Freight Market Update

In this freight market update in what’s becoming a pattern, the expected Peak Season rush did not occur, meaning less congestion, low rates, and more predictability.

But the subdued demand for space means shipping lines continue to blank sailings to maintain rates.

The main driver here is a generally slow global economy. High interest rates, persistent inflation, a slowing in the Chinese economy and the continued war in Ukraine all contribute.

Drewry’s composite World Container Index decreased by 9.29% in the past month and is now 6% below average 2019 (pre-pandemic) rates, the lowest for three years.
The latest analysis from Drewry forecasts a 60% rate reduction in global freight rates (spot & contract combined) for 2023, followed by a further drop of 33% in 2024. The shipping demand outlook forecasted for 2024 is expected to be muted at 2% globally year-on-year. However, the Oceania region is expected to be closer to 4%.
ANL announced Rate Restoration from 1 November at USD100/teu for all shipments from North East Asia to Australia East Coast, Fremantle, Adelaide & New Zealand.
The latest Purchasing Managers’ Index (PMI) data shows trade conditions continue to deteriorate at the end of Q3 2023, down for the nineteenth successive month, quantifying the lack of shipping demand globally.

Schedule Reliability

Global schedule reliability declined by 0.9% month-to-month in August to 63.2%. It is still 17% higher than the same period last year.
The average delay for late vessel arrivals increased by 0.07 days month-to-month to 4.67 days, yet it is still 1.23 days better than the same period last year.

Cancellations

Between 28 October and 5 November and 27 November and 3 December, 62 cancelled sailings have been announced out of 660 scheduled sailings, representing a 9% cancellation rate (down 6% month-on-month).
Over the next five weeks, OCEAN Alliance has announced 24 cancellations, followed by THE Alliance and 2M with 13 and 4 cancellations, respectively. During the same period, 21 blank sailings have been implemented in non-Alliance services.

Orderbook / Scrapping

India’s prime minister, Narendra Modi, announced plans to make his country a top-five shipyard hub.
The global supply/demand index is projected to hit an all-time low, highlighting a significant overcapacity, with no sign of supply exceeding demand in the upcoming years. Hapag-Lloyd CEO Rolf Habben Jansen quoted in a German newspaper that he expects the next three years to be ‘difficult’ due to demand for shipping services growing more slowly than available shipping capacity.
Alternative fuel vessels account for 67% of ships currently on order. LNG is the most common of the alternative fuels.

Sustainability

In the EU, the Emissions Trading System (ETS) will apply to the shipping sector from January 2024, requiring ocean carriers to monitor and report their carbon emissions. By the end of the year, carriers purchase an equal amount of emission allowances, where one allowance counts for one ton of CO2. Legislation will apply to vessels travelling between EU countries and between EU and non-EU ports.
The United Nations Conference on Trade & Development (UNCTAD) released the 2023 Review of Maritime Transport, calling for a just and equitable transition to a decarbonised shipping industry.

Global Air Freight

The average air cargo spot rate for the month was USD$2.23 per kg in September, a rise of 2% month-on-month.

September air cargo volumes were on par with the same period last year, but global air cargo capacity grew at its slowest pace in the past 11 months, up 5% from a year ago.

Qantas Freight issues arising from a failed system cutover created mayhem at Qantas Freight terminals around Australia, requiring Qantas Freight to resort to manual processes and lose control of data integrity. The issue caused significant delays throughout September & October, leaving customers with considerable damage, losses, and additional costs.

Enterprise Agreements

The CMMFEU commenced protected industrial action on 6 October 2023 at all DP World (Australia) main terminals in Sydney, Melbourne, Brisbane & Fremantle. Stoppages have affected service since, with current reports citing delays of vessel turnaround times of approximately 5-6 days on the East Coast. The stoppages are expected to continue until at least 27 November 2023.

Hutchison Ports is fast approaching the end of its current enterprise agreements.

China / North Asia

The GRI at USD150 per TEU announced to take effect from 15 October was not fully implemented. Less than 50% of the announced amount was successful, possibly only due to blank sailings artificially inflating demand.

Carriers are hopeful a GRI of USD 100 per TEU for containers ex-North Asia to Australia and New Zealand, effective 1 November 2023.

South East Asia

The blank sailings announced before and after Golden Week have made space tight in some locations, and freight is accumulating at transhipment ports. We advise importers to secure bookings in advance to enhance the likelihood of securing space and equipment. Operations are functioning well, but some minor transhipment delays are being experienced at Singapore and Port Kelang.

North America

The market is stable, with plenty of space available.

The Panama Canal Authority has announced further restrictions on vessel slots, effective 1 November 2023. The new limits will further worsen the congestion and lengthen the queue times.

UK / Europe

Space availability is still favourable in Europe. There are no capacity constraints, only vessel delays. Blank sailings/suspension of services are still in place. More are expected in November.

In the UK, road freight rates rose 3.3% month-on-month in September. By contrast, rates have been sliding in the EU. Fuel prices are again showing signs of volatility.

Australia and New Zealand Ports

Patrick Terminals

Brisbane: Working with minimal delays approx. 0-0.5 day.
Fremantle: Working with delays approx. 1.5 days.
Sydney: Working with minimal delays approx. 0.5 day.
Melbourne: Working with minimal delays approx. 1 day.

DP World Terminals (*protected industrial action)

Brisbane: Working with delays approx. 5-6 days.
Fremantle: Working with delays approx. 3.5 days.
Sydney: Working with delays approx. 5-6 days.
Melbourne: Working with delays approx. 5-6 days.

VICT

Melbourne: Working with minimal delays of 0-0.5 days.

AAT

All ports are working with minimal delays.

MIRRAT

Melbourne: There is some congestion at present.

New Zealand

Lyttleton: Approx. 0.5-1 day delay.
Napier: Working with minimal delays approx. 0-0.5 day.
Tauranga: Working with minimal delays approx. 0-0.5 day.
Auckland: delays approx. 2-5 days.

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.

Sources:

https://news.ihsmarkit.com/

With thanks to the FTA for their freight market update.