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Rate hikes! Not the words that anyone wants to hear. General rate increases have continued to be released bi-weekly out of China and are expected to remain on the rise for the next 3-6 months.
The Red Sea situation continues to wreak havoc on shipping. Diversions are expected to extend well into the second half of this year, and potentially into 2025. Maersk predicted total capacity loss of 15-20% on the Far East to North Europe and Mediterranean market in Q2 alone. Re-routing of vessels adds (on average), an additional 14 days to the overall transit time.
Equipment shortage is now becoming an issue as vessels are taking longer to return to China. Shanghai, Xiamen and Ningbo are all reporting severe shortages of 20', 40', 40'HQ equipment.
Singapore congestion is becoming problematic. The Sea liner database currently shows 51 vessels at berth and 69 at anchor. This is only expected to increase.
The Panama Canal is showing signs of an improvement in operating conditions. The Panama Canal Authority has increased the daily number of ships to transit from 24 to 31. We are still far from normal conditions, however this is heavily dependent on rainfall in the area after unprecedented drought.
Airfreight demand continues to hold in China - mainly driven by e-commerce. With ongoing delays in the ocean freight trade, this is also pushing volume to air in order to accommodate ETA requirements.
There is no sign of slow down in demand as we roll into peak season.
Carriers continue to report full or overbooked vessels and have no desire (or need) to negotiate on pricing. This has been evidenced by the disregard of previously agreed contracts. There is potential for a slight slow down in late June/early July, however this may not eventuate if capacity is restricted.
Space is now king, and we are now seeing a ‘Just in Case’ model similar to COVID times.
We commence week 22 with full vessels, rolling bookings and congested transhipment ports.
Equipment shortages in SHA/NGB/XMN/TAO/SHK are now being reported regularly. This is a result of vessels returning later than usual due to re-routing and slow steaming.
Empties are being released later than usual, with turnaround times sometimes being only a few short days. We will see this impact destination free time also, as equipment needs to be returned to China to accommodate export demand.
While many high volume clients had negotiated named account pricing, this is now being disregarded by the carriers. They are pushing for either a 50% cut in allocation, or a 1:1 booking agreement of NAC vs FAK.
Majority of the decisions are made in the global HQs for each carrier. They are pushing for their largest vessels to service the highest yielding trades which typically lie in the US/EU.
May GRIs held firm, with additional hikes on 1st June, 15th June and another expected on 1st July.
Congestion in Singapore, the world’s second-busiest container port, has reached a critical level, compounding the shortage of ships and containers.
Typically, ships berth on arrival or wait half a day at most in Singapore. However, severe congestion is causing carriers to omit Singapore calls, leading to downstream port congestion and schedule disruptions. Here's what we're seeing:
Stats Source: The Loadstar
Given the expected delays and capacity issues, increase your safety stock to buffer against longer transit times. This approach ensures you have enough inventory to meet demand even if shipments are delayed.
In a tight market, strong relationships with carriers and freight forwarders can provide better access to space and equipment. Regular communication and long-term partnerships can lead to preferential treatment and more reliable service.
Use advanced logistics software to gain real-time visibility into your supply chain. This technology can help you track shipments, predict delays, and optimize routes, allowing for more informed decision-making and proactive problem-solving.
Keep up-to-date with the latest market trends and developments, such as changes in the Red Sea situation or Panama Canal conditions. Being informed allows you to anticipate disruptions and adjust your logistics strategies quickly to maintain operational efficiency.
To mitigate risks from rate hikes and equipment shortages, consider sourcing from multiple suppliers across different regions. This strategy reduces dependence on any single route or supplier, providing greater flexibility in response to disruptions.
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