Global Shipping and Logistics
Q3 2024 Market Update
SUMMARY: Perfect storm of factors reigniting shipping container capacity crunch, higher rates, uncertainty
Ocean shipping capacity is rapidly becoming constrained in the first half of this year and that is contributing to the unexpected spike in ocean freight rates now being experienced. Major elements of this situation include:
• An early start of peak shipping season • Longer transits around the horn of Africa to avoid the on-going Houthi rebel attacks on container ships in the Red Sea • Bad weather in Asia Carriers have increasingly skipped ports or decreased time in port, as well as not picked up empty containers to keep vessels on track for delivery, and all of this is happening when consumer goods for back to school and holiday seasons are set to be moved on the water. (CNBC)
Global shipping demand ended 2023 at a robust 8% over prior year and has stayed at reasonably strong mid-single digit rates through May. Demand spiked in June driven by inventory restocking as retailers increased buffer stock to prepare for longer voyages related to the Red Sea situation, initiating an early start to peak shipping season and earlier- than-normal ordering. Resultingly, spot rates for ocean shipping doubled in May over prior month and are now 2.5 to 3 times January 2024 rates. (DHL, beeontrade.com) Barring an end to the Red Sea crisis or slowing demand, industry experts see the congestion and delays persisting through the rest of summer. With the global container fleet expected to reach 30 million TEUs in June, between 6% and 7% of that capacity is getting tied up by port congestion. Logjams at the world’s busiest port, Shanghai, have spiked to as long as five days, the highest level since the Covid pandemic. (Journal of Commerce, Loadstar.com) International Longshoreman’s Association negotiations with management at East Coast and Gulf Coast ports broke down in early June over issues about automation displacing dock workers. ILA’s contract for these locations expires September 30 . (CNBC)
Global Capacity Development Apr- DEC’24 (in mTEU)
Alphaliner, SeaIntel, Linerlytica - Republished by DHL Global Forwarding Alphaliner, SeaIntel, Linerlytica – Republished by DHL Global Forwarding
scrapping
existing capacity Apr’24
planned deliveries
delays or congestion
routing avoiding Suez
idle, repair, lay up
forecasted capacity Dec’24
A note of good news - Baltimore Harbor remarkably re- opened on June 10, just three months after a tanker crash destroyed the Key bridge and blocked ship traffic.
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