Freight Market Update: Sept 25th, 2024

‍In this Update.

1. Asia Market.
2. USA/Canada Market.
3. Europe Market.
4. Airfreight Update.
5. General News
6. Interesting Articles.

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Rates:

• With the pressure to fill up a couple of big loading capacity ad hoc vessels leaving in the last week of September and the coming holiday between 1st to 7th of October, the rates have started to drop.
• At the same time, the reason rates will remain low until 14th October is also because of Golden Week -  the market will be a slow one during the 2^nd week of October.
• Typically, this is a very busy period for the carriers, and pricing reflects this. This year tells a different story.
  • Premium carriers on the A3 service are sitting at USD4200.00 per FEU, while the lower cost carriers (AUN/CA2) are offering rates of USD3600.00 per FEU.
  • West Coast pricing remains high, with most carriers still sitting at USD5000.00 per FEU or similar. 
  • South East Asia pricing has exceeded China's, with capacity also being limited. Current levels into the East Coast are USD4600.00 - 4800.00 per FEU.
  • Drewry WCI (World Container Index) decreased 5% to USD3970 per FEU, from the 19th September.

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• The market remains fluid. Spot pricing offers a competitive option on an ad hoc basis to obtain the best rates. Carriers are currently working to fill vessels ahead of Golden Week and are offering deals on specific sailings. 
• Carriers still have strong confidence that the market will improve after 15th October, with many publishing their GRI notice saying that they are expecting a USD500.00/USD1000.00 PER 20GP/40HQ markup based on the current rate structure. The logic of this gesture is that anything that needs to catch the sales of this Christmas and the coming New Year will have to be shipped in 2^nd half of October and 1^st half of November.
• MSC has announced a GRI of USD300 per TEU for all cargo from China, Hong Kong, Taiwan, Japan, Korea, Cambodia, Thailand, Vietnam, Malaysia, Myanmar, Singapore, Philippines, and Indonesia to Australia and New Zealand. This is effective from the 15th October.

Capacity:‍

• Carriers are scrambling to fill their vessels ahead of Golden Week. We have yet to see any demand materialise ahead of the China holiday. 
• CMA, OOCL, and MSC added extra loaders ex NE Asia to the East Coast. If demand does not pick up after Golden Week, we can expect these to be pulled.
• South East Asia remains limited in capacity. Vietnam, Thailand, and Malaysia are all congested with rates increasing. No signs of a slowdown in this area.
• Carriers are omitting the West Coast/Adelaide to maintain schedule integrity. Booking capacity remains tight.
• Bangladesh is still weathering congestion out of Chittagong and Dhaka - this is largely due to political unrest and large scale flooding. Operations show signs of improvement.
• India is still facing equipment shortages with many carriers. Officials have agreed to extend relief in the form of longer free times for empty containers, lower rail yard fees, faster cargo movements, and investment in containership fleet. Source: https://container-news.com/indias-drive-to-rein-in-container-shipping-charges-faces-hurdles-as-volatility-persists/ 
• Typhoon Bebinca caused operational delays in SHA and NGB last week, with vessel arrivals taking a significant drop. Operations seem to have stabilized. Source: https://theloadstar.com/typhoon-bebinca-shuts-down-port-operations-in-shanghai-and-ningbo/
• The forthcoming Gemini Alliance will see Singapore gaining six more port calls from the Asia-North Europe carriers. Of the main Asian gateway ports, Vietnam’s Cai Mep gains two calls, Yantian loses three, Ningbo loses one and Shanghai’s call number remains the same. Source: https://theloadstar.com/singapore-to-gain-six-asia-north-europe-calls-in-alliance-reshuffle/

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Schedule Reliability:

• Maersk has received notification that due to weather-related delays through Oceania ports, CMA CGM SEATTLE 433S/438N will perform an Adelaide port omission to ensure the vessel meets the phase-out scheduling requirements. Adelaide import cargo will now discharge in Sydney for onward connection. Adelaide export cargo will be updated to load MATE 439N.
• Schedule adjustments will be made to minimise any further impact to EAC service line-up at Sydney due to delays from recent weather events. Maersk COSTA RICA EXPRESS 435S/438N will perform a combined/single Brisbane call as voyage 435S, omitting the northbound 438N Brisbane call. The revised schedule expected to be as follows:

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• Due to bad weather in Asia and ongoing port congestion in Sydney, A3 Consortium has agreed for OOCL MIAMI 099N to change rotation to call Melbourne prior Sydney in order to mitigate further delays in Australia coast.
• CONTI ANNAPURNA, the replacement vessel has been updated and will now be SEASPAN BREEZE 439S which will phase in at Port Kelang. Updated schedules as per below:

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• Due to bad weather in Asia and ongoing port congestion in Sydney, A3 Consortium has agreed for OOCL CANADA 108N to change rotation to call Melbourne prior Sydney in order to mitigate further delays in Australia coast. Tentative schedule as follows:

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• The Biden Administration announced New Actions to Reduce De Minimis Volume and Strengthen Trade Enforcement. The Administration intends to issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. Source: https://www.whitehouse.gov/briefing-room/statements-releases/2024/09/13/fact-sheet-biden-harris-administration-announces-new-actions-to-protect-american-consumers-workers-and-businesses-by-cracking-down-on-de-minimis-shipments-with-unsafe-unfairly-traded-products/ 
• US East Coast and Gulf strikes loom ahead of the ILA agreement being reached. The ILA (International Longshoremen Association) represents the largest union of maritime workers in North America. A strike is likely if an agreement on wages protection against automation cannot be reached by 1st October. Source: https://www.nbcnews.com/business/business-news/major-maritime-strike-threaten-ports-east-coast-ila-usmx-rcna171914 
• Carriers are preparing for impact and implementing precautionary measures for US East Coast and Gulf ports. On 1 September, MSC notified customers it would apply a $1,000 per 20ft and $1,500 per 40ft Emergency Operations Surcharge (EOS) from 1 October (the date set for the strike to begin) on all shipments from Europe to the US east and Gulf coasts, as well as to ports in the Caribbean, Mexico and Canada. That was followed by a CMA CGM advice that US east and Gulf coast local port charges for import shipments of $1,500 per teu would be applied from 11 October, while export shipments would be subject to local port charges of $800 per 20ft and $1,000 per 40ft on the same date. Hapag-Lloyd became the latest carrier to announce a port strike surcharge, revealing it would apply a Work Disruption Surcharge of $1,000 per teu from 18 October on container shipments to the US east and Gulf coasts. Source: https://theloadstar.com/carriers-announce-disruption-surcharges-for-usec-cargo-as-strike-looms/ 
• It is likely that many shippers will divert cargo to the USWC to avoid any strike action on the East Coast. Gene Seroka, Executive Director at the Port of Los Angeles described a continued surge of cargo into the port, saying: “The Port of Los Angeles handled a near-record 960,597 teu in August, a 16% increase over the previous year. It was the busiest non-pandemic month ever at the Port…Eight months into 2024, the Port of Los Angeles is 17% ahead of its 2023 pace, already moving nearly 1 million more containers than last year.” Source: https://www.seatrade-maritime.com/ports-logistics/us-west-coast-ports-benefit-from-cargo-diversions-as-east-coast-strike-beckons  
• For exports out of the US, we will see increases out of the East Coast and the potential for extended delays should strike action surge ahead.
• The Drewry WCI showed rates from Shanghai to New York declined 4% or $297 to $6,364 per 40ft box. Also, spot rates from Shanghai to Los Angeles dropped 1% or $47 to $5,580 per 40ft container.

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• The Department of Home Affairs has issued a special security direction to air carriers, effective 14th September. All inbound air movements into Australia from 55 countries (mainly in Europe) that are over 500g and lodged by an unknown sender cannot be sent via a PAX (passenger) aircraft. This cargo will only be permitted to travel on a freighter aircraft. Cargo from all unlisted countries will be exempt from this ruling. 
• A crucial rail route in Romania’s east will be suspended for the foreseeable future after heavy flooding from Storm Boris caused severe destruction along more than 100 kilometres of track between Bârlad and Galați. With some sections of track left “suspended” in midair as the ground underneath collapsed, the cost of repairs is estimated to be several million euros. Source: https://www.railtech.com/all/2024/09/17/key-romania-rail-line-closed-indefinitely-after-flood-damage/?gdpr=accept 
• Severe flooding in Austria, Slovakia and the Czech Republic has affected the transport network’s local infrastructure, including container facilities. Source: https://container-news.com/central-european-floods-cause-operational-disruptions-and-delays/ 
• The Drewry WCI showed freight rates from Shanghai to Rotterdam plunged 9% or $470 to $4,682 per 40ft container. Similarly, rates from Shanghai to Genoa contracted 6% or $328 to $4,928 per FEU. Spot rates from Rotterdam to New York increased 2% or $45 to $2,056 per 40ft box. Likewise, spot rates from New York to Rotterdam inched up 1% or $9 to $713 per FEU. Source: https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry

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• Pricing ex China and India are starting to show signs of increasing. 
• Lower-priced carriers are booking up first, with space hard to come by. 
• E-commerce continues to dominate the airfreight market. 
• Typhoons in Asia grounded many flights, however, operations have now resumed.
• Dhaka airport is experiencing severe congestion - extended dwell times, carrier equipment shortages, and volatile freight rates are frequently encountered. 
• Q4 is expected to be a very busy period, particularly for the charter market, with tight availability for wide-body aircraft. Source: https://theloadstar.com/air-charter-market-braced-for-very-busy-q4-and-prices-are-rising/ 
• Airfreight pricing out of Bangladesh and India has surged in recent weeks - bolstered by the disruptions to ocean freight supply chains caused by the attacks on shipping in the Red Sea. The latest figures from WorldACD show that overall airfreight rates were up 14% year on year in the week ending September 15, led by a 24% increase from Asia Pacific and 56% from the Middle East and South Asia (MESA). Source: https://www.aircargonews.net/data/surging-air-cargo-rates-out-of-japan-and-bangladesh-boost-buoyant-market/ 
• Airfreight out of Cambodia, Myanmar, Thailand, and Vietnam, is set to increase. There has been a strong uptick in manufacturing output and e-commerce products. This seems to indicate a switch from primarily Chinese suppliers to South East Asia as an alternative.

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General News

• Three containers from a FESCO boxship fell into the waters of the southern Chinese port of Nansha, after being hit by another ship. Source: https://container-news.com/containers-fall-overboard-fesco-boxship-after-accident-in-nansha/ 
• The families of those who died in the Baltimore bridge collapse in March have filed wrongful death claims in federal court. Source: https://www.freightwaves.com/news/families-of-workers-who-died-in-baltimore-bridge-collapse-seek-damages 
• Weather experts say this year’s typhoon season has been the most disruptive. According to Everstream Analytics, the most disruptive storms this season and the areas most affected have been Gaemi (Taiwan and China), Ampil (Japan), Shanshan (Japan), Yagi (Philippines, China, Vietnam), and Bebinka (China). These storms have had a significant impact on port operations. Source: https://www.freightwaves.com/news/typhoons-causing-billions-in-agricultural-losses-disrupt-global-supply-chains

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Interesting Articles:

• https://theloadstar.com/usmx-and-ila-in-claims-blame-game-as-strike-deadline-looms/
• https://www.explorate.co/resources/how-the-gst-deferral-program-can-improve-your-cash-flow
• https://theloadstar.com/transpacific-newbies-add-capacity-as-demand-for-express-services-grows/
• https://www.explorate.co/resources/mastering-supply-chain-flexibility-the-case-for-a-multi-forwarder-strategy
• https://theloadstar.com/call-for-consistency-in-ocean-shipping-emissions-calculation/
• https://container-news.com/port-of-melbourne-sees-box-decline-in-august/
• https://container-news.com/maersk-and-hapag-lloyd-charter-more-ships-ahead-of-gemini-launch/
• https://container-news.com/european-ocean-carriers-navigating-through-uncertain-waters/

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With 17 years of expertise in fixing and improving supply chains across Australia and the globe, I know what insights businesses need to stay proactive and ahead of disruption. Consider this your go-to resource for staying informed and making smarter logistics decisions. Ready to strengthen your logistics operations? Let's get started!

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