Freight Market Update: July 31st, 2024

Asia

Rates

• We are seeing the first of the August GRIs released. With smaller vessels in rotation and reduced capacity, it is unclear if these rate hikes will stick.
• Spot rates ex China vary significantly, dependent on service and carrier. A3C (Cosco/OOCL) leads the charge at levels of USD1900-2100 per TEU.
• On the cheaper end of the scale, we can see pricing anywhere from USD1450 - 1700 per TEU ex base port China to AUEC.
• FRE & ADL pricing sits approximately 25% below the East Coast rate levels ex China.
• SEA container prices remain more competitive than their NEA counterparts. Rates averaging around USD1300 per TEU are common into the East Coast.
• Carriers are prioritizing higher paying cargo, with rolled booking inevitable in some trades.
• Conversations need to start taking place in Q4 to prepare for Q1 contract negotiations.

General Rate Increases (GRIs) / Peak Season Surcharges (PSS):

• Gold Star Line: GRI of USD500.00 per TEU ex North & Central China to AU, effective 10th August 2024
• Gold Star Line: GRI of USD500.00 per TEU ex South China to AU, effective 16th August 2024.
• Gold Star Line: GRI of USD500.00 per TEU ex SEA to AU/NZ, effective 16th August 2024.
• TS Lines: GRI of USD300.00 per TEU ex SHA to AUEC, effective 1st August 2024.
• Cosco: Increase in AU THC and Documentation fees, effective 15th August 2024.
• OOCL: GRI of USD300.00 per TEU ex NEA & SEA to AU, effective 15th August 2024.
• Cosco: GRI of USD300.00 per TEU ex NEA & SEA to AU, effective 15th August 2024
• ANL: GRI of USD300.00 per TEU ex NEA to AU/NZ, effective 15th August 2024.

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Capacity

• MSC’s Panda service will be replaced with smaller vessels until the end of August. Their allocation is to be reduced on average to around 1200-1500TEU/WK. Gold Star Line will also be impacted as it is on the same service. This will start from vessel: MSC Odessa 2826 (ETD SHA on 29th/July)  until Vessel: MSC HOUSTON. Ship size changed from 6500 TEU to 2800-3800 TEU during August.
• CAT service has a blank sailing in 2nd week of August
• NEAX service has a blank sailing in 3rd week of August
• AUN//Maersk Fredericia 429S (ETD SHA on 26th/July) will omit Yantian, and some cargo might be facing rollover of up to 2 weeks.
• Shipping lines received almost 1.6 million TEUs of additional capacity this year, but this has not balanced supply and demand on Asia-Europe and trans-Pacific routes. Only 77 container ships, totaling 217,038 TEUs, are currently idle in the entire global fleet—a figure not seen since COVID times.

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Schedule Reliability

• Typhoon Kaemi is impacting vessels in the Hong Kong/Guangdong(Shekou/Yantian/Nansha)/Fujian (Xiamen)/Zhejiang (Ningbo)/Jiangxi/Henan regions. Heavy rain, flooding, high winds and treacherous waves have caused devastation across the region. Vessels are delayed, with general cargo vessel Fu Shun, sinking approximately 19 nautical miles off the coast of Kaohsiung. (Read the Loadstar article)
  
• Maersk is omitting SHA/NGB ports as part of a Typhoon Season Precautions Plan to mitigate disruptions and maintain service quality. (Read the Maersk release)
• Bangladesh cargo is now moving after a government-enforced curfew and internet connections were cut. This was in response to student protests over job quota reforms. 8,000 to 10,000 TEU of export containers could not be shipped and over a dozen vessels are at anchor outside the port. It is expected to take at least a week to clear the backlog. (Read the full Loadstar article)
• Severe weather around the Cape of Good Hope has impacted vessel scheduling, with waves up to 10 metres high. (Read the full container news update).
• In June 2024, global schedule reliability dropped by -1.2 percentage points M/M to 54.4%. This is keeping in line with the trends seen so far in 2024, where global schedule reliability has largely been within 50%-55%. Hapag-Lloyd was the most reliable top-13 carrier in June 2024 with schedule reliability of 55.4%. There were another 9 carriers above the 50% mark, with the remaining 3 carriers in the 40%-50% range. ZIM was the least reliable carrier with schedule reliability of 44.4%. Source: Sea Intelligence

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Port Congestion

Approximately $131 billion worth of cargo is at risk of disruption at key transshipment hubs in Asia. Namely, Singapore, Port Klang, and Tanjung Pelepas.

This is largely driven by the Houthi attacks in the Red Sea, with vessels diverting around the Cape of Good Hope and extended transits a consistent issue.

Mundra, India's largest container gateway, is struggling with rising transshipment volumes causing port congestion. Container dwell times at Mundra have lengthened significantly over the past few weeks due to a slowdown in import clearance in congested container yards.

Chennai is currently severely disrupted with over 120,000 containers on the ground. Largely impacted by vessel bunching, labour shortages, and poor infrastructure. Please expect delays. (Read the full article from India Shipping News)

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Transport/Port Updates

• Heavy fog in VIC has impacted local deliveries. On the 30th July, fog blanketed the city causing widespread traffic congestion, temporary closure of Patricks terminal, and heavy delays at VICT. Expect delays to container uplift and delivery as service providers work through the backlog.
• Due to adverse conditions, particularly high swell, the New South Wales (NSW) port authorities have implemented a temporary closure of all port facilities in the region. The following vessels are impacted:

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North America

• On the US export side, rates are increasing amid stronger demand in global markets.
  
• USWC remains preferable in to Oceania, with more economical rates over USEC.
• While demand remains strong in the TPEB market, rates have dropped slightly, with availability in a more stable state than previously seen.
• Carriers are aiming to impose GRIs in mid-August to correct the dip in container rates ex Asia. USD500.00 per TEU is the advertised quantum.
  
• The Port of Long Beach is expanding its rail yard in a $1.5 billion project called "America's Green Gateway". This will connect the port to 30 rail hubs across the USA and triple its rail cargo capacity.

Europe

• With summer in Europe, many hubs and terminals are faced with labour shortages due to holiday plans.
• The CLA (Collective Labour Agreement) is yet to be agreed to in Germany. This affects approximately 11,000 port workers and has resulted in ongoing strike actions in Wilhelmshaven, Bremen, and Emden. This has caused significant disruption and congestion at DE ports. (Read the full article from World Cargo News)
• Rates remain stable in Oceania, however extended transit times are a reality in the current market.

Global Air Freight

• Microsoft outage proves catastrophic for supply chains. The IT issue saw thousands of flights grounded or delayed at the largest air freight hubs in Europe, Asia, and North America. It could take weeks to resolve the backlogs and disruption.
• Airfreight pricing ex Asia to AU remains stable, with capacity beginning to tighten, particularly ex China. Book ahead where possible.
• International air cargo volumes rose by 15.6% compared to June 2023, supported by all regions and major trade lanes. Carriers from Asia Pacific and Latin America recorded the highest annual growth, and demand on the Africa-Asia and Middle East-Europe route areas expanded by over 30% YoY. Source: IATA Sustainability & Economics
• June cargo demand rose by 14.1% YoY, with seven consecutive months of growth. This was largely driven by e-commerce demand and delays in the ocean shipping sector.
• Asia-Pacific airlines saw 17.0% year-on-year demand growth for air cargo in June — the strongest among all regions. Demand on the Africa-Asia trade lane grew by 37.5% year-on-year, while the Europe-Asia, Within Asia, and Middle East-Asia trade lanes rose by 20.3%, 21.0%, and 15.1% respectively. Capacity increased by 10.7% year-on-year.
  
• North American carriers saw 9.5% year-on-year demand growth for air cargo in June — the weakest among all regions. Demand on the North America-Europe route saw an increase of 6.7%, while the Asia-North America trade lane, the world’s largest, grew by 12.8% year-on-year, the largest annual increase in five months. June capacity increased by 6.0% year-on-year.
• European carriers saw 16.1% year-on-year demand growth for air cargo in June. Intra-European air cargo rose by 16.7% compared to June 2023, the sixth month in a row of double-digit annual growth. Europe–Middle East and Europe–Asia routes saw demand increase by 30.2% and 20.3% respectively. June capacity increased 9.1% year-on-year.
• Middle Eastern carriers saw 13.8% year-on-year demand growth for air cargo in June. As mentioned above, the Middle East–Europe market performed particularly well with 30.2% annual growth, ahead of Middle East–Asia which grew by 15.1% year-on-year. June capacity increased 6.9% year-on-year.
• Latin American carriers saw 13.1% year-on-year demand growth for air cargo in June. Capacity increased 15.5% year-on-year. Notably, Latin America posted the second-highest increase in international demand growth at 17.2% in June, up 6.3 percentage points compared to the previous month.
• African airlines saw 11.8% year-on-year demand growth for air cargo in June. Demand on the Africa–Asia market increased by 37.5% compared to June 2023, the strongest performance of all trade lanes. June capacity increased by 23.8% year-on-year.  

‍Source: IATA Air Cargo Market Analysis

Interesting articles

• https://splash247.com/cma-cgm-boxship-loses-44-containers-in-extreme-weather-off-south-africa/
  
• https://splash247.com/general-average-declared-on-maersk-frankfurt/
  
• https://theloadstar.com/shippers-at-a-loss-as-red-sea-ripples-spread-across-container-trades/
  
• https://theloadstar.com/container-spot-rates-have-peaked-as-all-major-trades-see-falling-prices/
  
• https://www.cnbc.com/2024/07/19/crowdstrike-it-outage-spreads-global-supply-chain.html