This global freight market update sees us to the start of spring and the time we all start to turn our minds to Peak Season. However, the volume and rate spikes we usually see during the peak are not yet on the horizon. We expect carriers to implement more blank sailings and other rate restoration activities in the coming months as they restrict supply to push rates into more acceptable territories.
Freight market update
- Drewry’s composite World Container Index increased by 12.23% in the past month per 40ft container as of 24 August 2023. It is now 83% below the peak in September 2021 and 34% lower than the 10-year average. This indicates a return to more normal prices but remains 24% higher than average 2019 (pre-pandemic) rates.
- ANL has announced rate restorations from 15 September 2023 for shipments from South East Asia, India Sub Continent and Middle East to Australia Main Ports and from North East Asia to Australia East Coast, Fremantle & New Zealand
- MSC has announced rate restorations from 15 September 2023 from China, Hong Kong, Japan, Korea, Taiwan, Bangladesh, Malaysia, Singapore, Indonesia, Thailand, Vietnam, Myanmar, Cambodia and the Philippines to Australia and New Zealand.
- ZIM is pulling its service out of the Asia-Australasia trades to enter a vessel-sharing agreement with MSC on its Panda loop. To be branded ZAX by ZIM, the service will deploy seven 5,000 teu ships, with ZIM contributing three.
- Global schedule reliability has dropped for the year by 2.5%, down to 64.3%. It is still 24.4% higher than the same period last year.
- The average delay for late vessel arrivals is stable at 4.36 days.
- Between 28 August and 1 October, there was a 5% cancellation rate.
- Sailing cancellations are expected to increase in the coming months as liners battle the worsening economic environment.
Empty container parks
The Victorian Department of Transport & Planning, in collaboration with Container Transport Alliance Australia (CTAA), released the Victorian Empty Container Park (ECP) Trial Report, highlighting that truck servicing at ECPs is more than 30 per cent more efficient when pre-receival electronic data is provided by shipping lines and ECPs take steps to automate truck in-gate processes. This could save Melbourne’s container transport industry over $5 to $6 million in truck operating costs.
Global air freight market update
Spot rate declined 40% for the fourth consecutive month. Last month saw a 7% YoY capacity recovery as airlines’ schedules stepped up to meet increased passenger traffic. The average air cargo spot rate for the month was 41% down on July 2022.
The start of the Brown Marmorated Stink Bug (BMSB) season is imminent. The BMSB measures will be applied to goods shipped on vessels that berth, load or transship from target risk countries between 1 September 2023 and 30 April 2024. It’s an excellent time to remind your suppliers not to pack containers too tightly to ensure the fumigant can be distributed around the contents and that plastic wrapping should be perforated to allow the fumigant to pass through.
Shipping Line Q2 financials
In the second quarter of 2023, carriers’ operating profits took a hit, with a combined EBIT drop of 90% compared to the previous year. The primary reason for this decline in profitability was a substantial reduction in freight rates.
Panama Canal congestion
As of 27 August, 128 ships are waiting for passage through the Panama Canal, 45% more than average. Last month, the Panama Canal Authority cut transits by 20% to conserve fresh water. While rainfall has returned to Panama, the authorities are unlikely to lift restrictions due to the forecast El Nino. The average waiting time for container ships has remained insignificant, at less than a day.
Orderbook / scrapping
The container fleet is set to grow 18 per cent over the next few years. 4.5 million new teu will be added to the market by 2025.
To date, 57 ships or 110,000 teu, have been sent for demolition, with an estimated 105 vessels or 207,000 teu, expected to be scrapped by the end of this year. It is estimated that vessel scrapping will further increase next year.
- Maersk has ordered 25 ships that will run on green methanol.
- ‘Ship It Zero’ has released a decarbonisation scorecard, giving ratings to the carriers based on three campaign demands, which include their ability to end port pollution, abandon dirty ships, and put zero at the helm.
- Maersk earned the highest points, 76.5 / 100 (B grade), for its actions to end ocean shipping pollution. Maersk is committed to a 70% reduction in absolute emissions by 2030 and net zero by 2040 across all scopes. Maersk is the only carrier out of ten with a target date for decarbonisation of 2040.
Maersk aims to employ artificial intelligence for cargo handling fully and anticipates AI assuming key supply chain roles over the next 5-7 years. Their plan involves progressively using AI to manage global shipping tasks, striving for “zero-touch logistics.”.
While rates have remained reasonably stable since June, a GRI was announced for August. Blank sailings have made space tighter, and we expect this to continue until carriers bring freight rates to what they consider a more sustainable level.
Operations are generally undisrupted, and efficiency in local transport and terminals has improved.
Air freight is continuing to improve as more flights have been added, which means service is becoming more regular and volumes and rates have substantially improved for export from major airports.
South East Asia
Rates have remained relatively stable since May. Carriers have been blanking sailings to manage weak demand, and we expect this to continue. There may also be a GRI announced in mid-September.
There are no significant disruptions, and logistics operations are running smoothly between the terminals and the factory points of origin.
More air freight services have been added to the trade lane, and rates are now close to pre-Covid levels as services become more regular.
Ports in India are still recovering after Cyclone Biporjoy, which severely impacted deadlines and schedules, with containers missing scheduled departure times and shipments delayed. There is now a backlog of containers accumulating at the port.
Shipping lines are skipping Mundra Port for the next few weeks to restore schedule integrity as soon as possible. A container shortage issue is also emerging at Mundra.
India operations remain somewhat disrupted. Allow at least ten days in your scheduling from ex-factory to departure from India.
Industrial action, especially in Canada, has considerably disrupted operations.
US Customs & Border Protection has heightened AU & NZ bond cargo surveillance. We expect this will intensify across the remainder of 2023, exposing regular importers to longer delays. Cargo moving via the Los Angeles port has been hit the hardest throughout 2023, but other origin ports may soon experience a heightened level of intervention.
US land freight is also affected by the extreme heat, with water levels dropping across inland waterways. There is the potential for a repeat of last year’s draught restrictions to prevent vessels from running aground.
New Zealand has increased its Biosecurity System Entry Levy and hourly rate for biosecurity fees.
Australia / New Zealand Ports
All ports are working with minimal delays, approx. 0-0.5 day.
Patrick Terminals has announced an investment in 10 Kalmar hybrid straddles for its Melbourne terminal – Australia’s first container terminal operator to invest in this technology. The hybrid straddles feature advanced technology that enables them to operate on electric power. They also cut fuel consumption by up to 40 per cent compared to equivalent diesel-powered machines.
DP World Terminals
All ports are working with minimal delays, approx. 0-0.5 day.
Working with minimal delays of 0-0.5 day.
VICT is extending its equipment fleet by installing six new automated stacking cranes (ASC), increasing the terminal’s yard by 30% and reefer capacity by 43%. In addition, 15 new truck grids will be installed, increasing slot availability by 30%. VICT is also adding two bigger ship-to-shore cranes to its fleet, bringing the total number of cranes to seven. The new cranes will handle up to 14,000 teu Neo-Panamax ships. The quay line will also be expanded by 71 metres to accommodate two 336-metre-long vessels berthing simultaneously. The extension is expected to be operational by the beginning of 2024 and increase the terminal’s annual throughput capacity to 1.25 million teu, up from 250,000 teu.
- Brisbane: Berth congestion from Sunday, 13 August, throughout Sept 2023 due to vessel port rotations resulting in clumping of vessel ETAs in Brisbane.
- Port Kembla: Still affected by severe congestion, with vessels queued for up to 15 days, citing Berth & Yard congestion.
- Melbourne: Congestion at present.
- Auckland, Tauranga, Napier: Working with minimal delays approx. 0-0.5 day.
- Lyttleton: Approx. 0–2 day delay.
Magellan Logistics provides freight and logistics services to all industries, including sea freight, air freight, customs clearance and the all-important digital freight portal, providing 24/7 visibility of all your shipments. Keeping customers abreast of changing market conditions is critical in what we do. Our dedicated and professional team would love an opportunity to assist your business. If you have questions about the Freight Market Update, please get in touch on 1300 651 888.
As you start thinking ahead to peak season, get in touch to discuss your options, and please plan to book your shipments two weeks to a month in advance.
With thanks to the FTA for their freight market update.