April 2023 – Market Update
Japan - Golden Week - Saturday, April 29 - Friday, May 5
China - Labor Day Holiday - Saturday, April 29 - Wednesday, May 3
- Fuel surcharge is trending lower. Capacity is increasing, giving shippers more flight options and flexibility. No significant delays. Most airports are running closer to normal with little congestion. The market continues to stabilize.
- “February demand for air cargo was 2.9% higher than pre-pandemic levels” and “international belly capacity grew by 57% February year-over year, reaching 75.1% of the 2019 (pre-pandemic) capacity” according to IATA.
- Terminal operations at Los Angeles and Long Beach ports were closed during last Thursday's (April 6) night shift and Friday's (April 7) day shift due to a worker shortage. Work resumed with Friday's night shift, creating more uncertainty regarding the pending labor contract that is still under negotiation (since July 2022).
- The Pacific Maritime Association (PMA), representing the terminals, said port facilities were closed because of coordinated action by the International Longshore and Warehouse Union (ILWU) Local 13 as contract talks continue.
- "These actions undermine confidence in West Coast ports and threaten to further accelerate the diversion of discretionary cargo to Atlantic and Gulf Coast ports. The health of the Southern California and state economy depends on the ability of the Ports of Los Angeles and Long Beach to stem this market share erosion," the PMA said.
- Meanwhile, the ILWU reported that the worker shortage was due to the monthly membership meeting held on Thursday evening and Easter weekend-related time off.
- Carriers are still dealing with an oversupply of capacity and continue to announce more blank sailings in an attempt to balance the demand with capacity and push rates upwards to levels for profitability. We will likely notice some results in the coming weeks as volumes from Asia to the USA will start picking up again.
- Average operating margins for the leading container carriers fell by a third to their lowest level in two years in the final quarter of 2022, following the severe decline in rates and demand. Following an average margin of 51.9% in the third quarter of 2022, the top 10 carriers reported a much more modest 33.3% for the fourth quarter, the lowest since Q4-2020, reported by Alphaliner.
- Due to low volumes from Asia to the USA, exports will be affected by low equipment availability and some disruptions to vessel schedules.
- We recommend booking early and checking vessel rotations to ensure your booking is still on track for the estimated departure date.