Indicators suggest another surge: International freight insights APAC 2024 week 44
Indicators suggest another surge in Asia to Australia rates to end off 2024. Access ZG’s anecdotal observations from China freight forwarders are that spot ocean freight rates offered by some carriers this week increased by up to 15% from the previous week. Global rates are also hinting at increases for the first time in months with the Shanghai Containerized Freight Index showing a first weekly increase for the past few months – up 6%. China containerized futures markets are pricing in for global ocean rates to increase 40% between end of October 2024 and end of December 2024, and then gradually decrease throughout first half 2025.
The China Containerized Freight Index (which is the best index for spot ocean freight between Asia and Australia) showed spot ocean freight rates China to Australia flat over the past week (rates are down 8% over a 1-month period). Rates for China to all global routes decreased 3% over the past week. Here’s a 5-year chart comparing ex China to Australia & New Zealand rates and global rates ex China.
The Index lags the information Access ZG sees in both other indices and on the ground with Asia freight forwarder and shipping line quoted rates. The recorded index rate to Australia may see sharp ocean freight increases in coming weeks. Sustained large rate falls may come closer to year end/ early in the new year.
Air freight rates (full-market mix of spot rates and contract rates) within Asia Pacific were flat, while overall worldwide rates also were flat over a two-week comparative period. Air freight faces a capacity challenge especially for the peak season. There is a risk of air freight rate increases in the coming weeks.
Overseas may be the most vulnerable, least controlled part of your company’s international supply chain. Access ZG provides Australia & Asia on-the-ground specialist staff, expertise & resources for international supply chain management and brokerage & negotiating with shipping lines and forwarders. Reply to arrange a no obligation discussion via your choice of phone call, Zoom online or face to face (for those based in Sydney).
Shipping line expects profit hike on strong demand and Red Sea crisis
One of the biggest shipping lines Maersk has raised its full-year earnings guidance amid “strong container market demand”.
The Loadstar explains that The Danish carrier said this comes on the back of strong third-quarter results combined with strong container market demand and the continuation of the Red Sea situation. It has upped its full-year earnings to between $11bn and $11.5bn. This is up from its previous estimate of between $9bn and $11bn. Further, the outlook for the global container market volume growth for the full year has been revised to “around 6%” from the previous 4%-6%.
With shipping lines profits up amidst global rising rates, using a brokerage service as opposed to relying on one freight forwarder may be of great benefit.
Air cargo shifts capacity to where the money is as holiday season begins
The Loadstar explains that airlines are shifting capacity to Asia Pacific-North America as the Christmas rush starts. According to the US National Retail Federation (NRF), consumer spending for the holidays is expected to grow between 2.5% and 3.5% on last year, while ecommerce is expected to grow by 8% to 9%. Airlines are certainly putting their capacity where the money is. Last week, capacity from Asia Pacific to North America rose 6% on the previous week. To Europe, capacity was up 4%. Cathay Pacific’s chief customer and commercial officer, Lavinia Lau, said today: “We expect demand to be robust during the traditional peak season, driven by ecommerce, hi-tech and electronic goods from the Chinese mainland, South-east Asia and India, as well as perishables from the south-west Pacific and Americas.” Cathay saw volumes up 11% in September, year on year, and up 10% year-to-date.
Container Ports struggle as vessel bunching approaches covid levels
Splash 247 says that container ports are experiencing chaotic schedules not seen since the days of covid. Vessel bunching, where multiple vessels sail on the same week on the same service, has increased sharply this year. On Asia-Europe in particular, this is essentially back to the same level as during the pandemic thanks to the ongoing Red Sea shipping crisis. Schedule delays can lead to the issue of vessel bunching. The Houthis of Yemen have largely cut off container shipping from transiting the Suez Canal leading to a mass rerouting of containerships around the Cape of Good Hope. This soaking up of tonnage has inevitably brought vessel bunching and spikes in congestion around the world. Singapore’s port, for instance, has seen about 90% of container vessels arriving off-schedule, compared to an average of about 77% in 2023.
What keeps shipowners up at night?
From Splash247: The latest report published by the International Chamber of Shipping would suggest geopolitical instability and cyber-attacks are acute worry points for shipping (see chart below). The survey of over 100 global maritime industry leaders over a three-year period analyses year-on-year shifts in sentiment on pivotal issues influencing operations. Areas of concern for respondents include the recent increase in geopolitical instability which is seen as a risk multiplier as it impacts other factors, malicious physical attacks and cyber-attacks. Protectionism was also seen as a growing risk, driven by geopolitical instability, national energy security concerns, global and regional economic crises, and government-led manufacturing incentives favouring local production.
Access ZG (access-zg.com) provides services to international logistics & trade participants, specialising in connecting with Asian markets.
Thanks for taking the time to read and hope you gained some valuable insights,
Jeffrey Levy CA
Founder
ACCESS ZG
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