Airfreight
The Microsoft outage that smashed everyone’s IT systems last week has wreaked havoc on supply chains, grounding or delaying thousands of flights at major air freight hubs in Europe, Asia, and North America. The backlogs and disruption could take weeks to resolve.
As per IATA’s Air Cargo Market Analysis, Airfreight pricing from Asia to Australia remains stable, though capacity is tightening, particularly from 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, with demand on the Africa-Asia and Middle East-Europe routes expanding by over 30% year-over-year. June cargo demand rose by 14.1% year-over-year, driven largely by e-commerce demand and ocean shipping delays.
Asia
Rates
August is kicking off with a splash as we see the first General Rate Increases (GRIs) released. With smaller vessels in rotation and reduced capacity, it’s anyone’s guess if these rate hikes will stick around. Spot rates from China are all over the map, depending on the service and carrier. Leading the charge, A3C (Cosco/OOCL) rates range from USD 1900-2100 per TEU.
On the budget end, you can snag rates from USD 1450-1700 per TEU from the base port of China to AUEC. Meanwhile, FRE & ADL rates sit about 25% below the East Coast levels from China. SEA container prices are more competitive, averaging around USD 1300 per TEU to the East Coast. Carriers are prioritizing higher-paying cargo, so rolled bookings are inevitable in some trades.
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General Rate Increases (GRIs) / Peak Season Surcharges (PSS)
- Gold Star Line: GRI of USD 500.00 per TEU from North & Central China to AU, effective August 10, 2024.
- Gold Star Line: GRI of USD 500.00 per TEU from South China to AU, effective August 16, 2024.
- Gold Star Line: GRI of USD 500.00 per TEU from SEA to AU/NZ, effective August 16, 2024.
- TS Lines: GRI of USD 300.00 per TEU from SHA to AUEC, effective August 1, 2024.
- Cosco: Increase in AU THC and Documentation fees, effective August 15, 2024.
- OOCL: GRI of USD 300.00 per TEU from NEA & SEA to AU, effective August 15, 2024.
- Cosco: GRI of USD 300.00 per TEU from NEA & SEA to AU, effective August 15, 2024.
- ANL: GRI of USD 300.00 per TEU from NEA to AU/NZ, effective August 15, 2024.
Capacity
MSC’s Panda service is downsizing until the end of August, with vessels reduced to around 1200-1500 TEU per week. Gold Star Line will also be affected as it shares the same service. This change starts with MSC Odessa 2826 (ETD SHA on July 29) and continues until MSC HOUSTON. Ship sizes will shift from 6500 TEU to 2800-3800 TEU during August. Additionally, CAT service has a blank sailing in the second week of August, and NEAX service has a blank sailing in the third week. AUN/Maersk Fredericia 429S (ETD SHA on July 26) will omit Yantian, leading to potential cargo rollovers of up to two weeks.
Despite receiving nearly 1.6 million TEUs of extra capacity this year, supply and demand on Asia-Europe and trans-Pacific routes remain unbalanced. Only 77 container ships, totalling 217,038 TEUs, are idle globally—a number reminiscent of COVID times, something that is concerning, to say the least.
Schedule Reliability
Typhoon Kaemi has been a real game-changer, disrupting vessels in regions like Hong Kong, Guangdong, Fujian, Zhejiang, Jiangxi, and Henan. Heavy rain, flooding, high winds, and treacherous waves have caused chaos, with the general cargo vessel Fu Shun sinking off the coast of Kaohsiung. To mitigate disruptions, Maersk is omitting SHA/NGB ports as part of its Typhoon Season Precautions Plan.
In Bangladesh, according to Loadstar, government-enforced curfews and internet blackouts in response to student protests have delayed cargo movements, leaving 8,000 to 10,000 TEUs of export containers unshipped and over a dozen vessels at anchor. Severe weather around the Cape of Good Hope has also thrown vessel schedules off course, with waves up to 10 meters high. As of June 2024, global schedule reliability dipped by 1.2 percentage points month-over-month to 54.4%, staying within the 50%-55% range seen throughout the year. Hapag-Lloyd led the pack with 55.4% reliability, while ZIM brought up the rear at 44.4%.
Port Congestion
Approximately USD 131 billion worth of cargo is at risk of disruption at key Asian transhipment hubs, including Singapore, Port Klang, and Tanjung Pelepas. The Houthi attacks in the Red Sea have forced vessels to reroute around the Cape of Good Hope, leading to extended transits. Mundra, India’s largest container gateway, is grappling with rising transhipment volumes, causing significant port congestion and longer container dwell times due to slow import clearance. Chennai is facing severe disruption with over 120,000 containers on the ground, exacerbated by vessel bunching, labour shortages, and inadequate infrastructure.
Expect delays.
USA
On the export side, rates are climbing amid stronger global demand. The US West Coast remains the preferred route to Oceania, offering more economical rates than the East Coast. While demand remains robust in the Transpacific Eastbound (TPEB) market, rates have slightly dipped, with availability more stable than in the past.
Carriers are planning mid-August GRIs to correct the rate dip from Asia, with USD 500.00 per TEU as the targeted increase. Meanwhile, the Port of Long Beach is undergoing a USD 1.5 billion rail yard expansion project called “America’s Green Gateway,” connecting the port to 30 rail hubs across the USA and tripling its rail cargo capacity.
Europe
Summer holidays in Europe mean labour shortages at many hubs and terminals. As per World Cargo News, the ongoing strike actions in Germany, stemming from unresolved Collective Labour Agreement (CLA) negotiations affecting around 11,000 port workers, have caused significant disruption and congestion at ports like Wilhelmshaven, Bremen, and Emden.
Rates remain stable in Oceania, but extended transit times are a reality in the current market.
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