Freight Market Update: June 7th, 2024

Asia

Rates

• Rate increases continue to stick - with 1st June GRIs in full swing. Increases have been pushed out at USD300 per TEU ex North East Asia to Australia.
• Additional increases are to follow from 15th June at levels of USD300 per TEU ex North East Asia, and USD100 per TEU ex South East Asia.
• From the 1st July additional increases will be released to the market, including GRIs and PSS (Peak Season Surcharge). GRIs can be expected to be of similar levels to June GRIs, while any PSS thus far has been advertised at USD500 per TEU and applicable to all shipments ex North & South East Asia to Australia & New Zealand.
• Maersk has implemented PSS effective 12th June, with a quantum of USD500 per TEU ex NEA, and USD300 per TEU ex SEA.
• With the continuous market changes and unprecedented demand, rate levels are set to exceed the levels seen during the height of the COVID related shipping crisis.
• Due to a strong demand ex NEA, MSC has now activated its Diamond Tier rate level. This comes with secured space at premium rate levels. This means that non-DT bookings are now at risk of being rolled in favour of these premium rate level bookings. We have not seen Diamond Tier activated since COVID times.

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Capacity

• Vessels departing China to Australia continue to be overbooked and rolling in some cases. Please secure bookings as early as possible.
• Capacity continues to be diverted to higher yielding trade lanes into Europe and USA. Maersk reports the 10% of their capacity has been diverted to Asia-EU trade lanes, which amounts to approximately 47,000 FFE. Majority of vessels continue to be full/rolling throughout June.
• The Red Sea situation exacerbates capacity constraints, with vessels still be re-routed via the Cape of Good Hope, extending overall transit times by approximately 14 days.‍
  

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Equipment Shortages

Equipment shortage is becoming problematic, with majority of carriers short of empties. 40'HC are particularly scarce. Empties are being released to shippers closer to vessel cut-off which is impacting supplier loading capabilities. The carriers are also imposing stricter booking conditions - with changes to booking POL/POD prohibited in some cases.

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Weather impacts

Qingdao experienced extreme fog in late May, which has impacted vessel arrivals. Delays to be expected from late May through to mid-June.

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Singapore Congestion

Singapore is facing extreme congestion, with more than 450,000 containers berthing amid 7 day delays. Standard time to berth is only 12 hours in typical conditions.

Due to extraordinary conditions, previously defunct terminals are being reopened to support managing unprecedented volumes.

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Tanjung Pelepas & Port Klang are also facing severe backlogs. China's main ports - Shanghai & Qingdao - are also facing increased waiting times. Shanghai is up to 5 days at present.

North America

• Due to labour union renegotiations taking place in September, a rush for bookings is expected between May-August. SCFI to US West Coast has now reached a two year high.
• PSS is now being released to account for huge demand. From 1st June, a PSS of USD480 per 20' & USD600 per 40' has been release for all cargo ex East Asia to USA. Another release will take place on the 15th June, quantum USD1000 per TEU.
• Rates are already creeping close to USD7000 per 40' into the US. With further increases, we will see COVID level pricing in no time. Vessels leaving Asia are expected to be full through June.
• South America is rapidly increasing, with crazy GRIs of USD1000 per TEU from 1st June. Brazil will increase taxes on electric vehicles from July - many manufacturers are shipping large volumes into South America prior to this time. Carriers are also sending additional capacity to this trade lane to support the demand.

Europe

• Vessels continue to be re-routed via the Cape of Good Hope for the foreseeable future. The impact of Red Sea attacks only further exacerbates the global supply chain challenges we face.
• The knock-on effects include bottlenecks and vessel bunching, in conjunction with delays and equipment and capacity shortages. Maersk estimates an industry wide capacity loss of 15-20% on the Far East to North Europe and Mediterranean market during Q2. The vessel delays are also severely impacting equipment availability in Asia.
• Rates ex Asia to EU are hitting USD7000 per 40' and are expected to hit USD10,000 per 40' coming into peak season. Space is limited throughout June, with many shippers aiming to increase stock holdings ahead of any additional GRIs.

Interesting articles

• https://container-news.com/ocean-freight-container-shipping-market-set-to-surpass-red-sea-crisis-peak-and-hit-levels-not-seen-since-covid-19-pandemic/
  
• https://theloadstar.com/singapore-reopens-defunct-container-terminals-to-tackle-vessel-bunching/
  
• https://theloadstar.com/port-congestion-disrupts-almost-half-asia-europe-sailings/

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