At Twill, we give you the latest and most relevant updates on the global shipping scenario to help your day-to-day business. Here are the Q4 2022 shipping market updates in North America. Keep reading.
Businesses in North America Finalize Shipping Activities Ahead of the Holiday Season
As the year closes, some markets are visibly returning to normalcy. Overall cargo volume at some ports went down as customers are rounding up their business operations ahead of the holiday season to prepare supply chains for the Chinese New Year (22-January-2023 to 5-February-2023).
How does the Chinese new year affect shipping?
Chinese factories and ports start slowing down operations one month before the holidays, and workers return home to their families. Due to labor shortages, ports operate on limited capacity causing lower container availability, vessel delays, and higher freight rates. This traditionally low-activity period is followed by high post-holiday shipping activities — leading to an imbalance in the demand-supply patterns, directly affecting businesses.
Ocean Updates: Freight & Container Status in North America
Trends for the East and West coast improved compared to the previous quarter. However, longer vessel wait times remained a prominent issue. Empty containers were available throughout North America without any problems to cover export demands during the holiday shipping season.
Due to network optimization, there was a reduction in dwelling container units for both imports and exports, particularly in the Northwest Pacific region.
Vessel Waiting Times at Key Shipping Locations in North America
Oakland continued to struggle with labor shortages directly impacting port operations, with vessel wait times as high as 10-12 days. However, situations improved drastically at Long Beach and Los Angeles ports, with less than 1 day of vessel wait times.
Congestion remained a significant issue in Vancouver, impacting line-ups, yards, gates, and railway operations. At Centerm terminal, TP1 had an average vessel wait time of 20 days and TP9 services of 38 days. These terminals directly connect ports in Northeast China and Busan (Korea), causing a domino effect on the supply chain operations.
Recently, TP1 and TP9 services were consolidated into a weekly service. This move reduced congestion at Prince Rupert significantly, and is expected to reduce the vessel waiting time to 2 days at Vancouver as well.
As with our September 2022 market update, high transpacific market activity has led to congestion in ports on the East Coast.
Savannah port is facing high congestion with a wait time of 0-15 days for availing container berth. Tropical storm “Nicole” disrupted some activities in early November, but operations improved due to a decrease in import volume.
Baltimore is running 95% full yard storage with medium congestion. The average vessel wait time for Transpacific routes was 5 days and 2-3 days for Transatlantic and American routes. The terminal is using power packs to support the lack of reefer plugs. Waiting time is around 3-4 days due to the high volume of import reefers v/s available plugs.
Houston port continues to experience congestion with 8-10 days of vessel wait time at Bay Port (3 available berths) and 3-5 days of waiting time at Barbours Cut (6 available berths).
Sustained Import Dwell Fee at Houston Port
Port Houston had announced a Sustained Import Dwell Fee to address and curb congestion from 1-December-2022 onwards. However, the fee implementation has been postponed until Port of Houston addresses IT implementation issues.
Inland Updates: Increase in Request for Proposal (RFP) With Inquiries to Secure Inland Transportation Capacity in 2023
The growth of eCommerce and rapidly changing market demand patterns have stirred the interests of shippers across the supply chain. As 2022 closes, businesses are looking to renew or secure new contracts for their inland transporting requirements.
This had led to an increased “Request for Proposal” (RFP) activity for landside transportation contracts with high enquiries expected in Q1 2023. Top questions small and medium businesses (SMBs) are asking in the proposals include:
Interestingly, businesses are looking beyond shipping costs and prioritizing:
Reliable partnership and better stability
They’re seeking one-year or longer contract timelines, giving them a dedicated trucking capacity and network for their long-term, recurring requirements.
Meaningful service level agreement (SLA)
They’re searching for better partners for varying shipping needs to help them avoid last-minute hassle of spot market availability and constantly changing freight rates.
Faster and more efficient services
They’re eyeing improved shipping solutions, especially faster delivery times and increased Load Tender Acceptance Rate.
Logistics Trends: How is the Market Shaping Up?
Research published via Logistics Manager’s Index showed that the logistics industry is expanding, though slower than the previous quarter. Inventories remained high with relatively full warehouses and higher freight costs. As a result, transportation capacity reached an all-time high and markets normalized to pre-pandemic levels.
For SMBs, this means more logistics service providers to fulfill higher demands.
More trucks were on the road. Inland transportation capacity changed due to a decrease in outbound tender rejections (OTR) — a measure that tracks how often trucking companies reject hauling opportunities. As per data from FreightWaves, the OTR decreased from 9-10% to just 5%.
For SMBs, this means higher freight tender acceptance for your cargo.
Businesses pulled most of their shipments in the first half of 2022 to avoid peak season freight costs and potential delays. In addition, retailers reduced their storage stocks due to the impending holiday season. This led to a decline in inbound containerized freight via ocean.
For SMBs, this means more warehouse space and increased availability of trucks.
As per Maersk’s interim reports, demand for logistics services was moderated in Q3 2022. Supply chain bottlenecks eased up as businesses started closing for the holiday season. As a result, freight rates plunged, supply chain patterns normalized further, and global container volumes declined due to slowing economic activities.
For SMBs, this means that the container market can be broadly flat or negative in 2023.
How to Prepare Your Business for Chinese New Year 2023?
Being a central transshipment hub, holidays in China directly impact global supply chain operations. The Chinese new year (CNY) holiday period can topple your business activities due to factory closures, labor shortages, and limited port operations. But here’s how you can prepare for Chinese New Year 2023:
Plan in advance and ship finished orders earlier.
If your orders are due to be completed during the CNY period, consider shipping them before the planned dates to ensure availability of containers and avoid port congestion. Also, try to complete as many operations before things shut down in China.
Leverage the power of predictive forecasting.
Shipping activities generate vast amounts of data about user behavior, supply chain patterns, port congestion, etc. Use this data to your advantage and predict trends about customer orders, shipping routes, timelines, and so on.
Maintain adequate inventory in your warehouses.
Get an overview of available stocks and estimated customer orders. Have a backup inventory in case of unexpected order cancellations or shipping delays before, during, or after the holidays.
Be flexible with your routes and transporting medium.
As there aren’t many services or providers available around the Chinese New Year, plan for alternate shipping routes. For example, instead of shipping only via ocean, consider combining different forms of transportation, like ocean and rail, road and ocean, and so on.
Partner with reliable freight forwarders.
Work with different carriers and specialized forwarders according to your industry to keep your goods moving during the holiday period. Experienced logistics partners help plan effectively with proper tools and timelines to tackle supply chain volatilities during Lunar New Year.
And that’s a wrap! Here’s sending you festive greetings for the holiday season. And wishing you a happy new year 2023.
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