Freight Market Update: Aug 28th, 2024

Asia

Rates

• 1st September GRIs are pushing spot rates up to levels varying between USD4700-5200 per 40' ex base port China to AUEC.
• MSC revised their 1st Sep GRI from USD500.00 per TEU to USD1000.00 per TEU. This is effective for all cargo from China, Hong Kong, Taiwan, Japan, Korea, Cambodia, Thailand, Vietnam, Malaysia, Myanmar, Singapore, Philippines and Indonesia to Australia and New Zealand.
• OOCL is implementing a 1st Sep GRI of USD500.00 per TEU ex North East Asia to Australia.
• ANL is implementing a 1st Sep GRI of USD500.00 per TEU ex North East Asia to Australia. USD300.00 per TEU will be rolled out to NZ ports.
• Gold Star Line has announced a mid-month GRI of USD500.00 per TEU from 12th September. Other carriers are still pending.
• The current market is still very much a spot market. While September looks to offer more security and stability, currently we are best to quote per shipment, to ensure we can offer space on the desired sailing.
• Chinese New Year falls earlier next year - 29th January 2025. This will push contract negotiations earlier also. I suggest starting to discuss this in late Q4 2024 to ensure that we can actively approach the right carriers to support your supply chain needs in 2025.
• NOR (Non-Operating Reefer) containers are also an option for shippers on a spot basis. We can look at options for this type of equipment which is typically at a lower rate level than general equipment. While there is slightly less internal capacity in an NOR, this can be a good option for spot shipments to reduce costs.

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Capacity

• Carriers are full and/or rolling bookings currently. This is particularly problematic with the lower-cost carriers.
• Space out of South East Asia is extremely tight. Vietnam, the Philippines, and Thailand are seeing severe space shortages and high demand.
• September capacity looks to be more available than we have seen in August. TSL/YML/PIL/ANL have arranged extra vessel loaders to their offload bookings, there are now a total of 5 extra vessels in 1st half of Sep; a total of 9239 TEU.
• Most of the extra vessels are calling Shekou/Nansha, only Kota Nekad (PIL) is calling Shanghai/Ningbo, and Bright Cosmos (ANL) calling Ningbo. This is the reason why FAK sea freight from Shekou/Nansha is cheaper than Shanghai/Ningbo in the 1st half of Sep.
  
• OOCL/YML said they may arrange an extra vessel at the end of Sep, but they are still waiting for final confirmation from their HQ. This will positively impact freight rates if it goes ahead.
  
• FRE/ADL ocean freight has increased a lot but space is an issue for all shippers. OOG (out of gauge) is particularly problematic. ONE will only accept in-gauge OT/FR bookings, OOCL will not accept any OOG bookings to FRE/ADL ex Shanghai/Ningbo/Qingdao. PIL/Cosco will accept OOG bookings but their freight cost is very high. Many Fremantle OOG shipments have been booked under a break bulk service due to space issues from carriers.
  
• China's Mid-Autumn/Moon Festival commences on September 15th - 17th and Golden Week falls on the 1st -7th of October. This may lead to a surge in bookings in the second half of September.
• MSC relaunches its Wallaby service starting with the Saturday sailing from Hong Kong of the 5048 TEU MSC Eleni. rotation of Hong Kong – Yantian – Xiamen – Shanghai – Ningbo – Port Botany – Melbourne – Auckland – Bluff – Lyttelton – Wellington – Napier – Tauranga – Melbourne – Brisbane – Hong Kong with nine ships of 2546-5048 TEU, indicating a 63-day round voyage. Source: https://www.thedcn.com.au/sticky/msc-on-the-wallaby/

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Schedule Reliability

• ANL - A3 Consortium agreed for TIAN XIANG HE 144N to omit BRISBANE. All Brisbane cargoes will be rescheduled to the next available vessels.
• AUS1 service (Maersk/ONE) is blanking sailings ex SHA for ETD 11/Sep and 28/Sep.
• AUN service (Maersk/MSC/ONE) is blanking ex NGB for ETD 7/Oct.
• CAT service (Evergreen/Yang Ming) is blanking ex NGB for ETD 29/Sep.

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Port Congestion

• Shanghai is experiencing port congestion, with an average vessel wait time of 3-7 days.
• Bangladesh - particularly Chittagong - is seeing large delays of up to 7 days. After political unrest and severe weather, many carriers are seeing delays in berthing, alongside extended stays in port. Overland operations are also severely impacted as main highways lie underwater. Source: https://theloadstar.com/floods-swamp-highways-in-bangladesh-truckers-stranded-in-40km-queue/
• India faces port strikes nationwide if wage negotiations cannot be agreed upon. The walkouts will cover about 20,000 longshoremen and harbor tug operators. A full-scale strike would shut down about 2.3 million tonnes of cargo movement every day. Source: https://maritime-executive.com/article/national-longshore-strike-may-hit-all-of-india-s-major-ports-on-wednesday

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LCL

• While the FCL market continues to be extremely volatile, LCL offers some stability to Australian importers and exporters.
• We offer stable and competitive pricing and regular sailings globally.
• We have direct sailings ex China, Vietnam, Hong Kong, India, Korea, Singapore, Taiwan, and Thailand to the East Coast.
• With secured sailings and opportunities to negotiate on regular business, LCL offers your business an alternative that can work in a very fluid market.

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Carbon Emissions & Sustainability

• Carbon emissions remain high in international shipping. Cargo shipping contributes to more than 7% of the world's total emissions. This equates to more than 2 billion tons of CO2.
• With emission reporting now becoming a commonplace occurrence in most businesses, how are you managing your environmental impact?
• Explorate partner with Cloverly to support our customers in their sustainability goals.
• With a diverse range of causes to select in your offsetting journey, Cloverly allows our customers to choose a cause that aligns with their business ethos and values.
• Explorate report emissions on every shipment you move with us. Also providing a cost to offset this.
• Report - Offset - Share. Start your sustainability journey today.

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With emission reporting now becoming a commonplace occurrence in most businesses, how are you managing your environmental impact?

Explorate partners with SeaRoutes and Cloverly to support our customers in their sustainability goals. As part of our commitment Explorate automatically reports the emissions cost for every shipment you upload to the platform. We also provide a cost to offset. Report - Offset - Share. Start your sustainability journey today.

North America: US & Canada

• Canadian rail strikes ended after 18 hours as the CIRB (Canada Industrial Relations Board) imposed binding arbitration. Source: https://www.seatrade-maritime.com/logistics/canada-rail-unions-call-strike-appeal-federal-courts
• The threat of East Coast and Gulf strikes lingers in the US. The ILA has scheduled wage scale meetings for September 4 and 5, 2024. If no agreement can be made, industrial action is planned for the 1st October. Analysts, Sea-Intelligence estimated that US East Coast ports would handle 2.3 million TEU in October, which would equate to an impact of 74,000 TEU per day if dockworkers were to strike. Source: https://www.seatrade-maritime.com/containers/us-east-coast-port-strike-next-spanner-supply-chains
• US West Coast container volumes have seen the ports of Los Angeles and Long Beach handle a total of 9.02 million TEU in the first six months of this year compared to 7.87 million TEU in 2023. This signifies a 14.7% increase YoY. Source: https://www.seatrade-maritime.com/ports/us-west-coast-ports-winning-again-volumes-soar
  
• TPEB pricing has plateaued in recent weeks. East Coast import rates are sitting at USD8500 per 40', while the West Coast pricing is currently at USD6000 per 40'.
• The U.S. Department of Transportation (DOT) has awarded $3.5 million in grants to commercial driver training programs at 27 colleges, in a bid to open up more career pathways for the trucking industry. Source: https://www.supplychainbrain.com/articles/40266-biden-admin-awards-35m-in-grants-for-trucking-workforce-training

Europe

• FEWB (Asia to Europe) trade is stabilizing, and pricing is finally starting to plateau or drop in some cases.
• It has been predicted that the European peak season will hit earlier this year, with cargo being moved to the ports earlier than in the traditional period. This is largely driven by consumer spending and increased demand during the summer season, in addition to avoiding shipping disruptions with vessels diverting around the Cape of Good Hope.
• BMSB Season commences on the 1st September. Allow additional time for fumigation on applicable commodities. Typically we advise allowing for an additional 5-7 days in overall transit time. https://www.explorate.co/resources/2024-stink-bug-bmsb-season-are-you-prepared
• Rates out of Europe to Oceania remain mostly stable, with marginal increases across some carriers.
• FuelEU Maritime regulations are set to commence on 1st January 2025. To be compliant, companies will need to either pay a FuelEU penalty, or take action to bring the GHG intensity within FuelEU limits, which can be achieved by burning biofuels or LNG/LPG. Another way is pooling, where vessels that overachieve on intensity targets can compensate for underperforming vessels. Source: https://theloadstar.com/shipping-must-go-greener-or-pay-the-penalty-under-fueleu-maritime-rule/
  
• German trade union ver.di has rejected the Central Association of German Seaport Operators’ (ZDS) collective agreement offer. This is sparking fears of strikes across the ports of Hamburg, Bremen, Bremerhaven, Wilhelmshaven, Brake, and Emden.  Source: https://theloadstar.com/threat-of-more-strikes-at-german-ports-as-workers-reject-inadequate-offer/

Global Air Freight

• Global air cargo demand grew 12% year-on-year in the first seven months of 2024. This has been driven by high demand in e-commerce out of Asia, alongside ongoing ocean freight disruption.
  
• Taiwan remains congested with higher rates, particularly on direct services.
• Vietnam demand is expected to increase throughout September, as their e-commerce booms.
• While rate levels ex SZX & PVG have been stable of late, e-commerce demand is filling planes with certain carriers. MU (China Eastern) has limited space, with flights to BNE full this week, and their rates can change quickly based on demand.
• CZ (China Southern) offers competitive air rates into the East Coast.
• SQ pricing has been competitive ex China, but the second leg ex SIN has been tight on space.

General news

• Severe weather around the Cape of Good Hope has resulted in several containers being lost overboard. One of the major contributing factors to the dangers around the Cape is ‘parametric rolling’, which occurs when the wavelength of the ocean’s surface matches the rolling motion of the vessel, gradually increasing the angle of each roll with every wave impact. The stresses of heavy rolling can cause stacks of containers to buckle, damaging those lower in the stacks and causing those near the top to careen overboard.  CMA CGM Benjamin Franklin lost 44 boxes with damage to another 30 in July, and 99 containers were lost this month from CMA CGM Belem. Source: https://theloadstar.com/the-challenges-for-containerships-braving-the-waters-around-the-cape/
• The explosion on August 9 of a container loaded with hazardous materials exploded aboard the YM Mobility while it was berthed at Ningbo Beilun’s Phase III Terminal will have a knock-on on effect to supply chains. OOCL/HMM/ONE/EMC have stopped accepting bookings for any batteries or shipments containing batteries. ZIM/PIL/YML/TSL will only accept bookings on their own vessels. DG cargo will be under intense scrutiny moving forward.

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Although it was previously thought that the surge in volume to the US was a result of consumer spending, it has now been determined that retailers are increasing their inventory. The June 2024 US inventory data, released by the US Census Bureau, did not support the theory of a US spending boom. Source: https://www.sea-intelligence.com/press-room/281-retailers-inventories-above-trend

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European Parliament is in negotiations regarding the threshold for import duties on e-commerce goods. While this is currently set at EUR150.00, change is coming in 2028. This will specifically target online sales of low-value goods and allow for smooth and fraud-proof transactions between customers and sellers. This will ultimately provide an improved environment for e-commerce overall. Source: https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2023)749778

Turkey has introduced a new tax regulation for overseas e-commerce purchases. The new regulation means that even small-value purchases from abroad will be taxed, leading to increased costs for consumers. The tax rate on products from European Union (EU) countries has increased from 18 percent to 30 percent, while the rate for those from non-EU countries has risen from 30 percent to 60 percent. Source: https://www.fiscal-requirements.com/news/3180

IKEA is trialing a second-hand marketplace for the sale of its furniture. The resale store — dubbed Ikea Preowned — is currently up and running in Oslo and Madrid, with the company planning to decide on the next steps after December. This is a great initiative that retailers can replicate to reduce waste and opt for a more sustainable product lifecycle. Source: https://www.supplychainbrain.com/articles/40262-ikea-trials-online-store-for-secondhand-furniture

Interesting articles

• https://www.explorate.co/resources/2024-stink-bug-bmsb-season-are-you-prepared
• https://www.esgtoday.com/australia-senate-passes-new-mandatory-climate-disclosure-law/
• https://globalmaritimehub.com/ports-show-huge-throughput-gains-in-first-half-of-2024.html
  
• https://container-news.com/rates-are-on-a-12-month-slippery-slope-says-linerlytica/
  
• https://www.worldcargonews.com/news/2024/08/maersk-joins-lr-core-power-in-exploring-nuclear-power-for-container-shipping/utm_source=newsletter&utm_medium=email&utm_campaign=Newsletter%20week%202024-33
  
• https://www.morethanshipping.com/impact-of-a-gulf-coast-and-east-coast-strike-on-the-u-s-economy-a-numerical-analysis/