Keep this Freight Update for Winter 2023 handy if you are planning to order a new machine for delivery before year end!
Navigating the ever-evolving world of global shipping can be a daunting task. Such as dealing with various factors constantly impacting the flow of goods. In this blog post, we’ll shed light on some recent trends and developments that are shaping the maritime industry. Whether you’re involved in the shipping business, awaiting the arrival of a new machines, or simply curious about the state of global trade, these insights are worth keeping an eye on.
Freight Update – Panama Canal Transit Restrictions
Starting in November, the Panama Canal Authority will be implementing stricter regulations. These include the number of daily transits through the canal. This reduction will limit the transits to 31 per day, down from the usual 36. What does this mean for container services and the shipping industry as a whole? Well, it’s likely to result in delays that were previously avoided. While this change might cause concerns, it’s essential to note that the expected delays are relatively manageable. The delays range from 2 to 3 days. Moreover, even with these delays, the Panama Canal route remains a faster option for shipping goods from Asia ports of loading compared to using the Suez Canal. KAAST machinery manufactured in Taiwan travels through the Panama Canal en route to our Philadelphia warehouse.
Challenges in Latin America
Moving our focus to the freight update in Latin America, there are some significant developments that are affecting shipping in the region. In Brazil, the Amazon River, a crucial passage point for container vessels, is experiencing unprecedented water levels. This situation has made it impossible for vessels to access the Manaus port. Thus causing considerable disruptions. Unfortunately, due to the unpredictable nature of river conditions, it’s challenging to provide a concrete forecast for when Manaus will become accessible again. Ocean carriers are closely monitoring the situation. They will communicate promptly when safe operations can resume.
Meanwhile, in Brazil, the Port of Navegantes has been closed since October 4th due to adverse weather conditions. Additionally, ZIM has announced a General Rate Increase (GRI) for all cargo from East Coast South America, including Brazil. This is effective from November 1, with a quantum of $450 per container. However, as of October 21, some carriers have started reopening with certain draft restrictions in place. Despite these challenges, Brazil remains in its peak shipping season.
In Guatemala, the situation has been quite dynamic. The ports of Puerto Barrios and Santo Tomas de Castilla have recently reopened. This is after weeks of protests and roadblocks, providing some relief for shippers. On the flip side, the Port of Puerto Quetzal remains closed, adding complexity to the shipping landscape in the region.
As a result of these issues, machinery shipped from KAAST to countries in Latin America may be delayed.
Challenges Persist in Ocean Freight as Capacity Outpaces Demand
The dynamics of the ocean freight industry are showing limited signs of improvement in October. In fact, demand on most trade lanes remains relatively stagnant. This scenario is coupled with the continuous influx of additional capacity into the global fleet.
Alphaliner, a reputable industry source, reveals that the period from January 2023 through July 2023 witnessed the introduction of new vessels. These vessels amounted to a substantial 1.2 million TEUs added to the global fleet. This influx greatly outweighs the meager removal of less than 80,000 TEUs through vessel scrapping during the same period. The situation is poised to persist as another 1.2 million TEUs are anticipated to join the fleet by the year’s end. To put this into context, the previous single-year record for annual growth, which was observed in 2015, amounted to approximately 1.7 million TEUs.
A TEU twenty-foot equivalent unit is a measure of volume in units of twenty-foot long containers. For example, large container ships are able to transport more than 18,000 TEU (a few can even carry more than 21,000 TEU).
One 20-foot container equals one TEU.
As a result of this ongoing imbalance, overall vessel capacity continues to outpace demand, preventing significant and sustained rate increases. To adapt to this reality, steamship lines are making strategic moves. They are increasingly voiding sailings and employing a technique known as “slow steaming” to optimize their vessel capacity and reduce bunker costs. Additionally, full services, such as the PS5 and PN3 on the Trans-Pacific, are being suspended, while some services, like the TA2 on the Trans-Atlantic, are significantly downsized.
Consequences For This Freight Update
The consequences of these adjustments are being felt throughout the industry. Delays in transit times and cargo rollover on head haul routes are becoming more prevalent, exacerbating challenges in the supply chain. Furthermore, congestion of empty equipment at the origins of backhaul routes adds another layer of complexity.
The lack of stability in schedules and transit times presents a formidable challenge that is likely to persist for the foreseeable future. Stakeholders in the shipping industry will need to adapt to this evolving landscape as they navigate the complexities of the global trade environment.
While reliability is above pandemic levels, it has still not reached pre-2020 levels. Also, arrivals continue to be later than they were pre-2020; but are still much improved over 2020.