Ocean freight rates to fluctuate ahead of Christmas, New Year: Dimerco

Carriers have reduced blank sailing deployments to 70 voyages over the next five weeks (Weeks 43–47), a notable shift from the extensive blank-sailing strategies previously implemented during and after the Golden Week in China.

Cancellation rates by lane are significant, with 61 percent on the Transpacific Eastbound (TPEB), 24 percent on Europe Westbound, and 14 percent on Transatlantic Westbound, says the latest Asia Pacific Freight Report from Dimerco. "In addition to these sailing reductions, carriers are also implementing General Rate Increases (GRIs) effective November 1, leading to rate hikes of more than 18 percent for TPEB and 40 percent for Europe/Med Westbound."

Alvin Fuh, Vice President – Ocean Freight, Dimerco Express Group says: "We anticipate that ocean freight rates, whether for long-haul or intra-Asia, will experience significant fluctuations, swinging dramatically between highs and lows as we approach Christmas and New Year."

US elections to impact supply chain
The U.S. Presidential elections on November 5, 2024 could have significant implications for global trade and supply chains, the report added. "Political outcomes may lead to shifts in trade policies and regulations, raising concerns about a potential 200 percent tariff increase on Chinese goods.

"If these fears persist, businesses might rush to finalise shipments before the January 20, 2025 inauguration or experience delays until new tariffs are announced. Stakeholders must stay vigilant and adaptable in this uncertain climate."

Indonesia welcomed its eighth President, Prabowo Subianto, on October 20, 2024, and Subianto has "pledged to enhance the nation's self-sufficiency, aiming to boost economic growth from the current five percent to eight percent by focusing on developing industries that capitalise on natural resources.” The President will also welcome foreign investment, potentially offering opportunities for investors to manage airports and seaports, as part of his strategy to drive economic development, the report added.

Weak economic indicators
The Global Manufacturing PMI dropped from 49.5 to 48.8 in September. "For the first time this year, the index dipped below the same month’s levels from last year, signalling a more pronounced slowdown in global manufacturing activity."

India reported a reading of 56.5, down from 57.5 in September 2023 but the highest among regions tracked, the report added.

Projections indicate that global economic growth for FY 2024 will likely be around 2.5 percent, below the pre-pandemic average GDP growth of 3.1 percent over the previous decade.

Country report
China: Space to Southeast Asia has been tightening since mid-October, with particularly limited capacity to Indonesia due to increased shipments of reefer cargo from North China. "This trend is expected to continue through November. It's advisable to book space at least two weeks in advance.

"For the India trade lane, MSC and WHL have scheduled blank sailings at the end of October, leading to higher rates. Space to the U.S. West Coast is becoming constrained due to ongoing blank sailings."

There is an increase in shipment volume on South East Asia lanes from South China, accompanied by rising rates. "From East China to all destinations, carriers are announcing price increases for November due to blank sailings and businesses beginning to stockpile inventory in preparation for the holidays."

South Korea: Shipping costs from South Korea to the E.U. have decreased by 14.7 percent, marking the first drop in five months while rates on the South Korea-Vietnam route fell by 11.1 percent, the first decline in eight months.

"Despite these recent decreases, shipping expenses for both routes have more than doubled compared to the previous year, driven by ongoing tensions in the Red Sea region and an increase in global cargo volumes."

Malaysia: Space and rates have returned to normal from Penang, the report added. "Carriers expect a surge in cargo for ocean freight from Kuala Lumpur at the end of the year. While port congestion at Port Klang has improved compared to previous months, it's still advised to allow a week of buffer time for delays in estimated arrival times, discharge and unstuffing for LCL shipments."

Singapore: Ocean space and rates from Singapore are expected to remain soft and stable for all destinations in November. "Currently, there are no congestion or delay issues at Singapore ports, and vessels are arriving and departing on time. However, it is advisable to continue proactive planning to prepare for any unforeseen events."

Vietnam: Ocean freight rates to the U.S. and Canada have gone up compared to last month. "The increase is mainly due to delays at Vietnamese ports after China's Golden Week in early October. During that time, more space was given to shipments from China, which reduced space for Vietnam, causing some cargo to be rolled over to the next vessel. It’s recommended to book 2-3 weeks in advance to secure space on U.S. routes."

India: The normalisation of weekly sailing schedules by carriers has ensured sufficient space in the ocean freight market. Additionally, the shift of urgent cargo from ocean to air has further contributed to the slower pace in India's ocean freight sector.

U.S.: With Chinese New Year falling on January 29, 2025, the traditional pre-CNY rush will occur earlier, potentially coinciding with the expiration of the ILA strike extension on January 15, 2025, just after the U.S. election, the report added. "If the strike negotiations remain unresolved, importers may advance their shipping schedules to avoid disruptions, which could shift the typically slow end-of-year period in 2024 into a peak season, leading to higher rates."

Several terminals at Los Angeles Port are currently facing chassis shortages, requiring drivers to pick up chassis from other locations, which may incur split charges, the report added. "Securing terminal appointments for both pick-up and return remains challenging, depending on terminal conditions. Additionally, there may be potential costs associated with storage, chassis rentals, and stop-offs."

On the East Coast (New York, New Jersey & Norfolk), "APM and GCT are experiencing significant congestion, resulting in congestion fees of $100 to $200. Additionally, securing an empty return at the APM terminal has become challenging."

Europe: Asia-North Europe ocean spot rates are currently on a downward trend, but demand is anticipated to surge in November due to limited capacity from blank sailings. "This year's Chinese New Year peak will also arrive earlier, driven by longer transit times around Southern Africa."

Mexico: HAPAG and COSCO are experiencing space and scheduling challenges at the port but continue to provide competitive rates, the report added. "COSCO's subsidiary, OOCL, has introduced a new direct maritime route between China and Mexico, cutting travel time to just 22 days and covering key ports such as Ensenada, Manzanillo and Lázaro Cárdenas.

"The route will feature eight cargo ships with capacities ranging from 6,000 to 8,000 TEUs, offering weekly services to transport grains, chemicals, minerals, auto parts, and machinery."