Market Update

Market Update July 2024

July 1, 2024
Sasha Khan
Marketing Manager
8 Minutes

Ocean Import Updates

Global demand for container ships outpaces supply, reducing idle vessels.

As global demand for container ship capacity continues to exceed supply, the number of idle vessels has dropped to pandemic-era levels. Alphaliner data shows that in the first half of the year, commercially idle ships averaged 0.7% of the fleet, about 210,000 TEU out of a global fleet of 29.6 million TEU, similar to numbers seen in early 2022. Currently, only 77 ships, totaling 217,038 TEU, are idle, with none over 18,000 TEU and only two above 12,500 TEU, as carriers seek any available capacity.

All shipping lines need ships at the moment, and there are virtually no idle vessels, as every single one is actively working. Spot rate surges are expected to continue until supply surpasses demand. Currently, long-term rates are below spot rates, prompting carriers to limit their capacity for long-term agreements and use peak season surcharges. Almost all vessels are running at full capacity, driving the surge in rates.

As vessels over 4,000 TEU become scarce, the number of forward fixtures for larger ships to be delivered later this year and next has risen. This trend reflects carrier expectations that Suez routings will not resume soon and is driven by higher-than-expected cargo volumes and a better-performing global economy despite geopolitical challenges.

Container shipping faces extreme volatility amid supply and demand imbalance

Transport Intelligence (Ti) describes the container shipping supply as "febrile and extreme" due to fluctuating capacity demands and a surge in new vessel supply. The Red Sea crisis has further disrupted the balance, requiring more ships for Asia-Europe routes and tightening capacity.

New ships from Chinese and South Korean yards help mitigate some market strain. Alphaliner data shows that carriers like MSC, Maersk, and ONE have significant new vessel orders, boosting future capacity. Q2 saw a 1.5% year-on-year increase in capacity but a slight 0.7% quarter-on-quarter decline.

Additional equipment is necessary to support the new ships, increasing costs as spot and charter rates rise. Despite higher expenses, some carriers seem willing to pay due to expected revenue gains.

The market remains uncertain, especially if the Suez Canal route reopens, potentially leading to an oversupply and downward pressure on rates.

Don't let container shortages and port congestion slow you down—partner with us for reliable and efficient freight forwarding services. Our team is equipped to provide tailored solutions for the evolving changes within the logistics industry. We are adept at adapting to market dynamics, recommending proactive measures that ensure your goods stay on the move. Get in touch today.

Container freight market sees early peak amid supply chain strains

The industry has seen an early peak season, with retailers pre-stocking to avoid congestion later this year, rather than a recovery from 2023’s low demand. Many shippers, scarred by pandemic-era congestion, are eager to avoid empty shelves during the fourth quarter.

It seems shippers are advancing shipments to avoid peak season rates and disruptions, noting moderate growth in US consumer demand. Concerns about potential strikes at US east and Gulf coast ports are also influencing importers.

Current data suggests we may be nearing the peak of spot rate pricing. Drewry’s World Container Index shows mixed growth: Shanghai-Rotterdam rates rose 11%, while Shanghai-Los Angeles and Shanghai-New York saw 7% and 3% increases, respectively. Drewry anticipates continued rate rises due to congestion at Asian ports.  

Spot rates inch up after surge, double-digit increases expected

Following last week's sharp rise, spot rates showed modest gains due to fewer surcharges. However, rates are set to jump next week with new adjustments expected.

MSC introduced FAK rates for Asia-North Europe at $9,800 per 40ft HC and $9,000 to West Mediterranean starting Monday. Projected rates of $14,000-$15,000 are being seen if peak season extends.

Bangladesh Faces Severe Shortage of 40ft High-Cube Containers

Bangladesh is experiencing a severe shortage of 40ft high-cube containers, affecting export shipments. Major liner operators like MSC and Hapag Lloyd are trying to reposition equipment from nearby ports to address the issue.

Congestion at Singapore has worsened the situation, stranding hundreds of Bangladesh-bound containers due to berthing delays. Additionally, many 40ft containers are stuck at Chittagong port as importers delay collection during the Eid holidays.

While some carriers have adequate supplies, others face severe shortages, especially those importing from Europe and America. The situation is unlikely to improve until congestion at Singapore eases.

Disruptions in US Meat Exports to China

A recent ban on US meat exports from two key locations has caused significant disruptions for shipments to China. On May 27, Chinese authorities banned US meat exports from Cool Port Oakland, a major temperature-controlled facility near the Port of Oakland, California.

This decision followed the discovery of ractopamine, a feed additive banned in over 150 countries, in a beef shipment from the facility. Although ractopamine is allowed in the US, it is prohibited in places like the European Union and China due to animal welfare and health concerns.

This ban has forced US meat exporters to find alternative routes, increasing their costs and complicating logistics.

Air Freight Updates

Air cargo market sees volatility and shifting trade dynamics

Transport Intelligence (Ti) reports significant volatility in the air cargo market due to economic growth and changing global trade structures. In Q1, global airfreight volumes fell by 6.4% from the previous quarter but rebounded in March with a 17.4% increase.

Year-on-year, global volumes rose by 7.3%, driven by 11.3% growth in Europe, 7% in Asia, and 4.5% in North America. The surge is attributed to the Red Sea crisis and booming Chinese e-commerce.

Despite efforts to reduce reliance on China, it remains a key player in global trade, expanding into western markets and diversifying trade into Asia and the Americas.

Chinese e-commerce is driving the growth of freighter fleets, and increased passenger services have boosted belly freight capacity by 20% year-on-year in March. The market's underlying demand is strong but complex, with potential for rapid changes.  

With the outlook for global perishable shipments being so positive, now is the perfect time to optimise your shipping strategy. Contact us today to discover how our expert team can help you navigate the complexities of reefer shipping, ensuring your perishables reach their destinations efficiently and cost-effectively.

Pathway

Understand, report, reduce. Our latest Carbon Accounting feature explained.

Our technology team are always looking for ways to take proactive measures to adapt our carbon accounting solution. We've updated our Pathway routing model to incorporate standard 'real-world' distances for shipments from China and the Far East instead of trade lane averages, ensuring that our carbon accounting remains the most accurate and reliable in the market.  

Our vision is clear: we commit to connecting our customers with the most sustainable solutions available, focusing on environmental responsibility and innovation. Our approach covers everything from Renewable Energy to Operational Waste and Product GHGs, underscoring our comprehensive commitment to sustainability.  

By focusing on container utilisation and optimising shipping routes to the UK ports nearest the warehouse destination, we strive to minimise our environmental footprint. Although we cannot fully negate the increased emissions from extended sea voyages, we should remain committed to maximising the efficiency of every aspect of logistics operations under our control.

We've already been refining how we discuss and measure emissions with clients, focusing on the journey towards net-zero emissions through effective offsetting initiatives with our partner, Pledge.

This project is a pivotal step for Unsworth, aligning our operations with our core values of environmental responsibility and innovation.

Book a Pathway demo.

No two logistics challenges are the same. We understand this and tailor our solutions to meet your specific needs. Our teams work closely with you to develop strategies that address your unique challenges effectively and efficiently.

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