Container demand to rise in H22024 but can GRIs hold, asks Dimerco

U.S. import volume for the first half of 2024 grew by 15 percent year-over-year, reaching 12.1 million TEUs. "Despite concerns over potential strikes at East and Gulf Coast ports, Global Port Tracker (GPT) projects strong growth in the second half with 2024's total volume expected to reach 24.9 million TEUs, a 12.1 percent increase year-over-year. This figure is slightly below the record highs of 25.8 million and 25.5 million TEUs seen in 2021 and 2022, respectively," says the latest update from Dimerco.

By mid-August, spot ocean rates had declined by over 20 percent from their peak in early July. "This drop followed the introduction of new standalone services on the Trans-Pacific Eastbound (TPEB) route by MSC, COSCO, ZIM, WHL and HMM, leading to capacity increases of 5.4 percent, 5.9 percent and 9.4 percent in June, July and August, respectively. The surge in capacity caused market rates to hit a ceiling in early July with prices steadily declining week by week thereafter. In response, no fewer than five carriers had announced general rate increases (GRIs) of $1,100−$1,300 per FEU, effective August 15, in an effort to prevent further rate erosion. It is anticipated that the majority of other carriers will follow suit."

Carriers have announced plans to cancel 37 sailings across their East-West head haul trades from weeks 34 to 38, representing a five percent cancellation rate out of a total of 696 sailings, the report quoted Drewry's analysis of August 16. "By trade lane, 70 percent of these blank sailings will occur on the TPEB route and 22 percent on Transatlantic Westbound."

The sharp decline in blank sailings, from 105 in weeks 29-33 to 37 in weeks 34-38 indicates escalating challenges for carriers attempting to enforce GRIs, the update added.

Alvin Fuh, Vice President, Ocean Freight, Dimerco Express Group says: "Supply chain disruptions have become the new normal. The ongoing conflict between Israel and Hamas in the Red Sea region shows little sign of resolution, adding to the uncertainty. Meanwhile, the threat of strikes at East and Gulf Coast ports in the U.S. as well as Canada’s West Coast ports, looms large. The potential shutdown of Canada's two major rail companies further exacerbates concerns. In Asia, port congestion is worsening due to the typhoon season while in Europe, productivity at ports like NLRTM, Antwerp and Algeciras is slowing due to summer holidays. These events are expected to worsen existing issues related to schedule integrity, port congestion, blank sailings and equipment shortages."

Country report
East China: Space is stable on the Shanghai-U.S. lane. Some carriers announced they will raise the GRI in the middle of Aug in order to stabilise the rate. The overall market is stable on the Europe lane, and space is stable with the rates slightly dropped on the South East Asia Lane.

North China: Space is soft with a slight rate drop on the Beijing, Tianjin, Qingdao-U.S. lane. "Some carriers offer special rates depending on the client. Some carriers are also announcing emission reduction fees to be implemented in September."

South China: The rate has decreased with ample space from Guangzhou and Shenzhen on the U.S. lane. "As the condition in the Panama Canal improves, the weight limit to USEC has also relaxed." Rates have declined with soft space on both the Europe and South East Asia lanes.

Hong Kong: The rate has increased and space is tight on the U.S. lane. On the Europe lane, the rate has increased and space is tight. "The port congestion in Port Klang continues to cause delays of up to three days while the space to Ho Chi Minh is tight."

South East Asia - Philippines: Securing space from Asia to the U.S./Canada remains challenging with rates expected to increase, the update added. "It is recommended to book at least two weeks in advance to secure space. The Manila port is experiencing some port congestion causing delays of two−four days for berthing. There is a lack of 40 HC containers for exports from Manila."

Malaysia: Ocean carriers have been omitting Penang port, leading to lesser capacity to accommodate demand. "Port Klang continues to experience port congestion. It is still advised to book export shipments two−three weeks in advance."

Thailand: For intra-Asia shipments to destinations like Manila and Jakarta, space must be booked three-four weeks in advance due to tight capacity, says the update. "Space for shipments to Europe and the U.S./Canada also remains tight, requiring bookings four-five weeks in advance, though rates have slightly decreased. This period marks the peak season for Thai exports."

India: Carriers are struggling to maintain their weekly sailing schedules to Europe, with many vessels being diverted via the Cape of Good Hope. There are also space constraints for shipments to the U.S./Canada, leading carriers to limit booking acceptance, the update added.

Mexico: Manzanillo Port, the primary hub for most shipments from Asia, is currently congested due to inadequate port infrastructure. This congestion has led to delays, rising shipping rates, and product shortages. To mitigate these issues, the Port of Ensenada is recommended as an alternative, given its proximity to nearby states like Baja California, the update added.

Europe: The spot rates for ocean freight from Asia to Europe have stopped increasing with some lanes dropping below $5,000 per TEU.

Space continues to be tight to South East Asia from North American ports. For Los Angeles/Long Beach, "similar to last month, rates are negotiable based on volume. Space to South East Asia is extremely tight, and all bookings to this region require feeder vessel approval."

Air cargo spot rates surge to $9-10/kg
The e-commerce market continues to drive demand, with leading e-commerce companies signing peak season charter agreements with commercial airlines. "This has further reduced the availability of commercial flight capacity, particularly on routes from China to the U.S.," says the update.

"Another product category that will contribute to the capacity demand is the consumer electronics market, which will begin its peak season in September. With Apple shifting iPhone 16 manufacturing back to China, the first wave of this product is expected to hit the market in September, alongside other new launches. Spot rates have already surged to $9−$10 per kg."

Kathy Liu, VP, Global Sales & Marketing, Dimerco Express Group says: "As more production of finished goods has relocated from China to Southeast Asia since 2022, additional capacity is required to transport these products to the U.S. and Europe. This has placed significant pressure on freighter services in key transit hubs like Taiwan, Korea, Japan and Hong Kong, impacting outbound capacity from these locations as well. With the peak season approaching rapidly, shippers are advised to plan their capacity needs at least two weeks in advance, especially for time sensitive shipments."