Shippers seeking ocean freight capacity from China and other parts of east Asia are seeing the already challenging conditions further intensify this week, with backlogs of bookings, rising rates, and capacity and equipment even more scarce than in previous weeks.
Freight fowarders in Europe have reported that the ocean freight market has worsened markedly in recent weeks, as the aftermath of the Suez Canal blockage has continued to have an impact on port congestion, capacity, container availability, and pricing.
Lloyd’s List reported this week that some shippers have been paying as much as $18,000 per feu for urgent shipments from Asia to Northern Europe, “with average slot utilisation rate ex-Shanghai about 100% and most vessels over booked”, meaning cargo owners with urgent cargo had to bid for limited space resources due to the pressure of the delivery period.
The latest rates update today from digital freight marketplace Freightos highlights that non-stop demand for ocean freight and the resulting delays and equipment shortages “pushed spot rates to new heights across major trade lanes once again this week”. But it also noted that “with nearly 40% of containers getting rolled, many shippers are paying significantly more in premiums in the hopes of securing space”.
According to Freightos’ FBX rates index – based on current rates being used by global logistics providers for the week leading up to Tuesday each week – prices out of Asia to the US increased this week by more than 13% and to new highs to both coasts, and Europe-North America rates spiked another 23% to $4,299/FEU, “nearly double their level just six weeks ago.”
And, once again, the latest projections show no let-up in US demand for imports, Freightos noted, highlighting: “May’s monthly retail import volumes are estimated to be just 2% below the record set in March, with June’s imports expected to be 16% higher than in 2019.
“Demand and rates from Asia to North Europe and the Mediterranean – where prices were stable but at, or near, record highs this week, with Asia-N. Europe rates up an incredible 469% annually – likewise are not expected to ease until after Q3 at the earliest.”
Very serious space crunch
Freight forwarder Flexport’s latest weekly Ocean Freight Market Update highlights on the Asia-Europe (Far East Westbound – FEWB) trade that due to the “impact of blank sailings in consecutive weeks and severe equipment shortage across Asia, there is now a very serious space crunch on the FEWB trade. Carriers are building up backlog and rolling more cargo due to capacity constraints and high demand.”
It said Asia-Europe rates had risen following general rate increases (GRIs) on 1 May and 15 May that had been implemented “by all carriers”. And on the capacity side it recommends advance booking notice of three or more weeks prior to the cargo ready date (CRD).
Meanwhile, on the Asia to North America (Transpacific Eastbound – TPEB) trade, Flexport reported that rates were increasing further in May over their already high levels in April, with the current severe capacity crunch worsening further and looking likely to extend into June, noting: “The crunch being felt on TPEB continues to tighten, as demand continues to move well beyond available capacity in the market. Carriers indicate an extremely strong backlog of bookings that are already pushing well through May and into mid-June.
With space “extremely tight”, it expects GRIs in the second half of May. And on the capacity and equipment situation continued characterised by “extreme shortages in North China, Southeast Asia, and Taiwan”.
On the Europe to North America (Transatlantic Westbound) market, Flexport noted that rates there had also increased, with a 1 May GRI implemented, and a GRI on 1 June likely to be implemented.
It recommended that customers make advance bookings with notice of five or more weeks prior to the cargo ready date (CRD) on the Transatlantic Westbound market, noting a “rate increase announced for June by GRI and new/amended surcharges”. It said this market was “expected to remain hot through the summer, with increased pressure on equipment availability in the short term. Booking early is key to securing space. Use Premium products for urgent cargo needing higher reliability.”
Equipment supply ‘extremely tight’
On the container equipment side, Flexport noted that “equipment supply is extremely tight across Europe as port congestion and lower vessel capacity hinder empty-container repositioning, particularly at inland depots. Allow flexibility in rcuting and empty pick up from the port.”
And on the capacity development side it noted that there were “fewer blank sailings on North Europe services, but schedule reliability still hurt by the port congestion in North Europe and North America, particularly on the USWC”. It said three blank sailings on the EMA service in May and June will restrict capacity from East and West Med to USEC in week 20, 23, 26.
India-North America challenges
For the India to North America market, Flexport highlighted that a 1 May GRI had been implemented most carriers, noting that “blank sailings and booking restrictions are continuing to negatively affect capacity in early May”, with suggested booking “remains at 15-20+ days prior to Cargo Ready Date (CRD)”.
Looking at equipment availability, it noted that “carriers indicate India will stay a priority – behind China, of course – for repositioning empty equipment. Even so, and as new equipment enters the market, increased demand and lingering effects of the Suez Canal blockage are likely to keep equipment scarce for the next two months.”
Flexport said it would “continue to recommend booking urgent cargo on Premium no-roll services” on the India to North America market.
Meanwhile, for North America to Asia services, it reported that rates are increasing. With a 15 May GRI notification received from two carriers, and indications received of a 1 June reefer GRI from the West Coast, it recommends advanced booking notice of 14-21 days prior to CRD at port, adding: “Capacity availability from the port of LA to all Asia destinations has grown tighter due to voided sailings”, recommending “at least 3 weeks lead time on new bookings”.
Chassis availability tight
Flexport added: “Chassis availability is tight at most major ports and rail ramps”, with the company recommending more lead time for truckers to procure chassis. Severe vessel congestion at both US coasts continues to move vessel cut-off dates and earliest return dates.”
On North America to Europe, it said rates were steady, noting that “only one carrier has announced a small GRI for June 1. Port congestion along the US East Coast and in North Europe impacts vessel-schedule integrity for all services, causing capacity loss week to week as ships make up time. We urge booking sooner to help ensure coverage.
“The limited capacity for all-water service from the US West Coast to Europe has grown increasingly tight. Would strongly suggest placing bookings with at least 3-weeks lead time.”