The freight market is all geared up for Christmas, and some retailers are already getting into the festive spirit with decorations everywhere you look.
With forward planning the name of the game for peak season, most shippers have positioned their goods. For those relying on air freight, note that space is limited, rates are rising, and carriers are adjusting operations.
The instability caused by geopolitical tensions, unrest, and economic changes continues. The US election may lead to a surge in Chinese orders to avoid proposed tariff increases.
And as we know, in our region, demand surges again before the Chinese New Year shutdowns, from 29 January to 3 February 2025. The best approach is to plan for unforeseen contingencies and back them up with a Plan B.
Rates and Rate Restorations
Drewry’s World Container Index (WCI) rose 3.8% to $3,213 per 40-foot container on 31 October 2024, pausing a 47.9% decline. Freight market rates are up 139% from last year. The average YTD index is $4,017 per feu, $1,178 above the 10-year average of $2,839.
- ZIM announced North East Asia to Australia Rate Restoration Program of USD$400/TEU effective 5 November 2024.
- ANL announced a Rate Restoration effective for all shipments from North East Asia to Australia East Coast, Fremantle, Adelaide & New Zealand of USD$300/TEU effective 1 November 2024.
- ANL announced a Peak Season Surcharge (PSS) effective for all shipments from Australia & NZ to the USA, Canada & French Polynesia of USD$300/TEU effective 1 November 2024.
Supply / Demand Dynamics
In early 2024, Australasian container trade grew by 12.7% to 3.5 million TEU. Imports increased by 14.7% to 1,965,200 TEU, and exports by 11.5% to 1,349,300 TEU. Imports from the Far East rose 19.3% to 1,404,700 TEU, and exports to the region grew 6.5% to 930,300 TEU. Despite strong demand, freight rates fell in most trades, with the Middle East/ISC seeing a 41% drop. The Far East was an exception, with rates up 9% in May and 20% in June.
September’s Purchasing Managers’ Index (PMI) showed manufacturing slowed to 48.8, while services grew to 52.9. Export orders for manufactured goods fell, but service exports rose to 51.7. Record container traffic in August indicates strong trade, especially in sea and air freight.
ABF cargo data shows sea cargo in October 2024 rose 59% YoY, and air cargo increased 36% YoY, with e-commerce making up 97% of air cargo. Sea cargo demand was driven by Golden Week.
Geopolitical Impacts
Panama Canal Drought Recovery
Panama Canal transits fell 29% YoY in FY2024 to 9,936 from 14,080 in FY2023. Daily averages dropped 30% YoY, from 38.6 to 27.1. However, MoM data shows improvement, with daily averages rising from 30.8 in August to 31.9 in September, the highest since October 2023. Container transits were least affected, down 0.5% YoY, with their share rising to 27.9%.
Somali Pirates
Somali pirates are active again, with 13 armed pirates recently leaving Ceel Huur near Hobyo into the Indian Ocean. This is the first sighting since early June, following a piracy resurgence that began late last year. The Maritime Security Centre – Horn of Africa (MSCHOA) advises caution and reporting of suspicious activity. UK Maritime Trade Operations (UKMTO) reported a vessel’s security team fired warning shots after an approach by five small crafts south of Aden.
Red Sea
The Red Sea crisis has intensified, with renewed Houthi attacks and security risks affecting shipping routes and global logistics. UK Maritime Trade Operations (UKMTO) reported three explosions near the bulk carrier Motaro. At the same time, Houthis claimed missile and drone strikes on Maersk vessels Maersk Kowloon and SC Montreal in the Arabian Sea, though unconfirmed.
Despite these threats, CMA CGM is cautiously resuming Suez routing for several Asia-Europe services while other Ocean Alliance partners divert around the Cape of Good Hope.
Diversions around the Cape of Good Hope have increased global TEU-mile demand by 17.2% in 2024, raising freight rates. Far East to West Coast US rates are up 241% from pre-crisis levels, impacting industry costs, especially with extended transit times and demand for more shipping capacity.
US importers are routing goods through West Coast ports and using rail to reach the East Coast, returning to pre-COVID logistics patterns. As carriers explore alternative routes and near-shoring in Central and South America, the industry expects further adaptation into 2025, with higher freight rates and evolving supply chain strategies becoming the “new normal.”
Schedule Reliability
Schedule reliability dropped 1.2% to 51.4%, aligning with the 50-55% YTD trend. Year-on-year, it was 13% lower than last September (64.4%).
Average delays for late arrivals worsened to 5.67 days, only exceeded by the pandemic peaks of 2021-2022. Last year, it was 4.58 days.
Cancellations and blank sailings are on the increase:
- Global – 64 out of 693 sailings were cancelled between weeks 44 and 48, a 9% rate.
- Australia – 1 out of 69 sailings was cancelled, a 1.5% rate.
Equipment
Container shortages persist but are improving. Factors include longer transit times, high demand, and port congestion, mainly affecting Asia and North America.
DP World acquired 47,000 containers to tackle shortages and improve supply chain services, ensuring consistent container access and reducing maintenance costs.
Supported by Mitsubishi HC Capital, CAI International invested $1.35 billion to add 700,000 containers, expanding by 20% with 10% for refrigerated units, to meet leasing market demand and adapt to shipping challenges.
China / North Asia
Carriers didn’t announce a GRI for October but adjusted rates based on capacity, equipment, and transit times. They blanked sailings to support higher rates, causing backlogs and capacity constraints in early November. Once cleared, rates may ease.
A rate increase with a GRI of USD 300 per 20’GP and USD 600 per 40’GP/HC from North Asia to Australia and New Zealand for 1 November was announced. It may not fully succeed as Christmas orders are mostly shipped, keeping booking demand stable. Rates may remain stable through November and beyond.
Blank sailings affect schedule reliability between North Asia and Australian East Coast ports, with Western Australia impacted by Singapore congestion.
Air freight demand for eCommerce and holiday cargo is tightening space, especially from China. Rates are rising and may increase further.
Sailing schedule integrity is challenged by congestion at Port Kelang and Singapore. Air freight demand, rates, and service reliability remain stable.
Indian Sub-Continent and Bangladesh
The situation in Bangladesh is problematic. There are technical issues at Dhaka Airport with explosive-detection scanners that delay air cargo export, mainly affecting US and European shipments.
At Chittagong Port, October’s industrial action left containers stranded, adding to logistics delays as the sector recovers from earlier unrest.
Middle East tensions are causing air freight congestion, leading Bangladeshi forwarders to route cargo to the US via China due to cost-effective rates.
Some cargo is diverted to India by truck and then flown to the EU and US, with Delhi seeing increased trade. India is rising as a transshipment hub due to declining freight rates.
North America
Conditions in the US have been challenging through October, affecting sea, air, and land cargo. Hurricane Milton worsened issues for ports still recovering from Helene, closing airports and seaports on Florida’s West Coast and impacting trucking.
An industrial relations clash shut down East and Gulf Coast ports for three days in early October, causing concern for carriers and shippers. Despite the brief strike, land carriers were affected as shippers redirected freight. Precautionary cargo movement inland to avoid storm impacts has limited space and reduced available truckers.
In Canada, the Port of Montreal Longshoremen’s Union began industrial action on 10 October, banning overtime indefinitely slowing operations.
UK/Europe
London’s export and import capacity will increase as DP World invests USD 1.3bn to expand the London Gateway facility, making it the UK’s largest container port in five years, with a 2.5km quayside for six ultra-large vessels.
Heightened security concerns for UK air freight arise from recent incidents of courier packages igniting, with unconventional incendiary devices being sent via freight services across Europe.
Security measures for freight are being tightened in several European countries.
Global Port Congestion Hotspots
Ningbo, Shanghai, and Qingdao are severely congested, with 72 ships in port and 102 anchored, making up 18% of global anchored vessels.
As Sea Intelligence notes a surge to near-pandemic levels, Australia may face increased vessel bunching, straining ports globally. The Red Sea crisis is causing ships to bypass the Suez Canal, leading to overlapping arrivals and congestion. The Asia-Europe trade lane is particularly affected, resembling COVID-era chaos. In Singapore, 90% of vessels are off-schedule, with port stays up 22% from 2023. Congestion is expected to continue.
Global Air Freight Market
The global air cargo spot rate is $2.61 per kilogram, up 3% from last year, showing a moderate cost rise.
- Asia Pacific: Rates increased by 7% in two weeks, indicating higher demand or capacity limits.
- North America and Europe: Rates rose 2% year-over-year, showing steady pricing growth.
- Volumes surged in October except in North America.
- Asia Pacific: A 48% year-over-year increase in chargeable weight, likely due to seasonal demand or supply chain shifts.
- Central & South America: A 16% growth in chargeable weight over two weeks, driven by agricultural exports.
- Europe: Volumes rose 3% year-over-year, showing steady demand.
- North America: A 7% decrease in chargeable weight year-over-year, possibly due to trade shifts or reduced demand.
Air Freight Capacity
Air cargo capacity rose 7% year-over-year, supporting increased volumes.
Asia Pacific and North America capacity grew 8% year-over-year, indicating carriers are meeting demand. Europe and the Middle East/South Asia saw a 7% capacity rise, potentially moderating rate hikes and supporting market stability.
Amazon Air has entered the cargo market, offering aircraft capacity to third-party customers for ad hoc and charter services in North America, Europe, the Middle East, Africa and Asia. The service includes over 100 aircraft and 250 daily flights, available through various booking arrangements with a fleet of Boeing 737, Boeing 767, and Airbus A330 aircraft.
Enhanced Air Freight Security
Starting 12 November 2024, US Customs and Border Protection (CBP) will reject vague cargo descriptions in ACAS filings for US-bound air freight. Non-compliance will prevent loading until corrected, affecting shipments.
Sustainability
- IMO’s MEPC 82 in October 2024 was expected to set a carbon levy for shipping emissions, but decisions were postponed to MEPC 83 in April 2025 due to unresolved issues.
- The CEI for ocean shipping in Q3 2024 reached 107.9 points due to conflicts, rising rates, and congestion. Rerouted routes saw emissions rise, with fronthaul emissions up 60.1% year-on-year. Carriers prioritised capacity over carbon efficiency, increasing emissions per tonne. An uneven trade balance adds to the strain.
- Singapore’s MPA will set methanol and ammonia bunkering standards by 2024 and 2025 to support alternative fuels.
- CMA CGM and SUEZ will produce biomethane in Europe, aiming for decarbonisation. SUEZ will supply 100,000 tonnes annually by 2030, with a €100 million investment in facilities.
- Mitsui OSK Lines, K-Line, and Hafnia are in talks to join the GDSC between Singapore and Los Angeles/Long Beach, promoting sustainable shipping.
- Ocean Network Express (ONE) reported a 62% decrease in emissions intensity, targeting a 70% reduction by 2050. Initiatives include wind propulsion trials and biofuel programs.
- EU ETS extension requires shipping companies to submit ETS allowances by 30 September 2025, with increasing coverage each year:
- 2025: 40% of 2024 emissions
- 2026: 70% of 2025 emissions
- 2027 onward: 100% of emissions
World Trade Organisation (WTO) – Global Trade Outlook Report Highlights
- Trade Growth Forecast: World trade is expected to grow by 2.7% in 2024, with GDP growth at 2.7%.
- Regional Disparities: Asia forecasts 4.0% growth, while Europe lags at 1.1% due to Germany’s weak performance.
- Price Trends: Trade volumes rose, but export/import prices fell by 2.6%.
- Risk Factors: Middle East tensions may impact shipping and energy prices.
- Monetary Policy Easing: Lower inflation allows interest rate cuts, boosting consumption and investment.
- Regional Import/Export Shifts: Asia’s exports grow, Europe’s trade is subdued, and imports from China decline, shifting to India and Vietnam.
- Energy Costs: Energy prices dropped from 2022 highs but remain high in Europe and Japan compared to the US.
- Supply Chain Fragmentation: Trade is re-orienting along geopolitical lines, especially in low-complexity goods since the Ukraine conflict.
Terminal and Port Update
Patrick Terminals
- Brisbane: Delays approx. 0 – 0.5 day
- Fremantle: Delays approx. 1 – 2 days
- Sydney: Delays approx. 3 – 4 days
- Melbourne: Delays approx. 1 – 2 days
DP World Terminals
- Brisbane: Delays approx. 1 – 2 days
- Fremantle: Delays approx. 1 – 2 days
- Sydney: Delays approx. 3 – 4 days
- Melbourne: Delays approx. 1 – 2 days
VICT
- Melbourne: Delays approx. 0.5 day
- VICT have announced that they can now offer customers 14.4 Rural Tailgate Inspections within their terminal
- VICT has received its five millionth TEU since starting operations in 2017 at the Port of Melbourne
AAT
- Brisbane: Vessel bunching is evident but working with minimal delays
- Port Kembla: Working with minimal delays
- Melbourne: Working with minimal delays
MIRRAT
- Melbourne: Working with minimal delays
New Zealand
- Auckland: minimal delays approx. 1 – 2 days
- Tauranga: minimal delays approx. 1 – 2 days
- Napier: minimal delays approx. 1 – 2 days
- Lyttleton: minimal delays approx. 1 – 2 days
Landside Charges
DP World Australia has announced a 60-day notice for increased Landside and Ancillary Charges at its terminals, effective 1 January 2025. The changes are driven by a $900 million investment plan to enhance efficiency and meet rising landside demand over the next three years. Key cost drivers include a 7% workforce cost increase, 6%+ rises in electricity and security, and a 21% hike in insurance. DPWA invites industry feedback before a final notice, expected by 1 December 2024. Access the announcement here.
Terminal Access Charges (TAC) will increase by 5% in Fremantle and 9.89% in Sydney, Melbourne & Brisbane.
All other ancillary charges have been increased anywhere between 5-25%.
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. Despite the headwinds of current freight market conditions, 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 with one of our freight specialists at AUS 1800 595 463 or NZ (09) 974 4818.
Sources: With thanks to the FTA for their freight market update.
