North America market update, Maersk said this year “more shippers are opting to wait until the holiday period concludes, as stocks shipped earlier in 2022 are already in position to fulfil demand”.

Meanwhile, after several consecutive weeks of double-digit falls, container spot market indices plateaued this week, suggesting the bottom may have been reached.

For example, on the transpacific, the Asia-US west coast component were all virtually unchanged on the week, with Xeneta’s XSI recording an average rate of $1,496 per 40ft. While, for the east coast, Drewry’s WCI edged down just 1%, to $3,952 per 40ft.

Indeed, joining the port of Los Angeles monthly media briefing this week, ONE CEO Jeremy Nixon said he expected short-term rates would remain flat into 2023, and added: “I think we are effectively on the bottom of those spot market rates.”

But he warned of a “big drop” in exports from Asia after the CNY holiday, and a “very soft” February and March.

“Let’s see whether demand starts to push back up around April/May time,” he said.

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