Navigate Turbulent Waters: An Update on 4 Global Disruptions
In the ever-evolving landscape of global logistics, recent disruptions continue to challenge delivering routes and supply chain operations. See how key disruptions are reshaping the industry—and what you can do about it.
1. Global delivery tensions: A surge in rates
Global delivery companies are choosing to circumvent the Suez Canal due to mounting tensions. This has led to a notable surge in delivering rates. With more than $200 billion of goods being diverted away from the Red Sea waterway to avoid potential assaults by Houthi militants, the repercussions are reverberating across the industry.
2. Organised farmer protests impede logistics for parts of Europe
Organised farmer protests continue to create transit delays in Germany, Belgium, and France. Major ports in Germany, including Hamburg, Bremerhaven, and Wilhelmshaven, were blocked on 29 January 2024, causing long traffic jams. In Belgium, protesting farmers blocked a major highway 29 January 2024 and blocked the port of Antwerp on 30 January 2024. In France, protesters blocked major roads around Paris causing major congestion. As these protests unfold, uncertainty looms over when normalcy will be restored in these key European trade corridors.
3. UK train drivers call for strikes
Members of the Aslef union called a rolling schedule of one-day strikes and an overtime ban between 30 January 2024 and 5 February 2024. The walkouts affect different operators on different days, including Avanti West Coast, Cross Country, East Midlands Railway, West Midlands Trains, GTR, LNER, South Eastern, SWR and Trans Pennine Trains. Train drivers are in a long-running dispute over pay, which they say has not increased in five years.
4. Public transport strike in Italy
Meanwhile, a 24-hour public transport strike hit Italy nationwide on 24 January 2024, affecting buses, trams and subways. On the same day, air traffic controllers walked out from 1.00-5.00 p.m., causing delays and cancellations for travellers flying to and from Italy.
Continue to focus on contingency plans
Amidst these disruptions, which are causing delays and equipment shortages in certain lanes, suppliers are proactively deploying air and less than container (LCL) delivering options to meet manufacturing deadlines. To ensure your strategy adequately aligns with current market conditions, consider the following moves:
- Review affected trade policies
- Conduct stress tests of your supply channels
- Determine your Economic Ordering Quantities (EOQs) up front
- Secure assistance with your freight mix to balance transit time and price
Keep in touch with your Key Account Managers to start the conversation on how Harders can help you navigate the ongoing global market turbulence.
Airfreight Update
Asia
Due to the Lunar New Year holiday across Asia in early February, soft demand is set to continue through the end of the month. Expect demand to pick up moderately in March with anticipated seasonal quarter-end demand after the Lunar New Year ends.
Should the current Suez Canal/Panama Canal crisis continue after the Lunar New Year, there may be a potential push for air demand if ocean is not able to support the start of spring demand. This in turn could result in container shortages, port congestion, surging rates, vessel schedule reliability and other disruptions.
Rates have remained stable in February before picking up in March due to the end of the first quarter. This is subject to the ocean situation, which may lead to a surge in air demand and push up freight rates.
There’s more than sufficient capacity for most of the trade lanes. Flight cancellations are expected prior to and during the Lunar New Year period and have returned to normal during end of February.
North America
The United States’ export market remains stable to most destinations. Capacity is suitable to handle demand and there is little reason to expect much change in the short term.
Most U.S. import lanes are in a similar position, as the first quarter is typically a low demand period. The short-term wildcards include ocean market challenges—Panama and Suez Canal issues are looming. If the ocean market tightens dramatically, there could be significant volumes shifts from ocean to air, creating an unstable market for air freight that is not typical for this time of year.
Oceania
The Oceania air market remains reduced in February, with additional capacity plus lower demand globally maintaining downward pressure on rates.
Australian export perishable markets will taper off, providing additional market capacity through first quarter in an already softer market.
Import capacity from the Northern hemisphere hasn’t been affected by the Red Sea as initially expected and with additional market capacity available, conversion cargo demand has been easily matched to capacity without increased rates.
South Asia, Middle East, and Africa
The critical state of air freight space and prices from the SAMA region to the United States and Europe is primarily attributed to disturbances in the Red Sea. This is affecting normal ocean freight costs and transit times.
Consequently, there is a notable increase in sea-to-air conversions as shippers encounter ocean freight delays, adversely affecting their supply chains. Prices to the EU have nearly doubled across major airports, while prices to the United States are steadily increasing and currently stand at a 70% rise compared to the same time last month.
Booking options to these destinations are limited with several major airlines. Departure delays are extending up to seven days.
Ocean Freight Update
Ocean Carrier Alliances
Maersk and Hapag-Lloyd announced the formation of the new Gemini Alliance to start in January 2025. Hapag-Lloyd will be leaving THE Alliance by the end of January 2025.
THE alliance members (Hapag-Lloyd, ONE, HMM, Yang Ming) are reassuring the market that business will continue as usual for 2024, but this will mean significant changes and disruption to vessel services in early 2025.
It is still a bit early to see if this will drive any more partnership changes in the other main delivery Alliances. Harders will provide updates as they become available.
Asia
Spot rates have been surging since December. The weekly jumps in spot ocean freight rates have started to slow down some. Ocean freight rates are still expected to hover at higher levels after the Lunar New Year holidays. This is due to more blank sailings caused by disruptions in the Red Sea. The higher ocean freight rates are affecting all the main East-West trade lanes (i.e., Asia-Europe, Trans-Pacific, Asia-Middle East and Oceania).
There is no reduction in the number of Houthi rocket attacks in the Red Sea. All major international delivery lines have diverted delivers to the longer routeing via Cape of Good Hope for the safety of crews and cargo.
North America / Exports
United States-Asia
- Carriers are experiencing more demand for services via the U.S. West Coast (USWC) due to continued challenges with obtaining appointments through the Panama Canal and extended transit times through the Cape of Good Hope.
- The temporary drop in blank sailings is expected to rise again once demand declines after the Lunar New Year.
- Congestion at transhipment ports in Asia remains an issue; deliveries can be delayed as much as 10-14 days at many major transhipment ports, such as Busan and Singapore.
- A temporary barge suspension occurred in China during from 5-18 February 2024 prior to the Lunar New Year. As usual during the barge suspension period, customers will need to terminate deliveries bound for Pearl River Delta ports at the China base ports called directly by ocean carriers, such as Hong Kong and Yantian.
United States-Europe
Demand continues to be low, particularly on the Trans-Atlantic westbound (TAWB) lane, which has created significant overcapacity from the U.S. East Coast (USEC) to Europe.
United States-LATAM
- Space is improving to East Coast South America (ECSA) ports, especially from USEC and U.S. Gulf Coast (USGC) ports.
- Carriers have significantly improved vessel space capacity (ex. USWC ports to ECSA and West Coast South American (WCSA) ports).
Imports
The Suez Canal Authority is maintaining the current draught and daily crossing slots until further notice. With the 16 January 2024, slot increase, some steamship lines (SSLs) have announced additional services to resume usage of the Canal, such as The Alliance EC2 and EC6 services for eastbound sailings.
The situation around the Suez Canal will continue to be fluid. Currently, all main SSLs are rerouting vessel traffic through the Cape of Good Hope, which adds, on average, 7-14 days to transit time. Some services are seeing lesser acceptance of heavy freight.
Rerouting even a portion of those vessels can have a significant impact, not just to trade that moves via the Red Sea, but across all global trade lanes. Blank sailings, service changes and an impact on rates are expected to continue across many trades into the first quarter. The industry could also experience an equipment imbalance, particularly in Asia and Europe inland depots, as equipment is slower to travel.
Supply and Demand
- On TPEB and Asia-Europe, as the momentum of pre-Lunar New Year demand rush tapers off, demand will slow down for most of the month. Carriers have built up roll pools and scheduled blank sailings to balance the supply as they attempt to prevent rates from falling.
- On Trans-Atlantic Westbound, SSLs are trying to push rate increases attributing the increase to the indirect impact of the Suez Canal disruptions and equipment shortages.
- ISC-North America is directly affected by the Suez Canal disruptions and while demand is steady, the capacity absorbed by the longer transit around Africa is still causing further rate increase announcements from the SSLs.
- LATAM to North America market is fairly stable.
Oceania
The Trans-Tasman market has continued to soften with space and equipment availability widely open. Rates are still being reviewed regularly with the introduction of new options on this trade lane.
The Europe to Oceania market is affected by disruption in the Red Sea/Suez Canal with most carriers implementing contingency surcharges with ongoing ripple effects causing port congestion and an increased demand on air freight. This is also affecting the transit times with most Carriers now transiting via the Cape of Good Hope.
Northeast and Southeast Asia supply continues to tighten as carriers increase blank sailing/port omissions and implement GRIs all due to issues surrounding the Red Sea and the recent Australian-wide Protected Industrial Action at DP World. Although an agreement has been made, there will be a continued slowdown for several weeks until the backlog is cleared.
With all the global trade issues, there is concern around equipment availability including the rightful return of empty equipment, globally.
Export rates are under pressure with strong load factors creating competition and rate increases.
SAMA
The delivery industry is facing significant challenges due to disruptions caused by vessels rerouting over the Cape of Good Hope, resulting in decreased delivery capacity and delays. There are blank sailings, particularly affecting routes to North America and North Europe, while new services are being planned to address demand.
Space challenges and schedule instability persist on routes to Latin America, Africa and Oceania. Despite stable schedules in the Gulf/Asia route, carriers have increased ocean freight rates across all sectors due to low capacity and cargo growth.
Additional rate increases are anticipated for North America in February and March. There are equipment shortages, with carriers prioritising premium freight-paying cargo. Overall, the market outlook is expected to remain dynamic and volatile until normal routeing through the Suez Canal is restored.
Inland Drayage Update
Asia
With the arrival of the Lunar New Year holiday, the supply of vehicles is getting tight and freight rates are rising during the first half of February. Expect the transportation market to grow slightly after the holiday while freight will likely keep relatively stable during the end of February.
Transit time at Ping Xiang port from China to Southeast Asia is now around 4-5 days as more cargo arrived at the border before the Lunar New Year. Despite the sudden increase in cargo volume causing short-term congestion at Ping Xiang, Harders can provide different ways to shorten transit times, including green channel.
Meanwhile, there is 1-2 days congestion for import trucking from Southeast Asia to China.
Europe
Over the last several weeks, farmer protests in several countries like Germany, France, Belgium and The Netherlands have caused blocked highways and distribution centres. In France, protesting farmers blocked major roads around Paris, causing long traffic jams. So far, the airports and ports have not been disrupted by these protests and governments are taking measures to minimise the impact of the protests.
North America / Southeast
Savannah
The Georgia ports have advised they are experiencing a severe backlog in Nashville-bound intermodal containers on dock. This is due to winter weather conditions in Nashville, as well as a shortage of chassis.
Atlanta
There are considerable challenges/congestion at some rails in the Atlanta market with long dwell times, which are usually due to inoperable cranes. At times, carriers are only able to schedule pre-mounted containers because their drivers cannot sit inactive waiting for a live mount.
There is an increase of rail storage or driver wait time fees as some are sitting up to five hours. With containers having only 24 hours’ free time, carriers are not able to get appointments, causing an increase in rail storage and demurrage.
Jacksonville
SSA Marine has reached the halfway point in a $72 million project to expand and modernise the SSA Jacksonville Container Terminal. Six new outbound truck lanes are also currently under construction and scheduled to open this February, with additional improvements to the terminal’s six inbound lanes scheduled for completion in late 2024.
North America / Northeast
Norfolk
While there have not been many issues with port congestion in Norfolk, carriers are having issues with congestion and getting containers returned at the Pinners Point Empty Container Yard (PPCY). They are also still being challenged with scheduling and appointments due to vessels slipping out.
Central/Ohio Valley – Columbus
Wait time at the rails have returned to a more normal 1-2 hours. Chassis availability still fluctuates week-to-week, depending on train schedules and 20’ chassis are harder to come by.
Mounting containers at CSX can take 1-3 hours. Truckers are still reporting issues at the NS of containers arriving, but only becoming available on the last free date. Flexi chassis are in very short supply.
Minneapolis/St Louis/Kansas City
There are still some backups from winter weather and freezing temperatures in the region earlier in the year, but most operations are back to normal capacity.
The Minneapolis market has seen an influx of container volumes, but still has plenty of carrier capacity in the market to service the increase.
West / Gulf – Los Angeles
At the Port of Los Angeles, despite lower volumes, carriers are still reporting issues with securing appointment slots for container moves.
Oceania
Australian port logistics and landside container transport services are operating at levels below optimum following the Planned Industrial Action at DP World Terminals across Australia.
Work bans and stoppages have been occurring since November 2023, with significant delays affecting importers throughout the period. While the MUA action has now concluded, operations will not be performing at optimum while DP World transitions back to standard operations and clears the backlog of cargo.
National empty parks have given notice of pricing increases through February.
National container terminals costs continue to rise with three major terminals increasing their landside fees and charges, with further increases expected in March.
There continue to be delays of de-hiring empty containers in Freemantle, Western Australia. Empty container parks are at capacity and with the imbalance of imports vs. exports, expect this to continue throughout the first quarter.
Customs Update – Oceania
Australia is experiencing delays with the processing of quarantine entries and longer delays where inspections of cargo are required.
Vaping goods become prohibited imports
In 2024, using a phased approach, all vaping goods will become prohibited imports under new regulation 5A of the Customs (Prohibited Imports) Regulations 1956 (Prohibited Imports Regulations.
- From 1 January 2024, disposable vapes will be prohibited imports.
- From 1 March 2024, all other vaping goods will become prohibited imports.
Brown Marmorated Stink Bug (BMSB) season continues
Now is a great time for importers to ensure the approved status of chosen treatment providers. This comes as the Department of Agriculture, Fisheries and Forestry issued a notice advising of a suspended treatment provider in Europe.
In New Zealand, customs and processing times are currently operating at levels within capacity with no reported delays.
Tyre Stewardship Fee starts 1 March 2024
As per our Client Advisory, New Zealand importers and onshore tyre manufacturers will be introduced to a Tyre Stewardship Fee, applicable 1 March 2024.
The fee, implemented by the Ministry for the Environment (the Ministry) and the New Zealand Transport Agency Waka Kotahi (NZTA Waka Kotahi) will be applied to all regulated tyres entering the New Zealand market.
For more details on any of these articles please contact your Harders New Zealand Key Account Manager.