Thunderbolt Global Logistics 2023 End of Year International & Domestic Transportation Update

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The year is ending in a turbulent way in the world of shipping.  War in the Middle East and Europe along with drought conditions in Panama have drastically impacted the maritime industry.  2024 is going to start off with a lot of uncertainty with the ocean carriers, especially on trade routes that utilize the Suez Canal and Panama Canal.

Looking back, 2023 started off with available capacity in most forms of transportation.  Space was not an issue from Asia to the U.S.A.  Rates were falling.  Truck capacity was available in most markets.  Port congestion was spotty.  Chassis were not always plentiful but there wasn’t a chronic shortage like there was in 2022.

Space was still tight from Europe, and RO/RO carriers that handle static cargo were booked out for month.   Rates came down from Europe in the summer and kept falling into the fall.  Space has opened up with the RO/RO carriers.

Some of the issues that haven’t gone completely away are:

  • High diesel fuel costs. Truckers are still charging fuel surcharges up to 40% or more in some markets.  Until diesel fuel costs go down, the fuel surcharges will remain high.
  • Return of empty import containers back to the terminal. In some ports there are restrictions on returning empty containers due to a lack of appointment availability.  Truckers have to hold the empty container until they can obtain an appointment to return it.  This adds costs to an import delivery.
  • Rail delays are happening from the west coast of the USA to the Midwest. Long Beach is having issues right now due to more volume being routed through the west coast due to delays at the Panama Canal.
  • Rail delays from Montreal going to the Midwest (Detroit/Minneapolis/Chicago) are really bad right now as the year ends.

VESSELS RE-ROUTING AWAY FROM THE SUEZ CANAL AND RED SEA VIA CAPE OF GOOD HOPE (COGH)

An escalation in drone and missile strikes on maritime ships passing through the Bab al-Mandab Strait at the southern mouth of the Red Sea has created uncertainty for global supply chains.  This has left shippers on the Asia-to-Europe trade lane, and to lesser extent, on the Asia-U.S. east coast, facing the possibility of sharp increases in ocean freight rates as most ocean container carriers re-route vessels around the Cape of Good Hope to avoid the Suez Canal.  This will add 3 plus weeks of transit time and add’l costs.  This is especially true for shipments to Europe.  This could add inflationary pressure if ocean rates go up sharply.

Operation Prosperity Shield was created just over a week ago in light of the continued attacks on commercial maritime traffic in the region.  This is an enhanced naval protection force operating in the southern Red Sea in an attempt to ward off mounting attacks from Yemen’s rebel Houthis on merchant shipping.  Houthis have been launching drone and missile attacks from the areas of Yemen they control.  They have also captured a few vessels and are holding them hostage.  This is in response to the war in Gaza.  They are firing on any vessel they believe has Israeli ownership or will call on an Israeli port.  A lot of the data they are referencing is old and is inaccurate.  Vessel and crew safety is of the utmost importance.  Hopefully, the show of force will reduce/eliminate these attacks.

Countries besides the U.S. participating in the effort include Bahrain, Canada, France, Italy, The Netherlands, Norway, Seychelles and Spain.  Saudi Arabia and Egypt are not participating which is disappointing.  More countries should participate as 15% of world trade passes through the Suez Canal.

Maersk Line has just announced they will resume utilizing the Suez Canal route with this added protection.  CMA CGM is allowing some of their ships to pass through the Suez Canal with protection from French Naval forces.  As of this writing, the other major container carriers have not changed their plans.  Hapag Lloyd and Mediterranean Shipping have rerouted all their vessels and are sailing around the Cape of Good Hope (South Africa).

EUROPE TO THE UNITED STATES

Space is readily available on container vessels from Europe to the United States.  Some capacity has been withdrawn due to the downturn in rates.  We are seeing delays out of Poland on feeder vessels that marry up with the main vessels sailing to the USA from Rotterdam or Hamburg/Bremerhaven.  Vessel schedule integrity is still a problem nearly everywhere as we see delays regularly from most European ports.

The RO/RO mafi carriers that call North Europe had space issues throughout most of 2023.  We did see space open up in the latter part of the 4th quarter.  We do hope that this situation continues to improve in the 1st quarter of 2024.  They are critical to moving oversize cargo on their vessels.  The Port of Baltimore is the number 1 port for RO/RO cargo, and with that static cargo can ship to Baltimore for delivery to points in the Midwest for imports, and for exports out of the USA Midwest to destinations in Europe and elsewhere.

The availability of empty containers at inland depots in Europe can be challenging.  It can vary from week to week.  The ocean carriers’ control what they want to do with the equipment.  When needed, our partners in Europe will pick up empties as close to the loading location as possible.

Hopefully we will see rate stability from Europe in 2024, but the situation in the Red Sea could cause rates to go up from Europe too.