North America Freight Market Update Live

The below transcript has been generated by an AI system and may contain inaccuracies, errors, or omissions. While efforts have been made to ensure the accuracy of the content, the AI-generated transcript should not be considered fully reliable or definitive record.

Nathan Strang

Hello, everyone. Welcome. Happy Thursday, and welcome to this month's freight market update. My name is Nathan Strang.

I am a senior account executive, here at Flexport. We got a great webinar for you today, but before we get into it, we're gonna do a couple of housekeeping items.

So on your screen, you're gonna see the main stage with our slides, and then you're gonna see a sidebar where Carol just posted a little bit in the chat. Over there, you get the chat, which is gonna be kind of for some administrative updates.

Anything that pops up during the during the webinar, announcements, things like that will go in there. Then if you go over to docs and click on that, you can see that we have a couple cool things in there.

First is webinar on the nineteenth that you should definitely all check out. That is for tariff trends.

So our our great customs, and trade advisory team will be hosting that webinar. Those are always great.

You know, highly recommend attending those. Then you have Flexport Atlas.

You're gonna see a couple screenshots from Flexport Atlas today. That's our global visibility tool.

You can track all the vessels, container ships around the world and also check out, disruptions that are happening, in the logistics landscape. And then, of course, today's slides.

So if you click the the bottom link in the docs, you can see today's slides and download those for your, your use internal to your company. We also have q and a.

This is my favorite button. So go ahead and click that, drop any questions you have in there, and then we'll leave time at the end of the webinar for us to get to those. Alright.

And now, as always, a brief legal note. Please keep in mind that all information provided in this session is based on the situation at this current time and may not be customized to your specific business requirements.

We always recommend reaching out to a Flexport expert to discuss your particular situation. Alright.

Joining me today, our usual lineup, myself, Nathan Strang, and then we have Kyle Bolu. He is senior director and head of Oceans Americas at Flexport, and David Grenewald, who is regional director for air freight.

Our Rona show today, I'll be giving an operations update. I'll hand it over to Kyle for TPEB and then David for air freight, and then we are going to get into q and a.

So, again, drop those questions. Now for an operations update.

So I want to start with a couple things that are hitting the the, the freight world, some shipping impacts. So on the left side of the screen, you can see, a map there that is, Asia, China, coast, all the way down to, you know, Indonesia.

And what you're looking at there are container ships, vessel traffic. And if you look kind of in the center of the screen, you can see a big gap, where there should be ships.

What that is is that is, Typhoon Dolphin that impacted the ports of Shanghai Ningbo in that port area, over the weekend or earlier in the week. And you can see the vessels stopped.

So you see them clustering north and south of that location around the coast of Korea, and then down closer, to South China. So it pretty much put a stop to operations in the regions for about three days.

Ports opened up fully. They were both back full operations kind of early Wednesday morning local time, but it did stop operations in there. You know, if you if you looked at the next day, you'd see the vessels kind of move back in.

But that was one disruption that we saw in in Asia, and it's gonna be kind of a little bit more as we get further into typhoon season. And then on the right side of the slide, we had the Panama Canal.

So this comes up every couple years. It's, it's, due to water restrictions and draft depth, but there's been a very large backup at the Panama Canal.

So what you have there is a C SPAN benefactor. That vessel actually paid, at auction.

So there's a couple different ways that vessels can get slots to move through the Panama Canal. One of them is by auction where you go in and place a money bid on on a slot.

They bid a $4,000,000 bid to move up basically in their transit time. And they're actually still waiting.

Their their transit isn't for another couple days. And $4,000,000, 10,000 TEU ship.

Right? $400 at TEU. But it was a commercial decision on the part of the carrier. The carrier that that controls the vessel is ONE and that alliance.

Commercial decision on the part of the vessel to pay that fee to get the vessel on schedule, deliver the cargo, and turn it around. So, you know, that's that's pretty interesting.

We don't see a lot now. I mean, auctions are normal, but an auction price that high, especially for a container ship, isn't something we normally see.

But if you look at the weight, booked vessels, there's 72 booked vessels that are are getting ready to transit, but there's 31 vessels that do not have a booking but are scheduled to transit or at least as part of their, their voyage plan and are looking for slots. When I took this screenshot, the there was only one, slot available, until the second week of September, and that slot is now gone.

So there are no more additional slots, so those 72 are gonna get through. But the rest is gonna be pretty, pretty difficult.

And then the longest waiting ship right now, at least at the time that I published this, was thirty three days for a chemical tanker. Waiting thirty three days for for a northbound transit.

So northbound Pacific side to Atlantic side. So that's the longest wait vessel right now.

So big backup there, and that's why you're gonna see things like Panama Canal surcharges coming up from from some of these carriers, suggestions for rerouting. Also some weight restrictions being put in or vessels deciding to light load so that they don't have to, wait for water levels to go through.

So keep an eye, especially if you're going into the ports of Houston, Tampa, Mobile. This could definitely impact your your transit times.

But, it's something that we have that we're we're displaying live to all of our our customers. So you can you should be able to see it in your quotes.

But, also, if you have any specific questions, any projects coming up, any questions on rerouting, reach out to your Flexport expert. We will jump on with you and give you some options such as, you know, going on rail via the West Coast, which is a viable option.

Alright. Now I'm gonna kinda get into an operational impact update. A little bit of change of the slide here from from how we've done this before.

This is actually a screenshot of the Flexport Atlas program. So I think this is pretty cool.

All those little, dots you see on there, the colored the blue dots are all ships, container ships specifically. And then if you look at the balloons, those are all kind of, incidents.

If you can hover over them, you'll get little news stories. But just wanna kinda hit where we're where we're at here for, some operational impacts.

In the Pacific Northwest, if you've been watching the news or you live in the Northeast portion of the of The United States, you've been noticing a lot of wildfire smoke. Those wildfires are impacting rail operations out of Prince Rupert and Vancouver.

Not substantially to the point of fully shutting down, but trains do have to stop while a wildfire moves through the track edge areas and then can continue. Smoke also does impact visibility, slows trains down.

The ports are operating just fine, and trains are getting through, but expect a couple days delay, moving out of the PNW. LA Long Beach is relatively fluid.

We're seeing pretty good cargo operations there. 73% of cargo is moving through the port in four days and less.

Slightly below where they wanna hit. They generally wanna be around 80%.

But for what we're seeing in terms of cargo surge, it's not doing too bad. Where we are seeing some backups, again, because of reroutings, little bit of backup at transload, warehousing, trucking, things like that.

But local cargo and rail cargo is departing, generally on time. We already mentioned the Panama Canal, so I'll just move over to the East Coast.

There was a cyber attack that import impacted the port of, North Carolina. Not a very big port, but just something to look at and just something that's always in the, back of our minds is is cyber vulnerabilities as always.

Europe, as if it didn't need more kind of, with cargo surges and and backups at ports, if it didn't need more delays, the Rhine River is is drying up. A lot of cargo moves inland on barge services in Europe.

So when the rivers, you know, kind of back up or dry up, it causes cargo to back up. So that's something to keep an eye out for there and look for cargo alternatives.

A lot of cargo. A lot of ships go into Africa now. Very important trade, coming up.

A lot of services are are calling there more. In The Middle East, I'll have a slide on that on on the next one, where we can cover that a little bit more.

But we go over to India, surge in cargo out of there that has also coincided with monsoon season. So you're gonna see some delays moving out of India, and also kind of a surge in prices and dropping capacity.

And then we already kind of hit the Asia weather delays. All right.

What we're seeing in The Middle East and the Strait Of Hormuz, not gonna spend too much time here. I think everyone, you know, if you're on social media at all or follow the news at all, you kinda know what's going on.

And it's a little bit of of the same old, same old. Nothing's really changed.

The straight is still effectively closed. We're only seeing about 5% of of normal traffic moving through there.

So are there ships moving through? Yes.

Few and far between. What's kind of kicked off again, though, is the Red Sea. So we saw a vessel hit by a projectile, on the eleventh off the coast of Yemen.

Three seafarers were killed as the deadliest strike of the year. So that's gonna cause backlogs.

We saw, already start to see a drop in Red Sea traffic and Suez traffic. So I don't think that's gonna be a viable alternative for container shipping anytime in the near future.

And then, of course, bunker prices. So bunker prices are still very elevated.

This is the global for average bunker price that's being displayed as of the tenth, and that is 51% higher than we saw pre conflict. So still the major news story, you know, lack of of ability to use the ports in the Gulf, fuel, access, and then, of course, the Red Sea in Suez is still a a major player in everything that's going on.

So these choke points, either the Suez, the Straits Of Hormuz, the Panama Canal, you know, all these things are kind of adding up to add those little delays and those those little things that keep chipping away at schedules and impact reliability. And with that, I will hand it over to Kyle.

Kyle Beaulieu

Thank you, Nathan. Just to make sure wanna make sure we're all connected here. Okay.

So we're gonna talk a little bit about TPEB supply, and then we'll talk about the ocean market overall. So on the supply side, there is good news.

So the TPEB supply is there, just not necessarily enough for current demand. So deployment is operationally at full capacity.

You can see in the graph that total TU is slightly elevated week over week from 2026. Despite the high total deployment, service disruptions remain a factor of life on the trade.

So every week, 10 to 15% of standard services are blanked, either due to systematic blanks or vessels being out of position. So the systematic blanks aren't new.

If you've joined previous FMUs, we've discussed that some services just don't have enough vessels for full weekly deployment, and the blanks are built in reality. And during these periods of high demand, those blanks are really felt.

Compounding challenges is extra congestion that places vessels out of position. So Nathan spoke to this a little bit in his slide about some of the operational delays, in Asia.

So there is congestion from demand across Ex Asia, but also the port congestion from the weather, is absorbing capacity in the region. So according to liner lithica, more than 2,400,000 TEUs of container ship capacity was stranded over recent after recent typhoons, which according to their tracking, in North Asia, that put it higher than during COVID times, which really said something.

We also tracked in Flex four Atlas, that loading on over a million TEU was impacted over the three to four day period in Shanghai Ningbo during the recent typhoon Dolphin. So this is having an impact in getting vessels loaded.

So it's either causing delays, and getting that those containers out, or in some cases to to make up schedules, carriers are skipping these ports, which leaves, boxes stranded as well and only builds up congestion. All of that is to say that compounding conditions has impacted the flow of containers out of the region.

The good news is there are periodic exer loaders. So over five are expected this month so far.

Most of these are to The US West Coast, and those are helping exit cargo, and a couple of them will also be going to the Shanghai Ningbo region, which should help, with with some of the recent challenges there. The conditions to The US East Coast and Gulf, are worse, than standard services on the trade.

So, Nathan also spoke to the Panama Canal. That draft allowance or that decreased draft allowance, has resulted in more weight restrictions on some services.

The vessels are just, running out of, space to to load those heavy containers, and so that has, put restrictions if your cargo is heavy. And, also, this month, Panama Canal surcharges have entered the market, in August, and those will continue into September or sorry.

Yes. Into September. Thought I misspoke there. So on the TBEB supply side, it's a mix.

You can see that overall, total deployment is high, but it's not necessarily high enough for the demand that's out there. And there's impacts across the board, that are making that deployment not necessarily as effective as it might otherwise be.

On the rate side, there has been quite a bit of market movement in August. Unfortunately, that movement has mostly been upwards.

So the market overall has been resilient, and demand has continued at a steadily high clip. There was a temporarily rate temporary rate reprieve in July in the trade, which hinted that we might have been at the peak, but demand stayed strong and rate increases did resume in August.

They can be seen here across most major import trades. Here represents from Asia.

But others like ISC to North America have also seen increasing rates in August as well. The peak levels of 2026 have now surpassed all 2025 and most of 2024 as well.

As far as outlook goes, it is really trade dependent. So, globally, there is a tight balance of supply and demand across multiple trades.

They're in high high demand, whether you're coming to The US or going to another region. For TPEB, carriers have thankfully put in additional capacity with upsized vessels on strings and the XL loaders that I mentioned in the market.

But as we discussed, other conditions have impacted sailings. And the trade is competing with other trades that have also have healthy demand and high high rate levels.

So they can't necessarily pull vessels from other trades because they also need them there as well, and they're also, at healthy levels too. Overall, conditions are expected to continue into September.

So there are healthy loadings for August or bookings for August, and the accelerators will help, but they're not expected to overtip the balance on the supply side. And then looking further afield, we do have Golden Week coming up in about six weeks, which traditionally does bring an uptick in demand as well in September.

So we could very well be looking at general space restraints into early October. Hopefully, not as tight, as we're seeing in August, but, that'll be determined as we get closer to September.

So that's it for the ocean side. Now I'll hand it over to David for an update on the air market.

David Grinevald

Thank you very much, Kyle. Hi, everybody.

I am David Grunewald, air freight director here at Flexport. And together, we're gonna take a look at what has the air market been for the past couple of weeks.

Overall, what we are seeing is that the rates are decreasing. However, we're looking at a very fragmented and localized market.

So, yes, global air cargo spot rates did fall for the second consecutive months in July. And we're also seeing a deceleration of the growth of tonnage.

The, worldwide chargeable weights have rose have risen five percent year over year in July, but which is down from the 9% that they had grown in June. Like I said, we're seeing a very localized picture for demand.

China and Hong Kong to Europe, tonnages obviously fell for a six consecutive week following the, the EU July 1 equivalent of the de minimis rule change. However, other origins like Taiwan, Vietnam, South Korea are still being very much pushed by the AI hardware volumes and the high-tech volumes, allowing them to stay very firm.

What we are not seeing, however, are signs of a peak season this year or at least, you know, I think it's probably early to say there will be no peak season, but it is not showing in the same sort of of tails that it usually does. And so we're still kind of waiting to see if shippers are going to show a stronger interest in peak season charters.

Now we're going to do our usual, update on the situation in The Middle East. What we are seeing this week is that the European Aviation Safety Agency has extended its conflict zone guidance over the Persian Gulf through the end of August.

The the, the airspaces of Kuwait and The UAE remained the tightest, where restrictions are are most strongly in place. And, of course, we're seeing Saudi and Oman absorb the load that used to go over there.

You can see on on the right side of the slide that the the perimeter around Iran where, aircrafts are not allowed to go is kind of reducing week over week, but it's still very much an ongoing situation there. And on the capacity side, I think it's it's safe to say that the big airlines like Emirates and Qatar have added back a lot of frequency, but we are still seeing the regional capacity running about 11% below its pre conflict baseline.

Alright. Let's take a look at jet fuel cost. If you're looking at this slide here, on the top, right side of the slide, you'll see that you'll see pretty much the entire story.

Right? I mean, we we went down a lot from the peak, at the beginning of the conflict. It was at its lowest when we had the memorandum of us of understanding between The US and Iran.

And then once that that ceasefire sort of did not hold as we were expecting it to, the price rose again. Now they are on the way down once again since since, I wanna say early July.

However, airlines are taking a lot longer to to show sort of the decrease in the fuel surcharge as they were to to increase it when the fuel was going up. You'll see on our on our table there where we list sort of the main, airline surcharges, they're all going down, though not at the same not not at the same rate.

Right? And and we're seeing some already in the in the low twenties while other, companies are still charging over a dollar, per kg. And and as I'm sure every everyone knows, this is still a geopolitical wild card, and and everybody will be monitoring the situation in the weeks to come.

Alright. I'll go very quickly on on the overall rates analysis because, like I said, I think this week, the most interesting part is to look at sort of the origin specific situation because we are looking at a different situation based on different origins. But overall, the rates are are stabilizing.

They're sort of grinding lower rather than snapping back. And even though most of the market expects the rate to keep on declining for the rest of summer, I think we also expect that the way down will come in small steps, given the the the conflict in Iran and the jet fuel volatility, which we just covered.

An interesting, sort of tendency we've already mentioned during the FMU live is we're seeing a lot of freight moving on spot. I think it's anywhere between 5060% of the air freight is currently moving on spot.

And for those shippers that are contracting, they're actually trying to keep their contract shorter. And we're seeing less and less of the long term contracting happening in air freight right now as I think shippers are just sort of wait sort of in a wait and see position.

Alright. So now let's let's kind of look at what's going on, in the main origins mostly in in TPEB. So as you can see, the Indian Subcontinent and Korea are are both sort of the two most complicated origins right now.

The Indian Subcontinent is is linked to what, Kyle and Nathan mentioned earlier. The ocean conditions out of India have been complicated.

It's been hard to get SOs out of the Indian ports. And so a lot of shippers are reverting part of this cargo, to air, which which has obviously sustained demand.

In Korea, it's a bit of a different situation. Not only is the demand strong with a lot of AI hardware coming out of Korea, not just Taiwan, but there there has been a very dire congestion at the airports in South Korea, which had been sort of walked through two weeks ago and seems to be very much back.

So if you're shipping out of these two origins, that's probably where most anticipation will be needed. When it comes to North China, well, the same weather events that nation Nathan mentioned, are affecting, the air cargo as well.

A lot of flights were canceled out of Shanghai last week, and those that were able to take off were able were were not able to take as much freight for obvious payload restrictions due to the detours they had to make in order to get around the typhoon. Taiwan still obviously sustained by the same, AI hardware demand that we mentioned on every FMU Live.

So I'm sorry if it's starting to sound like a broken record, but seems like AI is with here to stay and is gonna be with us for a little while. And, and then Vietnam, Vietnam and and Cambodia have seen, demand softening out of Vietnam, even though the rates are up because of fuel cost.

And that's going to be about it for air. We can probably now go to q and a.

Nathan Strang

Alright. Here we are. Q and a. Alright.

A lot of good questions coming in. You can keep them coming in.

We got about seven minutes of, of time here for q and a. I'm gonna start out with one.

There was a question that came in pretty early on, Pakistan transport strike update. So this is a developing situation.

There was a announcement yesterday from the trucking, unions in Pakistan that they would go on strike due to a fuel surcharge that was imposed, directly related to the conflict in The Middle East. That's about all that's happened so far is an announcement, and we have not seen any official government notices.

We haven't seen anything from our local partners. We haven't seen anything from, on the news, but an announcement was made.

And and a lot of times, you know, you'll get the announcement and then it'll move into an action later, but we haven't seen anything further. So, yes, an announcement was made for Pakistan about a, truck driver strike, but we have not seen any any action taken.

Maybe over to Kyle on Panama Canal.

Kyle Beaulieu

Yeah. I'll take a couple, questions related to the Panama Canal.

So first one, if you're going through the Panama Canal, do you get charged per containers at per cubic foot? I believe this is referring to some of the surcharges that have entered the market.

And so with this, it's generally per TEU. So, you get charged a different rate for a 20 foot container versus 40 foot container.

Related to that question on the Panama, so with vessels transporting less weight, and this was due to weight restrictions there, do you think it'll cause a delay in booking containers? The short answer is yes.

So in in two ways. So first, if you do ship heavy, you you have less options. So so certain carriers, won't even take over a certain weight, and some carriers are placing restrictions on how much they they will what they will take.

In addition, the the weight restrictions do mean that carriers can't transport as many containers per vessel. So let's say, because of restrictions, a carrier has to ship a thousand teas less on its vessel to make sure that it can make it through the Panama Canal, with recent draft restrictions.

Overall, that's a thousand t's, that that weren't able to be booked on that vessel, which sort of builds up demand as well and causes a delay, in booking. So I'd say those two factors will would come into play, in this scenario.

And it's one and both of them we are seeing out there out there today. Nathan, I believe you have a cup another operational question on LA.

Nathan Strang

Yeah. LA rail. Are we seeing, any delays at LA Long Beach moving containers from the port to the rail? Not from the port to the rail.

We're seeing good transit. You know, they're they're loading onto the trains. So it's about two to three days delay, for on dock, about four days for off dock, which is relatively within normal.

A little bit elevated for for off dock moves of four days. We are seeing some delays in train dispatch.

So overall, so from the time the vessel the vessel arrives until the the train leaves, we're seeing up to seven days, of wait on that. You can follow that along if you go to, flexport.com and go to our resources section and go to the global logistics update.

We publish those numbers every week. So there is a a dwell statistics at the bottom.

So LA, slightly delayed. It's not increasing very fast, though. But if you're looking at other ports on the West Coast, Oakland is fluid.

Pacific Northwest is fluid. Canadian ports are fluid. So those are moving pretty well.

To Kyle's point, though, you know, more containers, coming through the Panama Canal or going around the Panama Canal. We could see some more containers coming into LA Long Beach, and those would be going on rail or on transload, which will which could compound those factors if if more containers are coming through.

If you if you have to light load your containers, you generally go from three to four. You don't just, you know, not ship cargo.

So, we're gonna be keeping an eye on that as as, you know, the those situations continue to back up.

Kyle Beaulieu

Take another question. Question is I expect the demand on TPEB to drop after the tariff deadline in July, but that that does not seem to be case.

Any explanation for the continuing high demand? You know, I do think that was that was certainly a factor, in the early, really the early start of this peak, and it's continued longer than most people expected.

I think the additional factors that are play is replenishing inventory levels. Right?

There's many reports out there, overall low inventory levels, for the year and then getting ahead, of replenishing stock before the holiday season. So and, overall, I think in in August, levels across different industries have have remained high, from the big big retailers, to to smaller companies as well.

So it's a mix of factors, sort of similar to when it really started. The big question is was why, and there was multiple different reasons for it, cross trades.

Nathan, another typhoon question.

Nathan Strang

I'll take yeah. I'll take one on the typhoon.

So, it said, from Kelly, any information on typhoon delays? Yeah.

So a little bit more on that. Like, how how long are the actual delays?

And then and this is always one of those things we hate in logistics because it's the it depends, answer. But overall, how long were vessels just stopped for and how long were the terminal shutdown is is a little bit informative.

So about six days total of vessel delay. So if you think about four to four to six, so about four to six days delay of vessel delay, that compounds pretty quickly because, obviously, there's still containers coming into the port.

There's still containers that need to move. There's still empties that have to go out of the port.

So, yeah, about, you know, on the on the on the normal side, I'd say about a week, for vessel delay up to two weeks. Now vessel delay does not always translate into cargo delay, because bookings can move.

Sometimes you can slide to an earlier vessel. Sometimes you have to slide further into a much later vessel.

So trying to equate vessel delays specifically to a cargo delay does involve other factors such as the trade you're on, your your port of destination, which carriers you're using, etcetera. So it's a little bit hard to add, answer that directly.

But, yeah, about a week of delay for for most shippers out of out of Shanghai, Ningbo due to the due to the storm. It kind of took a perfect path in terms of cutting across the shipping lanes, whereas it it if it and it was a little bit, you know, a little bit slower, so that caused a little bit more delays than than normal.

But the port is back operating again, and vessels are loading. We got any more?

I think we're that's about it. We're also almost at about time.

So, thank you all for coming, this month again. If you wanna sign up for the next, next one, you can you can find those links on flexport.com.

Also, if you notice at the beginning of this, I my title has changed. I was director of Ocean Freight.

Now I'm a senior, account executive. So I will still be seeing a lot of you just in a different capacity, but, I will not be joining you, on this webinar, at least as a as a scheduled, scheduled host anymore.

So after five years of of hosting FMU Lives, this will be my last one as a as a regular host. So thank you all for joining.

Please continue to join, and I will absolutely still be seeing all of you all, around Flexport. So thank you all again, and have a great week.

And we'll see you next month on FMU Live. Bye.