WEBVTT
00:00:01.760 --> 00:00:06.480
Hi, and welcome to today's episode of Container Bites, your ten minute update on the latest in freight.
00:00:06.719 --> 00:00:10.960
I am Julia Frowine, as always joined by Judah Levine, our resident freight expert.
00:00:11.199 --> 00:00:12.240
Judah, how are you doing today?
00:00:14.480 --> 00:00:15.919
Yeah, doing a lot better than last week.
00:00:16.480 --> 00:00:18.640
Definitely less uh congested, so that's a win.
00:00:19.199 --> 00:00:20.879
If only portray less congested.
00:00:22.399 --> 00:00:23.280
That's freight humor.
00:00:24.960 --> 00:00:30.879
Speaking of which, things are escalating significantly in the Strait of Hormuz once again.
00:00:31.359 --> 00:00:34.240
And for freight, that means fuel costs are climbing again.
00:00:34.799 --> 00:00:38.880
So for ocean freight, fuel surcharges may be keeping the flaw for rates elevated.
00:00:39.039 --> 00:00:42.240
But for now, overall, rate levels are being driven by other factors.
00:00:42.479 --> 00:00:44.159
So let's start with the Trans-Pacific.
00:00:44.240 --> 00:00:46.719
Do we see this year's peak season coming to an end just yet?
00:00:47.039 --> 00:00:56.159
Yeah, so starting with fuel costs, there have been really significant escalations in terms of the attacks back and forth between Iran and the US.
00:00:56.560 --> 00:01:05.359
And when we see these escalations, you see often a direct impact on what crude oil prices are doing, and that usually has an impact on how fuel costs are behaving.
00:01:05.599 --> 00:01:19.599
In addition, we have some uh increase in Chinese demand for crude oil, which uh for a lot of the year um has been a big easing factor in terms of pressure on rates because there's been very little uh Chinese imports.
00:01:19.680 --> 00:01:22.000
They've been relying on reserves and things like that.
00:01:22.079 --> 00:01:25.439
So that's starting to push uh some demand up as well.
00:01:25.680 --> 00:01:29.519
In any case, we see bunker fuel prices back to where they were in June.
00:01:29.760 --> 00:01:34.079
Jet fuel prices are back to where they were in May, and both of these are about 60% higher than before the war.
00:01:34.159 --> 00:01:41.280
So we're not at the highs that we had kind of early on in the war, but rates are much uh higher than they had been really from May and on.
00:01:41.359 --> 00:01:50.079
We had starting to see uh uh prices cooling, and now uh they're they're increasing from lows they hit in in early July when there's optimism around the ceasefire.
00:01:50.319 --> 00:02:02.400
In any case, moving to ocean rates, as you said, you're not really seeing changes in oil prices uh um influencing changes in uh container prices because there are other forces that are having kind of a larger impact.
00:02:02.480 --> 00:02:06.719
But as you said, there probably is a higher floor because of what fuel costs are doing.
00:02:06.879 --> 00:02:15.919
So, in terms of Tran-Pacific, ocean rates cooled slightly last week, and that suggests that maybe there won't be any more increases until we get to the end of peak season.
00:02:16.000 --> 00:02:17.759
We're likely in the last few weeks, right?
00:02:17.919 --> 00:02:19.520
We have uh Golden Week coming up.
00:02:19.680 --> 00:02:28.159
It's possible there'd be some additional demand afterwards, but um, because peak season kind of started so early, it's likely that it won't, but of course, who knows?
00:02:28.319 --> 00:02:32.560
Um, but as we know, you know, peak season started early.
00:02:32.800 --> 00:02:38.319
We've seen rates kind of at peak levels and somewhat increasing, at least for the East Coast since early July.
00:02:38.479 --> 00:02:44.080
Current rates are at uh 7,600 uh per FU to the West Coast and 95 to the East Coast.
00:02:44.159 --> 00:02:48.719
So they're about back to levels that we've last seen in during peak season of 2024.
00:02:48.879 --> 00:02:58.560
Peak season during 2024, we had you know seasonal demand, but we also had red sea disruptions, which were absorbing uh capacity for the first time, and then that effect was at its strongest.
00:02:58.639 --> 00:03:06.319
There's also some front loading, so you had to have kind of multiple factors combining to push rates up this high last time, and that's what we're seeing this time as well.
00:03:06.560 --> 00:03:13.919
One of those factors, in addition to kind of the early uh demand, the surging demand, different um factors in terms of capacity.
00:03:14.240 --> 00:03:18.159
We also have really significant congestion in the Far East, which continues.
00:03:18.240 --> 00:03:27.520
We've had just a series of typhoons that have kept disrupting operations and causing long lines and long waits and effectively absorbing capacity and reducing capacity.
00:03:27.680 --> 00:03:29.360
So that's another factor here.
00:03:29.520 --> 00:03:46.319
There are carriers announced some uh additional blank sailings for for this week, and that's either to kind of to you know keep uh vessels fuel but full, but it might also be because carriers are um you know not going to make those sailings because of these delays because of that congestion.
00:03:46.479 --> 00:03:49.759
These are for kind of uh schedule recovery, which we might be seeing as well.
00:03:49.919 --> 00:03:54.639
Either way, those are factors which will probably help it keep rates elevated, even if demand is starting to ease.
00:03:54.879 --> 00:03:59.919
Okay, we've also seen the Panama Canal Authority has eased some restrictions planned for October.
00:04:00.080 --> 00:04:02.479
Is this good news for shippers that are on this lane?
00:04:02.800 --> 00:04:03.280
So right.
00:04:03.360 --> 00:04:08.240
So the the Panama Canal Authority is expecting um drought conditions.
00:04:08.400 --> 00:04:17.759
The Panama Canal operates on fresh water from a nearby lake, and they need to kind of conserve water in order to make sure that they can uh service as many vessels as possible.
00:04:17.920 --> 00:04:28.240
So the two ways of doing that is one, reducing the the maximum uh draft for per vessels that are passing, meaning that it uses only up to a certain amount of water.
00:04:28.399 --> 00:04:32.560
And the second one is reducing the number of transits to also use less water in that way.
00:04:32.720 --> 00:04:39.279
So the authority has postponed an additional half foot reduction in draft, which was meant for October 1st.
00:04:39.439 --> 00:04:40.319
It's been postponed.
00:04:40.399 --> 00:04:44.160
They they haven't announced a date, so that's a good uh sign.
00:04:44.480 --> 00:04:50.560
But they have reduced transits from what's normally 36 down to 32 already in September.
00:04:50.720 --> 00:04:53.519
Now for the big, the major container lines, right?
00:04:53.600 --> 00:05:03.680
So for Asia to the US East Coast, which is the major one, those are very large uh container ships, and most of those, or most of them are, and they usually go through the there are two different lanes.
00:05:03.759 --> 00:05:08.639
They go through the larger one called Neo Panamax, and that one's only been reduced by one um slot.
00:05:08.720 --> 00:05:11.439
So it's probably not the biggest disruption just yet.
00:05:11.600 --> 00:05:14.639
We do see some carriers have made some changes, right?
00:05:14.720 --> 00:05:19.439
They do have these draft reductions, so they can't carry as many containers as many they maybe they otherwise were.
00:05:19.519 --> 00:05:29.120
So we might start seeing some adjustments there, maybe including the you know, a limit on the number on weight per container or the number of heavy containers that they're able to take.
00:05:29.279 --> 00:05:41.360
Um, so so far it hasn't been, you know, as extreme as we saw the last time that we had uh the threat of drought back in 2023, but there are steps being taken, and there is still the expectation that it's going to be drought.
00:05:41.519 --> 00:05:51.920
It's possible that they've kind of started earlier with water levels higher in the lake than we did last time that to kind of spread out the restrictions to have uh uh less of a pronounced impact.
00:05:52.079 --> 00:05:58.480
There are still some surcharges by carriers announced for end of September or of October, so we'll see if those materialize just yet or not.
00:05:58.720 --> 00:06:00.480
And what about the Asia Europe ocean freight?
00:06:00.560 --> 00:06:01.199
What are rates doing?
00:06:01.519 --> 00:06:12.000
So for Asia Europe, as we said, we had an early start to peak season on uh across the East-West lanes, and those rates have kind of continued to come down, but only gradually since those highs in in early July.
00:06:12.160 --> 00:06:26.240
So Asia Europe rates ticked down slightly last week for both lanes to about 4,500 per FEU to North Europe and 47th to the Mediterranean, though prices this week have cooled further for the Mediterranean, so that now the two are about on part, about$4,500 or less.
00:06:26.319 --> 00:06:30.639
And these are well down from like$6,000,$7,000 per container back in July.
00:06:30.800 --> 00:06:37.920
Going back to 2017, in general, Asia and Mediterranean rates have been about 17% higher or more expensive than Europe rates.
00:06:38.000 --> 00:06:41.120
So the fact that they're back at the same level um is unusual.
00:06:41.519 --> 00:06:42.000
Okay, interesting.
00:06:42.079 --> 00:06:43.600
Why is there a difference in the behavior?
00:06:43.920 --> 00:06:45.519
So not exactly sure.
00:06:45.600 --> 00:06:46.560
There may be a couple things.
00:06:46.720 --> 00:06:51.120
One is that as we know, the some cars have started uh transiting the Red Sea.
00:06:51.279 --> 00:06:59.600
Again, at least on parts of their services, there have been estimations by sea intelligence that it's about 19% of Asia-Europe uh volumes are going through the Red Sea.
00:06:59.680 --> 00:07:10.319
A lot of these are going to the Mediterranean, so because there's this shorter distance, uh there's kind of an effective increase in capacity, and so we might be seeing rates come down for that reason.
00:07:10.639 --> 00:07:12.800
The other factor is congestion.
00:07:12.879 --> 00:07:22.399
So, as we said, you know, both these lanes, Asia, Europe and Mediterranean, are dealing with Far East congestion, but North Europe also has its own problems with congestion and hubs in hubs there.
00:07:22.639 --> 00:07:34.160
There have just been kind of chronic problems with congestion and North Europe hubs that high end will kind of the largest uh vessels, but they've also been dealing with low water levels in the Rhine, which has been backing up containers into those ports.
00:07:34.240 --> 00:07:40.959
And just this week there were two port labor strikes that were impacting uh those port operations as well.
00:07:41.040 --> 00:07:47.600
So this might reflect the difference there where North Europe is dealing with congestion kind of on both ends, whereas Mediterranean is only dealing with the origins.
00:07:47.839 --> 00:07:49.600
And lastly, let's move to some air cargo.
00:07:49.759 --> 00:07:51.920
There were several disruptions this past week.
00:07:52.079 --> 00:07:54.000
How have those impacted rates?
00:07:54.399 --> 00:08:06.560
Yeah, so in air cargo, unfortunately, there was an Amazon air freighter crash at Miami International Airport that shut down some runways there for but just temporarily, those have come back online.
00:08:07.199 --> 00:08:13.600
Um there is a major volcanic explosion in Indonesia that was shut down uh all airports there for some days.
00:08:13.920 --> 00:08:20.959
I think this started on Friday, and by Tuesday, most of the airports had been back into operations, but still disruptions there.
00:08:21.120 --> 00:08:24.639
Overall, though, in terms of air cargo rates, we haven't seen anything too drastic.
00:08:24.800 --> 00:08:34.399
From the Far East, we saw increases about 5%, both to North America and to Europe, about$6.30 to the US, and then$4.88 per kilo to Europe.
00:08:34.480 --> 00:08:37.840
Uh, these increases might reflect some of these ongoing disruptions.
00:08:37.919 --> 00:08:48.159
So especially those typhoons, which impact the airports in those regions, those might be um, you know, seeing some congestion and backlogs, which are reducing capacity and pushing rates up a bit on those things.
00:08:48.480 --> 00:08:48.639
Great.
00:08:48.799 --> 00:08:49.519
Thank you, Judy.
00:08:49.600 --> 00:08:50.720
That's all we have time for today.
00:08:50.879 --> 00:08:55.840
If you enjoyed the session, please hit the subscribe button and you will get notified about all our future episodes.
00:08:56.080 --> 00:08:57.600
Thank you for listening and have a great day.
00:00:01.760 --> 00:00:06.480
Hi, and welcome to today's episode of Container Bites, your ten minute update on the latest in freight.
00:00:06.719 --> 00:00:10.960
I am Julia Frowine, as always joined by Judah Levine, our resident freight expert.
00:00:11.199 --> 00:00:12.240
Judah, how are you doing today?
00:00:14.480 --> 00:00:15.919
Yeah, doing a lot better than last week.
00:00:16.480 --> 00:00:18.640
Definitely less uh congested, so that's a win.
00:00:19.199 --> 00:00:20.879
If only portray less congested.
00:00:22.399 --> 00:00:23.280
That's freight humor.
00:00:24.960 --> 00:00:30.879
Speaking of which, things are escalating significantly in the Strait of Hormuz once again.
00:00:31.359 --> 00:00:34.240
And for freight, that means fuel costs are climbing again.
00:00:34.799 --> 00:00:38.880
So for ocean freight, fuel surcharges may be keeping the flaw for rates elevated.
00:00:39.039 --> 00:00:42.240
But for now, overall, rate levels are being driven by other factors.
00:00:42.479 --> 00:00:44.159
So let's start with the Trans-Pacific.
00:00:44.240 --> 00:00:46.719
Do we see this year's peak season coming to an end just yet?
00:00:47.039 --> 00:00:56.159
Yeah, so starting with fuel costs, there have been really significant escalations in terms of the attacks back and forth between Iran and the US.
00:00:56.560 --> 00:01:05.359
And when we see these escalations, you see often a direct impact on what crude oil prices are doing, and that usually has an impact on how fuel costs are behaving.
00:01:05.599 --> 00:01:19.599
In addition, we have some uh increase in Chinese demand for crude oil, which uh for a lot of the year um has been a big easing factor in terms of pressure on rates because there's been very little uh Chinese imports.
00:01:19.680 --> 00:01:22.000
They've been relying on reserves and things like that.
00:01:22.079 --> 00:01:25.439
So that's starting to push uh some demand up as well.
00:01:25.680 --> 00:01:29.519
In any case, we see bunker fuel prices back to where they were in June.
00:01:29.760 --> 00:01:34.079
Jet fuel prices are back to where they were in May, and both of these are about 60% higher than before the war.
00:01:34.159 --> 00:01:41.280
So we're not at the highs that we had kind of early on in the war, but rates are much uh higher than they had been really from May and on.
00:01:41.359 --> 00:01:50.079
We had starting to see uh uh prices cooling, and now uh they're they're increasing from lows they hit in in early July when there's optimism around the ceasefire.
00:01:50.319 --> 00:02:02.400
In any case, moving to ocean rates, as you said, you're not really seeing changes in oil prices uh um influencing changes in uh container prices because there are other forces that are having kind of a larger impact.
00:02:02.480 --> 00:02:06.719
But as you said, there probably is a higher floor because of what fuel costs are doing.
00:02:06.879 --> 00:02:15.919
So, in terms of Tran-Pacific, ocean rates cooled slightly last week, and that suggests that maybe there won't be any more increases until we get to the end of peak season.
00:02:16.000 --> 00:02:17.759
We're likely in the last few weeks, right?
00:02:17.919 --> 00:02:19.520
We have uh Golden Week coming up.
00:02:19.680 --> 00:02:28.159
It's possible there'd be some additional demand afterwards, but um, because peak season kind of started so early, it's likely that it won't, but of course, who knows?
00:02:28.319 --> 00:02:32.560
Um, but as we know, you know, peak season started early.
00:02:32.800 --> 00:02:38.319
We've seen rates kind of at peak levels and somewhat increasing, at least for the East Coast since early July.
00:02:38.479 --> 00:02:44.080
Current rates are at uh 7,600 uh per FU to the West Coast and 95 to the East Coast.
00:02:44.159 --> 00:02:48.719
So they're about back to levels that we've last seen in during peak season of 2024.
00:02:48.879 --> 00:02:58.560
Peak season during 2024, we had you know seasonal demand, but we also had red sea disruptions, which were absorbing uh capacity for the first time, and then that effect was at its strongest.
00:02:58.639 --> 00:03:06.319
There's also some front loading, so you had to have kind of multiple factors combining to push rates up this high last time, and that's what we're seeing this time as well.
00:03:06.560 --> 00:03:13.919
One of those factors, in addition to kind of the early uh demand, the surging demand, different um factors in terms of capacity.
00:03:14.240 --> 00:03:18.159
We also have really significant congestion in the Far East, which continues.
00:03:18.240 --> 00:03:27.520
We've had just a series of typhoons that have kept disrupting operations and causing long lines and long waits and effectively absorbing capacity and reducing capacity.
00:03:27.680 --> 00:03:29.360
So that's another factor here.
00:03:29.520 --> 00:03:46.319
There are carriers announced some uh additional blank sailings for for this week, and that's either to kind of to you know keep uh vessels fuel but full, but it might also be because carriers are um you know not going to make those sailings because of these delays because of that congestion.
00:03:46.479 --> 00:03:49.759
These are for kind of uh schedule recovery, which we might be seeing as well.
00:03:49.919 --> 00:03:54.639
Either way, those are factors which will probably help it keep rates elevated, even if demand is starting to ease.
00:03:54.879 --> 00:03:59.919
Okay, we've also seen the Panama Canal Authority has eased some restrictions planned for October.
00:04:00.080 --> 00:04:02.479
Is this good news for shippers that are on this lane?
00:04:02.800 --> 00:04:03.280
So right.
00:04:03.360 --> 00:04:08.240
So the the Panama Canal Authority is expecting um drought conditions.
00:04:08.400 --> 00:04:17.759
The Panama Canal operates on fresh water from a nearby lake, and they need to kind of conserve water in order to make sure that they can uh service as many vessels as possible.
00:04:17.920 --> 00:04:28.240
So the two ways of doing that is one, reducing the the maximum uh draft for per vessels that are passing, meaning that it uses only up to a certain amount of water.
00:04:28.399 --> 00:04:32.560
And the second one is reducing the number of transits to also use less water in that way.
00:04:32.720 --> 00:04:39.279
So the authority has postponed an additional half foot reduction in draft, which was meant for October 1st.
00:04:39.439 --> 00:04:40.319
It's been postponed.
00:04:40.399 --> 00:04:44.160
They they haven't announced a date, so that's a good uh sign.
00:04:44.480 --> 00:04:50.560
But they have reduced transits from what's normally 36 down to 32 already in September.
00:04:50.720 --> 00:04:53.519
Now for the big, the major container lines, right?
00:04:53.600 --> 00:05:03.680
So for Asia to the US East Coast, which is the major one, those are very large uh container ships, and most of those, or most of them are, and they usually go through the there are two different lanes.
00:05:03.759 --> 00:05:08.639
They go through the larger one called Neo Panamax, and that one's only been reduced by one um slot.
00:05:08.720 --> 00:05:11.439
So it's probably not the biggest disruption just yet.
00:05:11.600 --> 00:05:14.639
We do see some carriers have made some changes, right?
00:05:14.720 --> 00:05:19.439
They do have these draft reductions, so they can't carry as many containers as many they maybe they otherwise were.
00:05:19.519 --> 00:05:29.120
So we might start seeing some adjustments there, maybe including the you know, a limit on the number on weight per container or the number of heavy containers that they're able to take.
00:05:29.279 --> 00:05:41.360
Um, so so far it hasn't been, you know, as extreme as we saw the last time that we had uh the threat of drought back in 2023, but there are steps being taken, and there is still the expectation that it's going to be drought.
00:05:41.519 --> 00:05:51.920
It's possible that they've kind of started earlier with water levels higher in the lake than we did last time that to kind of spread out the restrictions to have uh uh less of a pronounced impact.
00:05:52.079 --> 00:05:58.480
There are still some surcharges by carriers announced for end of September or of October, so we'll see if those materialize just yet or not.
00:05:58.720 --> 00:06:00.480
And what about the Asia Europe ocean freight?
00:06:00.560 --> 00:06:01.199
What are rates doing?
00:06:01.519 --> 00:06:12.000
So for Asia Europe, as we said, we had an early start to peak season on uh across the East-West lanes, and those rates have kind of continued to come down, but only gradually since those highs in in early July.
00:06:12.160 --> 00:06:26.240
So Asia Europe rates ticked down slightly last week for both lanes to about 4,500 per FEU to North Europe and 47th to the Mediterranean, though prices this week have cooled further for the Mediterranean, so that now the two are about on part, about$4,500 or less.
00:06:26.319 --> 00:06:30.639
And these are well down from like$6,000,$7,000 per container back in July.
00:06:30.800 --> 00:06:37.920
Going back to 2017, in general, Asia and Mediterranean rates have been about 17% higher or more expensive than Europe rates.
00:06:38.000 --> 00:06:41.120
So the fact that they're back at the same level um is unusual.
00:06:41.519 --> 00:06:42.000
Okay, interesting.
00:06:42.079 --> 00:06:43.600
Why is there a difference in the behavior?
00:06:43.920 --> 00:06:45.519
So not exactly sure.
00:06:45.600 --> 00:06:46.560
There may be a couple things.
00:06:46.720 --> 00:06:51.120
One is that as we know, the some cars have started uh transiting the Red Sea.
00:06:51.279 --> 00:06:59.600
Again, at least on parts of their services, there have been estimations by sea intelligence that it's about 19% of Asia-Europe uh volumes are going through the Red Sea.
00:06:59.680 --> 00:07:10.319
A lot of these are going to the Mediterranean, so because there's this shorter distance, uh there's kind of an effective increase in capacity, and so we might be seeing rates come down for that reason.
00:07:10.639 --> 00:07:12.800
The other factor is congestion.
00:07:12.879 --> 00:07:22.399
So, as we said, you know, both these lanes, Asia, Europe and Mediterranean, are dealing with Far East congestion, but North Europe also has its own problems with congestion and hubs in hubs there.
00:07:22.639 --> 00:07:34.160
There have just been kind of chronic problems with congestion and North Europe hubs that high end will kind of the largest uh vessels, but they've also been dealing with low water levels in the Rhine, which has been backing up containers into those ports.
00:07:34.240 --> 00:07:40.959
And just this week there were two port labor strikes that were impacting uh those port operations as well.
00:07:41.040 --> 00:07:47.600
So this might reflect the difference there where North Europe is dealing with congestion kind of on both ends, whereas Mediterranean is only dealing with the origins.
00:07:47.839 --> 00:07:49.600
And lastly, let's move to some air cargo.
00:07:49.759 --> 00:07:51.920
There were several disruptions this past week.
00:07:52.079 --> 00:07:54.000
How have those impacted rates?
00:07:54.399 --> 00:08:06.560
Yeah, so in air cargo, unfortunately, there was an Amazon air freighter crash at Miami International Airport that shut down some runways there for but just temporarily, those have come back online.
00:08:07.199 --> 00:08:13.600
Um there is a major volcanic explosion in Indonesia that was shut down uh all airports there for some days.
00:08:13.920 --> 00:08:20.959
I think this started on Friday, and by Tuesday, most of the airports had been back into operations, but still disruptions there.
00:08:21.120 --> 00:08:24.639
Overall, though, in terms of air cargo rates, we haven't seen anything too drastic.
00:08:24.800 --> 00:08:34.399
From the Far East, we saw increases about 5%, both to North America and to Europe, about$6.30 to the US, and then$4.88 per kilo to Europe.
00:08:34.480 --> 00:08:37.840
Uh, these increases might reflect some of these ongoing disruptions.
00:08:37.919 --> 00:08:48.159
So especially those typhoons, which impact the airports in those regions, those might be um, you know, seeing some congestion and backlogs, which are reducing capacity and pushing rates up a bit on those things.
00:08:48.480 --> 00:08:48.639
Great.
00:08:48.799 --> 00:08:49.519
Thank you, Judy.
00:08:49.600 --> 00:08:50.720
That's all we have time for today.
00:08:50.879 --> 00:08:55.840
If you enjoyed the session, please hit the subscribe button and you will get notified about all our future episodes.
00:08:56.080 --> 00:08:57.600
Thank you for listening and have a great day.
