Import Volumes from Europe Hit Pre-Pandemic Levels in Q1 Thanks to Rising US Demand
The westbound trans-Atlantic trade lane saw near-record TEU import numbers, virtually matching volumes seen in 2019 and falling 5% short of 2021’s record Q1 volumes. The import boom is thanks to a 10% year-over-year increase in US demand for European imports.
The first three months of this year saw import numbers from Europe reach 928,232 TEU, almost comparable to 2021’s record Q1 volume of 979,878 TEU. The import surge was slow to begin with, as westbound trans-Atlantic import volumes for January fell 5.9% year-over-year, followed by an increase in February of 20.13% according to data from PIERS. Preliminary data for March indicates a 17.3% increase in volume compared to March last year.
In the week starting April 8, FEU spot prices on this trade lane rose to around $2,000 per container from December’s spot price of just $600, with vessel utilization sitting at 75%. Despite the large spot market price increase, contract rates have stayed relatively stable in the last four months. With the uptick in container traffic, data from Sea-Intelligence Maritime Analysis shows that westbound trans-Atlantic schedule reliability dropped 1.2 percentage points in February, reaching 43.3%.
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US Freight Demand Lags Behind Improvements in Overall US Freight Economy
Despite growing signs that the overall US freight economy is improving, there have been little to no measured improvements in US freight demand as current demand is being absorbed by surplus truck capacity.
This means that even as import volumes build, there may not be a notable change in domestic full truckload (FTL) freight rates unless another source of demand enters the picture. Other sources could include stronger manufacturing or an increase in construction activity.
According to forecasts from the TD Cowen/AFS Logistics Freight Index, FTL rates for the second quarter of this year will drop to just 4.8% higher than the 2018 baseline after sitting at 4.9% in the first three months of the year. For comparison, the index’s truckload rates for Q1 2022 sat 25.7% above the same 2018 baseline, highlighting the current depression in truck rates.
Less-than-truckload (LTL) rates on the other hand are averaging much higher with a 2.4% year-over-year gain and Q2 forecasts reaching as high as 59.4% above the 2018 baseline.
Ocean Spot Rates Maintain Downward Trajectory on India-US Trade Lane
Data from the Journal of Commerce shows ocean spot rates from India’s West Coast to the US have continued to drop in April after the last two months of falling prices.
Compared with spot prices at the end of March, spot rates through to the end of April from India’s Nhava Sheva and Mundra ports to the US East Coast fell by between $200 and $400 per TEU/FEU. Prices have also fallen to the US West and Gulf Coasts but with a much wider variation in rates.
Data from Platts has put the average spot rate from West India to the US East Coast at $3,766 per FEU on April 10, a three-month low since a peak of $5,150 per FEU in mid-February. The mid-February peak is attributed to the uncertainty of trade security in the Red Sea, with India-US prices falling since then.
Although rates are currently depressed, trade lanes out of India are expected to strengthen as demand shifts away from China. Ocean Network Express (ONE) will be starting a new service from West India to the US East Coast, leaving Nhava Sheva on May 24.
Baltimore Announces Partial Port Reopening by End of April
The Port of Baltimore has announced that it will implement workarounds to begin processing limited quantities of ocean containers near the end of April, before the full reopening near the end of May.
The port has shown a rapid recovery since its closure to ocean carriers at the end of March. Although the diversions to other East Coast ports are not severely straining their operations, shippers are often the ones footing the additional transportation costs.
The US Army Corps of Engineers (USACE) has announced that before it clears the rest of the Francis Scott Key Bridge wreckage from the channel, it will open a 35-foot deep channel for a container-on-barge service between the Port of Virginia and Seagirt Marine Terminal. The temporary channel will also allow for some roll-on roll-off services to continue.
Port of Virginia Increases Operating Hours to Process Baltimore Cargo
The Virginia Port Authority has announced that its Virginia International Gateway (VIG) terminal will be extending its operating hours to cope with increased container traffic diverted from Baltimore.
VIG will now be open from 3 am until 6 pm on weekdays, and opening 8 am to 5 pm on Saturdays. The expanded hours will continue until the Virginia Port Authority sees that truck drivers can handle the cargo volume within normal working hours. Over 400 Baltimore drivers have temporarily registered in Virginia to move the diverted cargo, and the additional operating hours allow them a more time-efficient way to move more containers.
Some destinations in western Maryland and Pennsylvania may also benefit from Norfolk Southern’s rail services to the Virginia Inland Port in Front Royal, being a more efficient option than trucking diverted containers to these regions.
Photo by Jacob Meissner on Unsplash
