Australia rates finally join the global trend down: International freight insights APAC 2024 week 42

Spot ocean freight rates China to Australia have fallen, decreasing 7% over the past fortnight (rates are flat over a 1-month period).

Rates for China to all global routes decreased 10% over the past fortnight (all global rates ex China have declined 19% over a 1-month period).

This is according to the China Containerized Freight Index (which is the best index for guidance about spot ocean freight between Asia and Australia; the index didn’t have a reading last week due to the China Golden week public holiday). Here’s the year-to-date chart comparing all rates ex China with Australia and NZ rates ex China:

The two index lines have almost comparatively aligned to be where they were at the start of the year, after a big divergence throughout 2024.   

A note of caution- in spite of this, a few carriers this week slightly increased offered rates Asia to Australia. The Index lags the information Access ZG sees in quoted rates. This suggests the recorded index rate to Australia may steady for the next few weeks. In other words, sustained large rate falls should not be expected immediately (they may come closer to year end).

Global airfreight rates from Asia Pacific increased 1% over the China public holiday week, despite a 7% drop in Asia Pacific region tonnages due to the holiday. Air freight faces a capacity challenge especially on the eve of the peak season. Capacity from some China and other Asia airports are especially tight. There is a strong risk of air freight rate increases in the coming weeks.

Asia to Oceania ocean freight demand to exceed capacity to year end

DHL Ocean Freight Market Update – October 2024 report

Notice how Asia to Oceania route is one of few forecasted by DHL to have demand exceeding capacity for remainder 2024. This analysis supports Access ZG’s observations of quoted spot rates not necessarily drastically falling in coming weeks (as has been observed in world prices over the past weeks).

American port union doubles down on anti-automation rhetoric

Per Splash247, last week’s historic port strike across America’s eastern seaboard may return again: “Both sides said they would return to the bargaining table to negotiate all outstanding issues while their existing contract would be extended through to January 15, 2025. However, union bosses reiterated their determination to make sure that their labour contract contains commitments not to automate operations… American ports are already seen lagging when it comes to port efficiency.”

On the shipping line side, they’re unlikely to mitigate the capacity shortfall as a result of the short strike as to do so would likely mean a continuation of the rate declines seen recently.

DHL optimistic for first quarter 2025 airfreight demand

Per Air Cargo News, “DHL is optimistic for the first quarter of 2025 with the expectation that airfreight volumes will continue to trend upwards. DHL said no major changes are expected following the anticipated strong fourth quarter. Third-quarter airfreight volumes out of Asia Pacific increased this year compared to the third quarter of 2023, plus much of that air cargo capacity is already secured by e-commerce shippers. Further, post-Golden Week in China DHL expects an increase in airfreight demand and for this to continue. Asia exports continue to be healthy… and there continues to be strong volumes out of Thailand, Vietnam, India which is anticipated to continue in the first quarter.”

Taiwan tracks 20 Chinese military aircraft, 10 naval ships

Per Taiwan News “The Ministry of National Defense tracked 20 Chinese military aircraft and 10 naval vessels around Taiwan between Thursday (Oct. 10) and Friday. Of the 20 People’s Liberation Army (PLA) aircraft, 13 crossed the Taiwan Strait median line in the nation’s northern, central, and southwestern air defense identification zone (ADIZ). In response, Taiwan sent aircraft and naval ships and deployed coastal-based missile systems to monitor PLA activity.  So far this month China has sent 115 military aircraft and 55 ships around Taiwan. Since September 2020, China has increased its use of gray zone tactics by incrementally increasing the number of military aircraft and naval vessels operating around Taiwan”.

It's important to note that for ocean shipping chaos to occur in future as a result of China, Taiwan tension in South China Sea; a missile being fired is not required. A simple hint that China is blockading some international trade vessels in / out of Taiwan, would likely be enough for international supply chain chaos and a freight rate spike.

Access ZG (access-zg.com) is an Australian company that provides fourth party logistics (4PL) services to international logistics & trade participants, specialising in connecting with Asian markets. Access ZG’s 10 value- ads assist with alleviating issues & navigating this new paradigm of heightened freight & supply chain risks for the international logistics industry.

Please see website and / or read below the email signature for further information & reach out for assistance in this challenging environment.

Thanks for taking the time to read and hope you gained some valuable insights,

Jeffrey Levy CA 

Founder

ACCESS ZG 

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