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Important Shipping Updates

Auckland Port Delays

Please note the Port of Auckland is currently experiencing delays due to suffering a major mechanical failure on one of their STS cranes, ‘K’, which will be out of service until approximately mid-October whilst repairs are being undertaken.

The crane can be moved but is the centre crane of 5 on FX/FZ berths which does pose some limitations on the number of cranes the port can deploy to vessels at berth. Ongoing delays will remain to vessels working at the terminal as the port continue to manage tight labour capacity in addition to the above. 

China Golden Week – Reminder 

China National Golden Week holidays will fall between the 29th of September and 6th of October 2023. The National Day is held annually on the 1st of October, to celebrate the founding of the People’s Republic of China. It kicks off a 7 day Golden Week festival, including parades, ceremonies, and other displays.

Expect shipping and airfreight delays following the Golden Week as a lot of cargo would have been rolled due to being overbooked leading into the holiday period. We will also see blank sailings immediately after Golden Week due to factories being closed during the holiday leaving carriers to announce blank sailings in order to optimize vessel utilization. 

Airfreight Update

As the end of third quarter approaches, there is a build-up to relatively modest high season in the approaching fourth quarter this year compared to last year. This is driven mainly by ecommerce product demand for the upcoming holiday season—especially out of China and new technology product launches. 

Rates are picking up. This is affected by continually elevated jet fuel prices, capacity tightening from flight cancellations and increased demand for specific trade lanes that are affected by seasonal demand. 

Expect a slight rate increase as carriers implement winter schedules for October. Currently there are no disruptors expected for Q4—all airports, ports and terminals in the region are operating smoothly. Capacity is widely available. 

Impact of Labour Strikes 
Repeated labour strikes continue to occur in the wake of President Macron’s plan to raise the pension age. Impacts have included delays, fewer flights and increased air space congestion throughout Europe. 

With France hosting the Rugby World Cup from 8 September through 28 October, anticipate logistical delays due to traffic and demand. In addition, Paris Metro workers have threatened to strike during this period, which would result in traffic jams in and around the city. 

While train drivers will receive a bonus in recognition of the additional services they must run during the event, station staff have not been offered additional pay. Members of the trade union FO-RATP, which represents public transport workers in Paris, have threatened to walk out over the issue. Negotiations are currently ongoing. 

Latin America (LATAM) 
Capacity has increased +12% year over year (Y/Y) compared to last year and it continues to recover, matching pre-pandemic levels. This growth is driven by freighter and integrator capacity deployed in their networks. 

Expect market conditions in Q4 to be similar to current market conditions, with ample capacity for current volume levels. Airlines will look for ways to adjust capacity to reduce pressure on rates. 

Demand for crude oil remains stable, even as fuel surcharges are still going up. In Chile, carriers are preparing for the next cherry season. 

Space is available on most southbound lanes (ex Miami) with a combination of both passenger and freighter capacity available. Demand continues to be slow, driven by global and regional economic outlook. Markets continue to adjust rates to the new supply and demand reality. Long-term rates are stable as the market has likely bottomed out. 

Currently, there is ample capacity in all major trade lanes. This surplus is a result of reduced demand, prompting carriers to offer competitive spot pricing options. Despite these fluctuations, contract rates have maintained their stability with minimal to no adjustments. Moreover, the ongoing low season for perishable goods across the region has contributed to this. 

Consequently, the demand for northbound cargo remains lowered due to perishables being in their seasonal low. Conversely, southbound capacity originating from Miami is widely accessible for most markets. This situation has also led to the availability of aggressive spot pricing on the majority of lanes, which provides potential benefits for businesses engaged in delivering and trade. 

North America 
The U.S. export market remains stable and should remain so as the fourth quarter approaches. While you can expect capacity to decrease as the summer travel season comes to a close, the impact will likely be limited as a result of low overall demand. 

Spot market rates are trending up from Asia to the United States in August and September. Freighter operators continue to reduce flight schedules while demand is generally stable, resulting in the rate increases. 

Do not expect demand to significantly increase in the short term. From Europe to the United States, demand and rates remain relatively stable, though the upcoming capacity reductions driven by lower travel demand could result in slightly increased spot market rates. 

Capacity to Oceania continues to grow, however there are some capacity restraints due to Northern summer season travellers and additional fuel loads required—particularly from North America on direct flights. Softening of these restrictions and further additional capacity are expected as Q4 approaches. 

There are fewer restrictions from both Europe and Asia to and from Oceania and ample support for cargo demand. 
The export market is softer overall to most destinations. With capacity exceeding demand, spot rates are lower for the month of September. 

South Asia, Middle East, and Africa 
The air freight market has been showing signs of improved cargo throughput since the beginning of August. The rates, which had gradually fallen for many months, have stabilised. There is increased activity on the air export side, especially from west and south India, mainly due to the pharma sector. 

The increased demand in the passenger sector is creating an increase in the lower deck capacity. The volumes are showing almost equal numbers and growth for both air import and air export. The spot rates are strong and might soon trend upward. 

Ocean Freight Update 

Ocean freight demand on most trade lanes has not meaningfully increased in September. In parallel, Alphaliner reports that January through July 2023 saw deliveries of new vessels of 1.2 million TEUs entering the global fleet, with less than 80,000 TEUs capacity removal through vessel scrapping. Another 1.2 million TEUs are expected to be added by the end of the year. To put this into perspective, the previous single-year record for annual growth was about 1.7 million TEUs in 2015. 

Overall vessel capacity continues to trend higher than demand, keeping rates from long- lasting or significant increases. As such, the steamship lines will continue voiding sailings and slow steaming. This allows them to allocate more vessel/capacity per service and save on bunker costs. They are also suspending full services (such as the PS5 on the Trans-Pacific) or cutting down service size drastically (such as the TA2 on the Trans-Atlantic). 

This lack of stability in schedules and transit times is a challenge that will likely continue for months to come. 

Transpacific rates rebounded slightly following the 1 September 2023, general rate increase (GRI). However, carriers started to offer rate discounts and removed high season surcharges before the Golden Week holidays in October. 

As demand starts to normalise, freight rates are predicted to fall through the rest of the month. Rates to the U.S. East Coast (USEC) and Pacific Northwest (PNW) have started to slip due to excess supply on these two routes, while rates to the Pacific Southwest (PSW) are more stable as demand and supply on this route is more balanced. 

New ship deliveries and carriers cutting rates into September, are both affecting Asia-Europe rates and the outlook is turning increasingly negative with pressure from the supply side. 

Expect rate levels to flatten with some slight decreases possible over the next several weeks. The number of days delayed is decreasing month over month and is currently at an average of 1-2 days for most U.S. ports/terminals. 

There are no GRI’s anticipated, no issues with capacity and carriers’ schedule reliability is improving month over month. 

Latin America 
The Panama Canal expects to maintain restrictions on daily vessel transit and maximum draught for at least 10 more months. The extension of this restriction would give the canal room for preserving water before the next rainy season arrives, but it could also create a larger bottleneck of vessels. Importantly, container vessels have appointments for transiting the canal and these appointments take priority over other vessels, so don’t anticipate a major impact on ocean exports at this point. 

Per the Panama Canal Authority (ACP) advisory, further limitation is implemented on Panamax locks, connecting those mostly used to connect the U.S. Gulf Coast (USGC), from 34-36 vessels a day down to 22, which is for around 5,000-6,000 TEUs vessels travelling through. USEC vessels through Neopanamax locks are less affected with restrictions changing from 9-11 vessels per day down to 10. Recent rains have kept the situation stable, although they did not lead to draught increase. 

Carriers are implementing more slow steaming strategies, affecting transit times and disrupting schedules. They are looking to achieve three outcomes: 

  1. Address over-capacity by adding more vessels to service strings and avoid parking vessels 
  2. Save on fuel costs 
  3. Comply with IMO 2023 regulations for older, non-compliant vessels, which is affecting transit times and disrupting schedules 

U.S. – Asia 
Ocean carriers shifted vessel capacity from U.S. West Coast (USWC) to USEC ports due to port congestion earlier in 2022 coupled with concerns over the ILWU negotiations at USWC ports. Now that the ILWU and Pacific Maritime Association (PMA) have reached an agreement, analysts are monitoring the extent with which vessel capacity returns to USWC ports, as some data suggests that only a percentage of the traffic will return to USWC ports. 

Congestion at transshipment ports in Asia remains an issue. Deliveries can be delayed as much as 10-14 days at many major transshipment ports, such as Busan and Singapore. Delays at transshipment ports are leading carriers to push for business on direct services only. Congestion is expected to ease in the coming months as volumes on the Asia trades continue to decline. 

Barge companies in South China will be suspending their operations to Pearl River Delta (PRD) ports for approximately 11 days from 28 September through 8 October due to the Autumn Festival holiday. During this period, deliveries to PRD ports will need to be terminated at China direct ports of call like Hong Kong and Yantian. 

U.S. – Europe 
Vessel capacity in this lane increased significantly (ex USEC ports in early 2023). With demand having dropped off significantly, particularly in the Transatlantic Westbound (TAWB) lane, expect carriers to cut capacity and blank sailings to prevent further rate erosion. As an example, the 2M Alliance Maersk and MSC have already advised will assign smaller vessels on the Trans-Atlantic lane, which will reduce capacity on their services by as much as 40%. 

Space is still tight (ex USWC to Europe) due to lack of sailing options and carriers are 

substantially booked on all water services (ex Los Angeles and Oakland). 

Currently, there are low water levels in the European river system. These levels are affecting barge transports due to draught restrictions. A pass-through charge may be put into place for all import and export cargo. 

The EU will be implementing a carbon tax system called the Emissions Trading System (ETS) that will apply to the delivery industry effective January 2024. Ocean carriers are advising that ETS will significantly increase their costs, which will be passed on to cargo owners. Analysts warn that ETS could also cause ocean carriers to adjust their delivery schedules into and out of Europe, which could significantly disrupt European supply chains. 

Space is improving to East Coast South America (ECSA) ports, especially from USEC and USGC ports. Carriers are also significantly improving their vessel space capacity offerings (ex USWC ports to ECSA and West Coast South America (WCSA) ports). 

U.S. – Oceania
Direct carrier service is available both from the USEC and USWC ports, however, high season is approaching so space will tighten. Recommend booking 3-4 weeks in advance. 

Transshipment options to Oceania have improved and there is now more space capacity available. 

The Brown Marmorated Stink Bug (BMSB) fumigation season will be in effect once again for all vessels departing from the United States effective 1 September 2023, through May 2024.

U.S. – India/Middle East 
Space is improving in this lane, especially with several carriers announcing they are re- opening space and service into this market. Expect this trend to continue through Q4 2023. 

Space is most readily available (ex USEC ports) where there are more direct services. Among USEC ports, space is more available (ex New York and Norfolk ports). 
Space (ex USGC ports) continues to be very tight but has improved slightly. 

The Trans-Tasman market has softened. Space and equipment availability is open. Rates are dropping with the introduction of new options on this trade lane. 

Direct carrier space is improving (ex USEC and USWC) while transshipment service options are widely available. Rates are softening due to improving space availability. High season on this trade lane begins in late August/early September so space may tighten. 

The Europe to Oceania market remains stable, with space and equipment readily available for dry cargo. Rates are still gradually being reduced by all carriers as supply continues to outweigh demand. 

Northeast Asia demand continues to tighten as carriers continue to blank sail/port omit, while demand remains steady from Southeast Asia to Oceania. Expect GRIs to be implemented from Northeast Asia to Australia, Australian East Coast ports and New Zealand. 

Export rates are under pressure. Waste paper, grain, wool and cotton/cotton seed are still moving in large numbers with load factors strong for the next several weeks, but it is coming up against constant competition/rate pressure. For Melbourne and Adelaide, 20′ containers are hard to forecast as solid grain season is currently in effect. Feeder space to India is tight across most carriers, with small allocations against demand from Singapore. 

South Asia, Middle East, and Africa (SAMA) 
The export and import markets into SAMA are relatively open for all trade lanes with few exceptions. Customers express they have better orders compared to the first half of 2023. The automotive, healthcare, retail, textile and manufacturing industries are particularly upbeat and intend to end with a good fourth quarter. 

India continues to be an increasingly important investment destination for a wide range of multinationals in many sectors, including manufacturing, infrastructure, garments and textiles, automotive, healthcare and aerospace and its ancillary industries. 

SAMA – North America 
Expect this lane to be generally stable with a few fluctuations caused by void sailings and capacity constraints. Market intelligence indicates there are a number of blank sailings being scheduled, which could be an indication carriers are trying to use a demand-supply gap to stabilise their rate level for North America. A number of RRI/GRI/PSS have been declared by carriers. 

SAMA – Europe 
Average short-term contract rates from Asia-Europe/Mediterranean are showing a bit of a rate hike. Space is open for all lanes to Europe/Mediterranean as demand continues to be weak. 

SAMA – Intra-Asia 
The market is volatile as carriers are trying to reduce capacity by inducing blank sailings, forecasting the readiness of standard cargo is the preferred approach. 

The market remains volatile with a slight increase. Several carriers are offering alternative services from Asia to ECSA to maximise their mother-vessel utilisations. Expect September to be strong for this trade lane. 

We will continue to evaluate all market options and work with you to provide individual solutions for your business. 

For more details on any of these articles please contact your Henning Harders Key Account Manager. 

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