Market Update Q2 2024

THINGS TO CONSIDER FOR Q2 AFTER Q1 WILD RIDE: RED SEA, THE AFTERMATH


The Current Market


The Market has now settled down and the Red Sea operational challenges have been smoothed out, leaving only the usual operational challenges. What was previously excess capacity was deployed in the new shipping lanes being used around the Cape of Good Hope. Additionally, the schedules, while longer in some cases, have at least started to be more consistent. Rates are also coming down across the board, but from an elevated position, rates are still higher than they were, but are moving in the right direction. To summarize, within the last 6-8 weeks the container futures market has gone from very good in January to the low end of the median and moving further downward.


To steal a little bit from the economic jargon of the past months, a "soft landing" would be best for everyone at lower levels than the current. Carriers and everyone, I think, would be well served to find the balance point where we have sustainable service and rate levels. Consistency would create some efficiencies for everyone...


Demand in Q1 was quite good from a pure TEU lift perspective - up 23% YOY. However, in Q2 and for the rest of the year, we expect flat to down volumes, which does not bode well for the carriers (considering the number of vessels and capacity coming into the trade this year).


April negotiations will be quite contentious and set the stage for the rest of the year so we will keep everyone updated individually on progress. The carriers are working very hard to keep rates higher by doing several blank sailings next month and announcing massive rate increases (attached are some resources).


Space and Service


You'll note on the attached service rotation that carriers are blanking sailings to a high percentage in the coming weeks, which means we will continue to have some schedule disruption. Moreover, carriers are NOT filling vessels right now meaning the supply/demand ratio is weighted toward oversupply. It makes the space for PSW and PNW tight as well and creates a rollover situation in some cases. The attached Liner, Lytica publication, has a lot of carrier information in terms of capacities if you want to review it in more detail, but the summary is above.


Baltimore


The biggest news at present is the Francis Scott Key Bridge incident which shuts down Baltimore port for the near future and longer. This will not be a fast cleanup or resolution. This means we are in the improvisational stage which will simply be a lot of cargo being discharged in Norfolk and New York depending on carrier discretion. So far, we have seen carriers choosing NY over Norfolk in terms of discharge of arriving vessels, so we will likely be trucking your Baltimore cargo from there in the short term.


For our customers with heavier loads, we recommend bypassing NY/NJ if possible - Norfolk is the better option. If that is not possible, we will work with you individually on your specific needs and delivery plans. Simply put, the OWT situation in NY may be restrictive and transload options or load reductions may be required.


Expect trucking rates to increase in NY/Norfolk due to the demand imbalance.


Resolved operational challenges in the Red Sea are making way for consistent schedules and rates calming down. However, carriers are still working hard to increase their rates. There will be a lot of blank sailing in the coming months. The Baltimore Francis Scott Key Bridge tragic incident means bypassing NY/NY ports if possible as they work on repairing that laneway. Thank you for subscribing.


Author,
Matthew Crocker, CCO




Resources:

Linerlytica

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One The Next Growth Stage

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TP Service Rotation

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