• Weekly Market Report

Transportation: Container Market Troubles

The Wall Street Journal reports that “…sagging global trade, rising fuel costs and stubbornly low freight rates have shipping lines facing new headwinds in an elusive search for stability.”

 According to the WSJ: “Shipping executives say uncertainty over the availability of cleaner fuels makes price estimates this year little more than a guessing game. “It has turned the shipping market, the transportation market, into a casino,” said Andreas Hadjiyiannis, president of the Cyprus Union of Shipowners.”

Reliability on trans-Pacific routes has been especially bad this year, according to JOC.com: “Schedule reliability for trans-Pacific ocean freight has plunged to new lows on the eve of crucial annual service contract negotiations that are already facing headwinds from shipper resistance to paying higher fuel costs tied to the International Maritime Organization’s (IMO’s) impending global low-sulfur fuel mandate…

According to two of the primary tracking instruments for carrier on-time performance, trans-Pacific schedule reliability fell below 40 percent in January despite a strengthening of freight rates on the Asia-US West Coast trade that rose above $2,000 per FEU as front loading ahead of the now postponed tariff increases combined with the pre-Chinese New Year shipping peak kept up demand…

That demand saw terminal operators in Los Angeles-Long Beach struggling with record container dwell times, a doubling of rail dwell times, and near-record truck turn times. LA-Long Beach handled more than 38 percent of US containerized imports in 2018, according to PIERS, a JOC.com sister product within IHS Markit. Volume has now begun to ease, and port sources anticipate full recovery by mid-March.”

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