image of a large freight ship carrying stacked containers

Overview: Market Insights Week 3, 2021

  • Container Depots
    • Sydney
    • Melbourne
  • Global Space and Container Shortage
  • Global Port Congestion
  • Industrial action and Port updates
  • Cargo Suspension to South China during CNY 2021
  • Tianjin/Xingang – Reefer Congestion Withdrawn
  • Dalian – Emergency Reefer Surcharge Application
  • Market, Space and Schedule delays:
    • South-East Asia
    • North Asia
    • Europe
  • GRI / RR / PSS / IMBALANCE Announcements
  • Market News – Other
  • Market Commentary
  • Tables:
    • Shanghai Containerized Freight Index (SCFI)
    • World Container Index
    • Spot freight rates
    • Port Throughput Indices
    • South China-Australia Rates

The increased demand for goods is a positive sign for the economy. 

According to the December 2020 edition of the World Bank’s China Economic Update, it projects economic growth in China to slow sharply to 2 percent in 2020 before rebounding to 7.9 percent in 2021, as economic activity broadens to private investment and consumption, in response to improved consumer and business confidence and better labor market conditions.

It is anticipated that the supply chain capacity will remain stretched until the Chinese Lunar New Year in mid-February 2021.

Container Depots

SYDNEY – The FTA reports that record numbers of empty containers have been exported from Port Botany in recent months and that shipping lines and stevedores are continuing to maximise evacuation of empty containers. However, there are still significant issues and delays, with transport operators having to utilise their yard space to house containers. It is reported that NSW Ports has also released a guide for truck queues. “NSW Ports has decided to take action to address this issue by introducing additional temporary dedicated truck queuing areas where it is safe to do so”.

MELBOURNE – Whilst empty container volumes peak and carriers seek to find a viable evacuation plan, Transport operators are having to hold excessive volumes of containers in their yards due to the delays in booking wharf slots and dehiring empty containers. The FTA highlights that a number of empty container parks are close too, if not at, maximum capacity and others have issues with truck queuing resulting in some transport operators receiving fines. It also reports that port congestion is increasing due to many vessels still “off window” creating delays in obtaining a berth.

Further to this, The Victorian Government’s “Big Build” road construction projects underway in greater Melbourne, with the challenges of traffic congestion further impacting container transport as highlighted in the following notice from the Container Transport Alliance Australia (CTAA).

Global Space and Container Shortage

Ocean carriers are looking to extend transit times in a bid to improve schedule reliability and cut costs. They are starting to add more buffer time into schedules to mitigate the impact of chronic global port congestion. It said the “schedule sliding” was necessary due to the severe congestion from “the challenging operational conditions in Asia.

The container shortage in 2020 is expected, however, to be a blip with a report predicting container manufacturing, principally out of China, could leap by as much as 40% in 2021. With demand for new containers remaining strong and factories reporting full orderbooks well into Q1 2021, output in 2021 is forecast to leap as much as 40% with further growth anticipated in subsequent years.

On a local carrier front, Hamburg Sud do not have any 20GP and 20Reefer stock to facilitate bookings.

Global Port Congestion

Five significant areas of congestion and the impact can be summarised as follows:

Port: Auckland

Position: Carriers are introducing a raft of port swaps and omissions to protect schedule integrity. Some carriers have stopped accepting cargo to Auckland.

Auckland Port Congestion Surcharges remain as previously advised.

Port: Sydney

Position: DPW Terminal – Current vessel waiting time / delay: 6 days. Terminal Situation expected to improve by late January/early February

Patrick Terminal – Current vessel waiting time / delay: 7-8 days on services where no contingencies have been employed. For on time vessels; 3-4 days delay. Improvement expected by late January/early February.

Sydney Port Congestion Surcharges remain as previously advised.

Port: Singapore

Position: Vessel berth delays of between 5 & 7 days, and an estimated three-week delay for transhipment cargo.

Warehouses are suffering from the congestion due to overflow, impacting LCL distribution to final destination.

Port: UK

Position: Some carriers are not accepting cargo to UK due to port congestion at major ports Felixstowe, Southampton and London Gateway. Cargo acceptance only on case by case and at premium levels.

Restriction of cargo acceptance also on the basis of serious shortage of haulage and the lock down due to COVID-19.

Port: Los Angeles and Long Beach

Position: LA and Long Beach terminals face a surge of imports – the Signal prediction for total Q4 volume at Los Angeles is up 40% year on year to over 850,000 teu – and vessels are waiting up to six days at anchor in the San Pedro Bay.

Industrial Action and Port Updates

DP WORLD FREMANTLE – PROTECTED INDUSTRIAL ACTION

DP World has informed CTAA that the Maritime Union of Australia (MUA) has given further notice of Protected Industrial Action (PIA) at its Fremantle Terminal, encompassing work restrictions and additional bans. Read further here.

A yard meeting has been called to be held 19 January 2021. Please find official notice.

DP World West Swanson

A yard meeting has been called to be held 15 January 2021.

Hutchison Port Botany 

Closed all slots since a flash storm hit Sydney on the evening of Monday 4 January 2021. 

Svitzer Industrial Action 

Please note that Svitzer Australia has received a strike notice from the MUA for the below listed

dates and locations,

Dates:

  • Tues 12 Jan 0001hrs until Fri 15 Jan 2359hrs
  • Tues 19 Jan 0001hrs until Fri 22 Jan 2359hrs
  • Tues 26 Jan 0001hrs until Fri 29 Jan 2359hrs

Locations: BNE, SYD, MEL, ADL, FRE

Svitzer is working on alternate arrangements in order to mitigate the impact to their services.

Cargo Suspension to South China During CNY 2021

In view of COVID-19 quarantine requirements for ship crews prior to Chinese New Year (CNY) 2021, South China (Yantian) & Hong Kong feeder operators have announced early feeder suspensions from 5th Jan to 21st Feb 2021.

Various destinations are impacted, namely:

Fujian Region

including but not limited to Fuzhou, Fuqing (via feeder), Quanzhou

Dongguan, Hainan, Guangxi Regions

including but not limited to Haikou, Shatian, Qinzhou, Fangcheng

West PRD Regions

Gaolan, Maoming, Zhanjiang

West PRD Regions

including but not limited to Beijiao, Zhuhai, Zhongshan, Jiangmen, Rongqi

North PRD Regions

including but not limited to Huangpu, Sanshan, Yunfu, Jiujiang, Sanshui, Lianhuashan, Zhaoqing, Gaoming, Qingyuan, Jiaoxin, Huadu, Nanhai

East PRD Region

Including, but not limited to Shantou

Nansha, Chiwan and Shekou may viable options (carrier dependent) for movement for dry cargo only, whereas Hazardous, Reefer and OOG cargo will not be accepted.

We have, however, heard that services into South China via Hong Kong would resume as per normal during the Chinese New Year period on the basis that the Consignee can clear the cargo during the above-mentioned period. However, it is expected that cargo will need to be held in Hong Kong due to the longer holiday period and therefore accumulate additional storage charges.

For any shipments into this region, Navia will consult with ocean carriers and will only confirm booking upon acceptance.

Tianjin Xingang — Reefer Congestion Withdrawn

As reported in week 48, carriers had implemented a surcharge to offset additional costs associated as a result of the slow inbound reefer container pick-up activity caused by tougher customs inspections at Tianjin/Xingang port in northern China.

We can now report that the terminal is back to normal operation, and that carriers have withdrawn this surcharge effective on/around 28 December 2020.

Dalian — Emergency Reefer Surcharge Application

Due to the terminal yard density for reefer units at Dalian reaching critical levels, Hamburg Sud and Maersk will apply an Emergency Reefer Additional of USD $1,000 per container for any Frozen Reefer container. HMM have not applied, but are monitoring the situation.

Market, Space & Schedule Delays: Southeast Asia

Space and equipment position per COUNTRY ex South Asia…

Port: Middle East Gulf (MEG)

Position: Booking availability is very low owing to issues in Singapore. Carriers YML, COSCO, HAPAG and PIL are not accepting bookings. All other carriers are reviewing space. 

There are challenges to get space with carrier under Prepaid basis.

Port: Malaysia

Position: Port Kelang is facing a critical congestion issue, impacting vessel berth and long anchorage times. Space to Australia should be OK after Min Jan 2021, although container stock is an issue. Port Kelang is a major transhipment port for routes ex Middle East, India Subcontinent and South Asia. At present, Port Kelang is also suffering congestion, hampering connections to Australian Ports.

Port: Philippines

Position: Normal capacity but vessel delays at transhipment port affecting berthing in Manila and Cebu ports.

Port: Thailand

Position: Space is full but has opened up on COSCO service in mid Jan 2021.

Port: Indonesia

Position: All Indonesian ports to Australia are full. There is minimal space allocation for Australia destination due to heavy congested at Singapore transhipment Port. Some carriers are fully booked until JAN 2021. 

Port: Vietnam

Position: The space situation is still very tight, with most carriers rejecting bookings to Australia. For space in early December, bookings need to be submitted early to ensure space. Rates to Australia in December have increased due to the shortage of equipment to serve cargo out of Vietnam.

Port: India

Position: All India ports have severe space issues and equipment shortages. Transhipment ports also have congestion issues. Getting a shipment out of India is very hard, and we are seeing extensive transit times to Australia of more than two months.

Space and equipment position per CARRIER ex South Asia…

Carrier: ANL/CMA

Position: 40GP/40HC equipment shortage at SE Asia become serious. Shipper needs to reserve time to pick up empty equipment in advance.

ANL has increased its Sea Priority Surcharge to USD700/Container effective 1/12/2020.

Carrier: COSCO

Position: COSCO space control team at origins strictly limit space and equipment released for BCO/Fixed deal.

Carrier: EVERGREEN

Position: 40GP/40HC equipment shortage is very serious in SE Asia/ISC region.

Carrier: HMM

Position: Limit FAK space release for SE Asia ports in view of tight space, need to check space under premium surcharge.

Carrier: OOCL

Position: Equipment availability at SE Asia need to check on case-by-case basis.

Capitalising on their full vessels, carriers are only taking cargo at Premium Rate levels, renegotiating on current contracts at FAK levels.

Carrier: YML

Position: SE Asia origins rollover at least 3-4 weeks, reject new bookings unless has regular support record.

Overall 

Equipment issues continue in most South East Asia ports.

Market, Space & Schedule Delays: North Asia

CHINA, KOREA & TAIWAN  

Container rates for early January 2021 are on par to that in December 2020. With the end of the Christmas holiday in Australia, export volume from China will reach its peak in the next two months, and the shortage of containers in each port will become more of an issue. Carriers have implemented various measures to control the equipment, such as shortening the time for picking up containers and implementing a list of available containers to control the numbers. Evergreen (EMC) Ningbo office have stated that containers obtained through unofficial channels will be directly rejected. Various factors have led to the increase cost of collecting empty containers, approximately USD150/Container.

There are long queues at warehouses in Ningbo. Drivers are forced to line up at the warehouse for 1-2 days. The cost of delivery and warehousing has increased as exporters have to pay the overtime and overnight charges. In addition, co-loaders are also facing the problem of lack of space at their depots.

It is forecast that carriers are preparing for the slack over Chinese New Year (CNY) by capitalising on the current delays and rolling cargo along with new bookings onto sailings over the holiday period. Rates are expected to remain at around current levels. It is yet to be seen if there will be a blank sailing schedule as per previous years.

The port of Qingdao continues to be impacted by port omissions due to vessel delays on applicable services, namely CAE (A1X) service.

Port Congestion in Australia has also affected southbound services. A3C service will not operate between 1-14 January 2021 which will heavily impact Ningbo and Tianjin/Xingang ports.

Space and equipment position per CARRIER ex North Asia…

Carrier: ANL/CMA

Position: Will only accept cargo under Sea Priority Premium which has higher priority to obtain equipment and space.

ANL has increased its Sea Priority Surcharge to USD1000/Container effective 1/12/2020, along with implementation of a Sea Priority cancellation fee ex China of USD150/Container effective 9 December 2020.

Carrier: COSCO

Position: Space control team at origins strictly limit space and equipment released for BCO/Fixed deal.

Carrier: EVERGREEN

Position: Due to the serious port congestion in Sydney port, will not accept bookings to Sydney from January until CNY.

Carrier: HMM

Position: Space and equipment shortage becoming severe even for Asia direct ports.

Carrier: HAPAG

Position: Cargo under FAK rate needs to book 21-30 days in advance. Equipment prioritised for FAK + Premium cargo additional payment.

Carrier: HSUD

Position: Only FAK rate ex NE Asia based ports can release space. Limited space on BCO/Fixed deal, in some cases, bookings were rejected. Prioritising space for FAK + Premium at Shenzhen.

Carrier: MSC

Position: Space needs to be confirmed if bookings placed 3-4 weeks in advance. Book under Diamond Tiers Product to secure space, equipment and priority loading.

Carrier: MAERSK

Position: Unless with space allocation, all bookings released subject to equipment and space availability.

Carrier: ONE

Position: No space and equipment released unless with Account Plan (AP) offered by ONE or pay premium surcharge. Prioritising space for FAK + Premium at Xiamen.

Carrier: OOCL

Position: Need to place bookings at least 3 weeks in advance to obtain booking.

Carrier: ZIM

Position: Severe 40GP/40HC equipment shortage at all Asia based ports. Higher chance of securing equipment for premium rates. Prioritising space for FAK + Premium at Shanghai.

Overall

Reefer shipments prioritised as against FAK cargoes. No vessel space until the beginning of January 2021 ex Korea. Equipment issues continue in most parts of China.

Market, Space & Schedule Delays: Europe

Space and equipment position ex EUROPE…

Carrier: HAPAG

Position: Overloaded with bookings so there are delays with getting confirmation and they are short of equipment until early January 2021.

Severe lack of equipment in Poland.

Announced an Imbalance Surcharge of USD200 / 40’ standard and 40’ high cube

containers for all exports from North Europe. Effective 15 JAN 2021.

Carrier: T/S SERVICES

Position: Due to the backlog of containers in Singapore and Port Kelang, which are the major Transhipment hubs to Australia, we are faced with:

  • Heavy vessel delays of 1 week or more
  • Shortage of equipment
  • Fully booked vessels until mid-December 2020

Overall

Bookings to Europe must be placed at least 21 days before ETD to have a higher chance of securing space. Carriers continue to apply yield management by reserving space and equipment to high paying cargoes.

There is an extremely tight equipment situation which may lead to booking cancellations, and it is expected to remain tight over the coming weeks.

GRI / RR / PSS / Imbalance Announcements

There have been a number announcements on General Rate Increases, Rate Restoration, Peak Season and Container Imbalance adjustments on rates to Australian Ports from 1 January 2021 as follows:

FCL SHIPMENTS – Navia will adjust FCL rates accordingly.

Carrier: Hapag Lloyd

  • Amount: USD 300/TEU
  • From: North Asia
  • Effective: 1 January 2021

Carrier: Hapag Lloyd

  • Amount: USD 150/TEU
  • From: MEG / IPAK
  • Effective: 1 January 2021

Carrier: Hapag Lloyd

  • Amount: USD 150/TEU
  • From: South-East Asia
  • Effective: 1 January 2021

Carrier: Hapag Lloyd

  • Amount: USD 200/TEU
  • From: USA and Canada
  • Effective: 1 January 2021

Carrier: Hapag Lloyd

  • Amount: USD 400/TEU
  • From: North Europe, Mediterranean and Black Sea
  • Effective: 1 January 2021

Carrier: Hapag Lloyd*

  • Amount: USD 200/TEU
  • From: Europe (excluding UK and Irleand)
  • Effective: 1 January 2021

* Equipment Imbalance Surcharge, 40GP and 40HC containers only

Carrier: MSC

  • Amount: USD 300/TEU
  • From: North Asia, Japan and South Asia
  • Effective: 1 January 2021

To NZ Ports as follows:

Carrier: Hapag Lloyd

  • Amount: USD 200/TEU
  • From: USA and Canada
  • Effective: 1 January 2021

Carrier: MSC

  • Amount: USD 500/TEU
  • From: North Asia, Japan and South Asia
  • Effective: 1 January 2021

LCL SHIPMENTS 

Please refer to the following notice sent outlining Rate Restoration (RR) and General Rate Increases (GRI’s) for both import and export traffic effective 1 January 2021.

Although the majority of rates to/from Australian Ports are stable (with the exception of Singapore to Australia), the impact is felt by the congestion on services to/from our Transshipment hubs of Singapore, Hong Kong and Port Kelang.

Any additional announcements will be updated in our next notice.

Market News — Other

  • China attempts at trade sanctions have particularly impacted Australia, but signs of self-harm are coming to the fore. China is said to be suffering power shortages from the lack of Australian coal and Australia could further damage the Chinese economy with Iron ore supply, supported by allied trading/political partners
  • With 2.4% GDP growth forecast by the IMF, Vietnam is on track to become one of the fastest growing economies in the world in 2020, as many others fall into lockdown-induced recessions. For example, Singapore and Malaysia look set to suffer deep economic slumps, which would see Vietnam overtake the pair to become the fourth largest Asean economy. Manufacturing continues to drive the country’s rise, with exports up 11% in the third quarter to $80bn. The fast-growing Deepwater port at Cai Mep-Thi Vai is lying in wait 50km away. The facility has had ultra-large container ships call in the past – temporarily – but current demand trends could now see the vessel-upsizing here to stay. CMA CGM is due to open Cai Map’s newest terminal next year.
  • While total world trade declined by 14 per cent in the first half of 2020 compared to the same time period in 2019, imports and exports of medical goods increased by 16 per cent, reaching US$ 1,139 billion in value. Trade played a critical role in meeting skyrocketing demand for products considered critical in the COVID-19 pandemic, with global trade in these products growing by 29 per cent. Total imports of face protection products in the first half of 2020 increased by 90 per cent compared to the same period last year. Trade in textile face masks has grown about six-fold. China was the top supplier of face masks, accounting for 56 per cent of world exports. Chinese exports of COVID-19-critical medical products more than tripled based on year-on-year data for the first half of the year, from US$ 18 billion to US$ 55 billion.
  • US Markets rallied into Christmas but the anticipated ‘Santa Rally’ was not forthcoming. The surge in virus cases across Europe and the US has seem massive disruptions and lock-downs. This will massively impact global economies and markets well into 2021. The Christmas/New Year period will be low volume and quiet across global markets.
  • Congestion at Long Beach has caused carriers to omit this port in order bring ships back to schedule.
  • US – The annual holiday rush of consumer goods typically stretches the capacity of vessels, ports, railroads, and warehouses. This year, a combination of shipments postponed due to COVID-19, reduced vessel capacity mid-year, and record-setting recent import shipments have overwhelmed the international supply chain. Major US ports, especially those on the West Coast, are experiencing delays of days to weeks in unloading vessels, providing cargo availability appointments, and moving containers to rail for inland transport.

Shippers are advised to expect extended transit times for ocean shipments as vessels wait offshore for days to be unloaded at port. Unloaded containers are often unavailable for movement for days to weeks and subject to pier demurrage and container detention. Local drayage capacity is good, but rail capacity is strained. Overall, it is recommended to add three days to two weeks to the normal ocean freight transit time.

Currently carriers are offering bookings for February. All of the carriers keep changing the ERD which is pushing the loading dates back further along with the sailing dates. This is being caused by the vessel being berth at the ports pending loading and unloading.

We are seeing Berth times of 10-14 days on the West Coast. Via the east coast and the congestion is just a little bit better.

  • Rates ex Asia to ISC continues to be on the higher end with little no space coverage on many carriers. Multiple GRI’s have been announced by carriers on the Intra-Asia trade lane.

Market Commentary

  • Port Botany On-Track to Support NSW – Read here
  • Container Detention Relief the Main Wish (Demand) for Christmas – Read here
  • Port of Melbourne welcomes largest container capacity ship to dock in Melbourne – Read here

TABLE: Shanghai Containerized Freight Index (SCFI)

Reflects the fluctuation of spot freight rates on export container transport market from Shanghai. The freight rate of individual routes of SCFI is the average all-in price which considers the spot ocean freight and related seaborne surcharges.

Down by USD14 / TEU, from USD2465 / TEU (Week 1) to USD2451 / TEU (Week 2).

Shanghai Containerised freight index

TABLE: World Container Index

World Container index increased by 19.8% to $5,220.99 per 40ft container. 

Updated Thursday, 7 January 2021.

The main driver of this percentage increase are the steep rises in freight levels on the Asia-Europe and Asia-USA services.

The average for year-to-date, is $5,221 per 40ft container, which is $3,652 higher than the five-year average of $1,569 per 40ft container.

world container index assessed by Drewry

TABLE: Spot Freight Rates by Route

Weekly analysis and latest freight rate assessments for eight major East-West trades.

Updated Thursday, 7 January 2021.

spot freight rates by route

TABLE: Port Throughput Indices — December 2020

Weekly analysis and latest freight rate assessments for eight major East-West trades.

Updated Thursday, 7 January 2021.

port throughput indices

KEY POINTS:

  • 2020 was the highest year on growth recorded, which is a sign that recovery is gathering momentum.
  • China is the largest region, accounting for around 40% of the global port volumes. The region has been leading the post-COVID-19 recovery since July 2020. Previously, growth was down to strong domestic volumes, but now, orders from international markets are increasing export volume.
  • North America’s throughput increased monthly as well as annually in October 2020. Ports including Los Angeles, Long Beach, Savannah, Vancouver reporting their highest ever throughput.
  • The index for the Middle East and South Asia grew 0.9% monthly and 2.0% annually respectively.
  • Ports in the Oceania region were severely affected by the ongoing congestion, but have since recovered to report a 17.1% monthly increase and a 2.3% annual increase in the region’s throughput index.

TABLE: South China-Australia Rates

south china australia rates

*Rates based on 40’ containers (in USD)

  • Fully utilised vessels due to high demand with the pre-Christmas rush has forced spot rates to continually to increase. Congestion at Australian Ports has not helped the matter.
  • Rates ex South China to Australia increased 12% from Nov20 to Dec20, with a Year on Year (YoY) increase of 130%.
  • Rates ex North China to Australia also increased by up to 10% from Nov20 to Dec20.