Shippers should expect ongoing volatility through to 2025: International freight insights APAC 2024 week 34

Futures show more downside to freight rates in 2025. China container futures trades suggest that freight rates could fall in 2025, after appearing to have peaked now.

Per Linerlytica: “The futures market is pricing in a 4.46% decline each week in the next three weeks to the end of August, to be followed by a 4.49% decline each week in the following nine weeks to the end of October. Rates are expected to continue to fall through 2025”.

This analysis is for the general ocean freight shipping container market, and is applicable mostly for Asia to North America & Europe.

This trend is NOT showing for Australia routes. Spot rates Asia to Australia have not yet showed evidence of reaching a tipping point, with the China Global Export Container Freight Index for the past week to 16th August increasing 3.4% (it increased 6.1% in the prior week). This is well above the 3.0% decrease (flat in the prior week) in the overall China Global Export all routes China Export Containerized Freight Index.

As can be seen in the 3-month chart, ocean freight rates have increased far more for all trade lanes than they have to Australia. In the past few weeks this trend is reversing with Australia trade lane rising as most others fall.

In the chart I’ve included China to Southeast Asia. Australia’s freight rate increases while others decrease is consistent with what I mentioned and predicted about a month prior: “it has been the first time in the past two decades that SE Asia has surged above China to Australia, New Zealand route in this index. Why may this be significant? Some routes from China to Australia have stops in SE Asia and it’s the closest geographically of the 12 major routes in the index. There is more possibility of increasing rates to Australia as shipping lines monitor their gross profit margins for different routes.”

It remains to be seen if rates to Australia will continue increasing or level out. My anecdotal information from certain shipping lines is that China -> Australia route is showing a further increase of up to 3% in rates as at early this week.

Airfreight rates have been unusually steady the past few months.

Another record-breaking month for container shipping demand

Ocean container shipping demand from China to North America and North Europe continued to break records in June 2024 as importers rushed to protect supply chains amid the global disruption caused by conflict in the Red Sea.

Actual departures from Asia remain volatile with port congestion and other delays causing significant capacity slippage.

Hapag-Lloyd applies new PSS from Far East to Australia

German shipping company Hapag-Lloyd has announced a Peak Season Surcharge (PSS) from the Far East to Australia. The surcharge will be effective from 22 August for cargo sailing from China, Japan, South Korea, Hong Kong and Macau to Australia. The PSS will be US$500 per TEU for all container types.

China’s export growth moderates as price competition ramps up

An ING bank report says China’s slowdown in exports is contributing to increasing price competition lead by the electric vehicle, household electronics sectors.

Shippers should expect ongoing volatility in container shipping freight markets through 2025

This is According to Lars Jensen, CEO of Vespucci Maritime. Jensen also noted that even if the Middle East situation was unexpectedly improved and Houthi attacks on global trade ceased, it would still take considerable time for liner networks to adjust. He suggested that an extended Red Sea crisis would likely lead to "continued high freight rates" and "high volatility." Looking ahead to 2025, Jensen said that if the Suez Canal remains mostly closed and global supply chains avoid further shocks, contract and spot rates are expected to soften.

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 

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ABOUT

An international supply chain, freight and logistics management company, specialising in connecting with C­hina & APAC markets. Access ZG gets its name from the initials ‘Zhong Guo which means China in Chinese. Access ZG began with accessing the China market and has since expanded to other APAC markets.

Access ZG is a fourth party logistics (4PL) operator that provides supply chain management services and arranges & coordinates freight services via a network of logistics providers. Using its expertise and connections has established an innovative model to international supply chain and logistics. This model provides increased flexibility, resources and options to enable best solutions.

Founder

Jeff is a China & APAC International Logistics & Trade Specialist. Based in Sydney, previously based in Shenzhen, China.

The founder of Access ZG has about a decade of experience working in supply chain and logistics in both Australia and China. Previously worked for an Australian land side shipping container storage & transport company, a Chinese freight forwarder as well as the world’s largest package delivery company, UPS. First job out of uni was in financial audit at Deloitte.

Qualifications: Bachelor of Commerce, Masters in Logistics Management, Chartered Accountant (CA).