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GEOPOLITICAL DISRUPTIONS AND CHRISTMAS PRESENTS HAVE COME TOGETHER TO DRIVE SHIPPING RATES UP... Wage arbitrage has been dead for some time, and highly volatile logistics costs are putting renewed focus on regionalization for supply chain cost and risk mitigation. I am involved in an increasing number of discussions around #tariffs in both the EU and the USA, which have increased in both urgency and level of concern. #Supplychain management has never been easy, but since #Covid19, it has become more of a board-level issue. What is your organization doing to manage the risks and costs associated with your supply chain so that your Christmas shopping does not ruin your bottom line?

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Global shipping rates and port congestion continue to rise in response to the Red Sea crisis. As vessels are rerouted and transit times lengthen, Brian Bourke advises shippers to communicate ocean container forecasts early and often, and make bold decisions now. Read more on the rise in ocean rates from Supply Chain Dive: https://bit.ly/3RURLWH

Sudden container crunch sends ocean freight rates soaring, setting off global trade alarm bells A perfect storm in global trade is creating a shipping container capacity crunch, fueling a sudden and surprise spike in ocean freight rates. The beginning of peak shipping season, coupled with the longer transits to avoid the Red Sea, and bad weather in Asia, have hit the flow of trade on key routes. Ocean carriers are skipping ports or decreasing their time at port, and not picking up empty containers, in an effort to keep vessels on track for delivery. The supply chain cost issues come at a time when consumer goods for back to school and the holidays are set to be moved on the water. From the Far East into the U.S. West Coast, it is likely spot rates will surpass the level seen at the height of the Red Sea crisis earlier this year, which demonstrates how dramatic the recent increases have been. Spot rates had fallen after the sharp rise triggered by Red Sea tensions in early 2024, but since the end of April they began spiking by as much as $1,500, on average, on routes to the U.S. coasts, and now some of the highest contract rates charged by shippers are over double the rates of just a month ago. MSC, the world’s largest ocean freight company, announced new rates of $8,000 to $10,000 for 40-foot containers to the U.S. West Coast, valid from May 15-May 31. Wan Hai has said it will charge a premium for “space protection.” https://lnkd.in/eJEiCzuZ 

As peak shipping season begins, we're experiencing a significant ocean container capacity crunch which is helping to drive spot rates higher. This crunch is being driven by adverse weather conditions, extended ocean transit times, and vessels bypassing ports. The result is that freight spot rates have surged by approximately 30% in recent weeks and continue to climb. As we have seen in the past, strong partnerships with carriers and vendors can help you navigate these choppy waters.

# Why ocean freight rates rose so much in May? In May 2024, Europe-bound ocean freight rates rose due to several key factors: 1. Congested Ports & Tight Capacity:  Major ports, especially in Europe like Hamburg, Rotterdam, and Antwerp, faced heavy traffic, slowing cargo handling and extending wait times for ships, hiking costs. 2. Geopolitical Turmoil:  Security threats, like those in the Red Sea, raised shipping risks and insurance costs.  Detours to avoid conflict zones further strained capacity. 3. Fuel and Surcharges:  Oil price swings inflated shipping fuel expenses, which companies passed on via surcharges, pushing up freight rates.  Top carriers announced rate hikes on Europe, Mediterranean, and North American routes. 4. Seasonal Pressures:  Despite not being a traditional peak season, early inventory restocking and summer prep drove up transport demand, increasing prices. Overall, May's rate hikes reflect a mix of economic, market, cost, and geopolitical factors impacting the shipping industry. Forecast that June is still a rising freight market. If you have any shipping plan, please inform us@Genson Logistics in advance, so that we can pay attention to the appropriate space and price for you in advance. m.chen@qdgenson.com

Diversions away from the Suez Canal have hit ocean freight trades hard from Asia to the Mediterranean, North Europe and US East Coast. However, it could be argued cargoes moving in the opposite direction on the backhauls have been hit even harder by these surcharges. Effect – North Europe to Far East. Moving from USD 400 per FEU by the end of 2023 to more than USD 1 000 per FEU by mid February, market average spot freight rates have gone up by 150% in six weeks. Within these market average spot rates, some shippers have been paying upwards of USD 1 000 in additional costs while others have managed to avoid surcharges altogether, with an average of USD 591 per FEU Effect – Mediterranean to Far East Surcharges are spread in the range of USD 400 (mid-low) and USD 1 100 (mid-high) per FEU, with an average of USD 639. Effect – North Europe to Australia and New Zealand Shippers and BCOs are paying average surcharges of USD 854 per FEU within a total spot rate of USD 2 400 per FEU. This positions the trade slightly above a classic backhaul and slightly below a classic fronthaul in terms of the total spot rate and percentage of surcharges to overall cost. Source: Xeneta https://lnkd.in/gWeTTVMh

Container traffic avoiding the Suez Canal has resulted in a decrease in demand and a continued decrease in ocean rates across major trade lanes. According to Container News, weekly rate averages from Asia to North America fell by 7% last week, and 7-10% to North Europe and the Mediterranean. Rates to North America have dropped by 25% since their February peak, and prices to North Europe and the Mediterranean have decreased by about 30%. Despite these drops, there has been some rebound for air freight. To learn more about this analysis, check out the article linked below. https://lnkd.in/gVJ8awTT

Freight crisis subsides ahead of slow season Having skyrocketed in January, global ocean freight rates have been decreasing since then. Although the Red Sea crisis is here to stay, carriers appear to have adapted to the new normal. Approaching low season as well as the recent news that the Panama Canal authority has decided to increase the number of daily slots has also helped allay the concerns. Chinese New Year weighed on demand The precipitous climb ended in late January and freight rates started a cool-off period amid faltering demand due to Chinese New Year holidays that took the steam off shipping activities. Demand also failed to stage a meaningful recovery following the holidays. Moreover, carriers have been able to manage their shipments via additional capacities, optimizing their operations through the longer route around Africa. Global indexes down by 10-14% since early February Freightos data showed that the global container freight index decreased by 7% from last week to stand at $3,070/feu as of March 11, following a three-week downtrend. This brought the cumulative drop to 10% since February. Drewry composite index decreased by 14% in the last six weeks to stand at $3,287 per 40ft container as of March 11. Meanwhile, the composite index is still %82 higher when compared to the same week of the previous year. Attacks continue, first casualties in the Red Sea Houthi attacks in the Red Sea continued to rattle global shipping industry with the Houthis sinking a UK-owned commercial vessel on March 3 with the sunken vessel posing a threat to other vessels passing through the region. Moreover, a joint effort by US, British, and French forces fought back a series of attacks by the Houthis, resulting in three seafarers losing their lives in the process, marking the first casualties of the crisis. These recent developments contributed to expectations of seeing the Red Sea turmoil continue for the upcoming term. Indeed, “Logistic disruptions caused by the recent crisis in the Red Sea may continue into the second half of 2024,” Charles van der Steene, regional president for Maersk North America, stated to CNBC. Will the downtrend continue in shipping rates? Despite the ongoing turmoil, industry experts generally agree that freight rate increases and surcharges applied particularly in January were exaggerated, blowing past expectations given the growing uncertainty and urgency to act at the time. Therefore, they will have to come down from those highs. Considering the overcapacity in the industry, the approaching slow season for ocean shipping and additional daily slots in Panama Canal have also been underpinning the further decreases to come in freight rates. However, a steep nosedive in freight rates does not seem likely, either, differing from the case of price hikes. Erasing the previous gains and going back to December lows may not happen as fast as prices climbed to their highest of previous years. (ChemOrbis)