Ocean Export Market Update – Week 48, 2022

This Ocean Export market letter will address the top issues facing US exporters as we approach the final month of this year. 

Market Conditions – Removal of Export Capacity  

Much of the recent industry news has been bringing attention to the drop in overall import volumes and rapid improvement of port congestion issues particularly on the US West Coast ports. With the decline in demand, carriers have been responding with attempts to manage capacity and actively reduce capacity.  The removal of capacity will impact not only import volumes but by default will also remove export capacity from the market. As reported earlier in November, the Port of Long Beach indicated that as much as 15% of its export capacity is tied to cancelled vessels in Q4. It is expected that there will be more unannounced cancellations coming. Quite simply if there is no import vessel arriving – there is no export vessel departing. We are seeing multiple carriers voiding sailings several weeks in a row. 

US Rail Strike – Uncertainty remains 

Out of the twelve total rail unions, eight have voted to ratify the contract, but the remaining four (the Brotherhood of Maintenance of Way-Employees Division (BMWED), the Brotherhood of Railroad Signalmen (BRS), the International Brotherhood of Boilermakers (IBB) and the Transportation Division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) have now voted against it. Which means that it is possible for a union to strike as early as December 9th with the risk that the others would likely join the strike action. Industry groups have been pushing for lawmakers to intervene. Earlier this week President Biden called on Congress to pass legislation to “adopt the Tentative Agreement between railroad workers and operators—without any modifications or delay—to avert a potentially crippling national rail shutdown.” Meanwhile rail operators will continue preparing for the possibility of a disruption including potential embargoes on shipment of certain materials. 

Union Pacific – New Intermodal Seal Requirements - Effective December 5, 2022 

Earlier this fall, the UP announced that “In order to reduce industry thefts, Union Pacific will require theft-deterrent or barrier seals (minimum 1/8 cable or bolt seal) on intermodal shipments beginning December 5, 2022”. In addition to UP requirements, we are aware that several export destination countries including India and Brazil have implemented similar requirements. To avoid adding increased complexity in attempting to customize seal requirements based on multiple railroads and/or destination requirements, we recommend using the required high security seals for all of your containerized export shipments. 

China COVID Lockdowns 

Concerns regarding supply chain uncertainty and disruption continue with increased reports of large protests and demonstrations regarding in China’s covid lock downs. Anti-covid protests have spread to major cities including Beijing, Shanghai, Chengdu, Chongqing, Nanjing, Wuhan, and Xi’an. Most experts indicate it’s still too early to make any conclusions on how seriously the protests might impact shipping. We will be closely monitoring and will advise relevant updates accordingly. 

Mega Ships 

COSCO has added to the ordering spree for ultra-large container ships with the signing of recent contracts for 12 24,000 TEU vessels.  Delivery of these vessels is expected between early 2027 into mid-year 2028. These orders in addition to similar orders from other carriers will bring the number of container ships over 17,000 TEU on order globally to approximately 60 vessels totaling almost 1.4mm TEU – an equivalent to nearly 40 percent of the current existing fleet capacity in this vessel size. 

Laufer-IQ 

Following its initial launch last year, Laufer’s new online pricing and booking tool, Laufer-IQ, continues to surprise, impress, and delight exporters. Specifically designed with forest product exporters in mind, our online tool, enables exporters access to: 

• Rate Matrix – Instantly access ocean export pricing when you want it: 24/7/365
• Online Booking Request – Find a rate and routing you like? Book it with the click of a button.
• Booking Confirmation Status – Timely and accurate notification of the status of each of your bookings

Interested in learning more? Please contact your local sales representative or Marc Van Gorp for additional information about Laufer-IQ or any other export questions you may have.  In the meantime, please check out laufer.com for more news and market Insights.