The two-month surge ends; spot ocean freight rates China to Australia have finally steadied: International freight insights APAC 2024 week 40

The two-month surge ends; spot ocean freight rates China to Australia have finally steadied, increasing just 1% for the week (rates are up 48% in the past 2 months; see green line in chart).

Still, there’s a contrast with rates China to all global routes decreasing 6% in the past week (global rates ex China is down 23% in the past 2 months; see black line in chart).

China Containerized Freight Index spot ocean freight rates YTD:

The recorded ocean freight rates index to Australia should start to decline within the next few weeks. A few carriers are this week offering reduced rates Asia to Australia (5%-10% lower). Enquire with shipping lines and / or discuss with an expert to ensure decreased spot rates are experienced for the remainder of the year.  There is an increased probability of steep rate falls in the medium term as Australia belatedly follows with the global trend, although carriers may increase blank sailings in an attempt to delay / limit this.

Global airfreight rates have been unusually steady this year, remaining flat in the past week. Increased air cargo demand with capacity not keeping up means that there is a reasonable risk of airfreight rate increases in the coming weeks. Although these will likely be nothing like the dramatic shifts in the ocean freight market.

A few days left to avert supply chain mayhem in the US

Daily Splash says that if by this week, “no pay deal has been struck between employers and employees, 45,000 American dockworkers across the east and Gulf coasts will then down tools in an industrial action that will have ripple effects across every shipping sector.” This strike threatens to send supply chains around the world into chaos. Contract negotiations have broken down between the International Longshoremen’s Association (ILA) and port operators on the US east and Gulf coasts. The current agreement, which covers workers at facilities including six of the 10 busiest US ports, is about to expire.

A JPMorgan analysis projected that a strike could cost the US economy $5bn daily. Xeneta says “the vast majority of vessels will simply wait outside affected ports until the workers return. The consequences will be ‘severe’, not only through congestion at US ports, but these ships will be delayed returning to Asia for the next voyage. A strike lasting just one week will impact schedules for ships leaving the Far East on voyages to the US in late December and throughout January.”

Medium & long term container shipping rates become more difficult to predict

On the one had record levels of new container ships being built with its expanding supply, flat demand and many irritated shippers suggests lower rates. On the other hand, some carriers are raising 2025 contact rates using global disruptive events such as the Middle East conflict, this week’s potential US dockworker strike as well as a more unpredictable future global environment as the reasoning.  

Disruption in global supply chains through the knock-on effects of trade disputes

Per Container News “Ongoing trade disputes between the European Union, the United States and China shape future container market dynamics. The backdrop of these developments is the trade war initiated in the previous year between the United States and China. The US imposed increased tariffs on over a thousand Chinese products, citing unfair trade practices, which prompted China to reciprocate with increased duties on American products.

This cycle of retaliatory actions suggests a likely escalation of sanctions as neither side shows a willingness to compromise in negotiations.”

Airfreight faces capacity challenge

The Loadstar explains how shippers and forwarders are facing the prospect of tightening airfreight capacity driving up pricing. “Growth in demand and available supply have diverged increasingly this year, and supply of large widebody aircraft remains constricted by supply chain issues and other problems in aircraft manufacturing. This has a knock-on effect on the availability of planes for conversion into cargo aircraft, further exacerbating the constraints on capacity.”

China's central bank unveils most aggressive stimulus since pandemic

Reuters explains that China is facing deflationary pressures, with growth targets at risk. “China’s central bank last Tuesday unveiled its biggest stimulus since the pandemic to pull the economy out of its deflationary funk and back towards the government's growth target, but analysts warned more fiscal help was vital to hit these goals. Analysts questioned how productive the People's Bank of China's liquidity injections would be, given extremely weak credit demand from businesses and consumers, and noted the absence of any policies aimed at supporting real economic activity”.

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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