Overall
This week, the Drewry composite index experienced a 5% decrease, yet it has registered a 88% increase compared to the same period last year. The World Container Index (WCI) is now 146% higher than the average rates before the pandemic in 2019. Additionally, the average index for the year-to-date significantly exceeds the 10-year average, highlighting the lasting impact of the exceptional conditions during the 2020-2022 period.
Freight rates between various ports have shown diversity; rates from Rotterdam to New York saw a 1% increase. Rates from Shanghai to Los Angeles fell by 4% and rates from Shanghai to New York declined by 3%. Drewery expects rates to slightly decrease next week.
Ocean Freight Insights
For the ISC to North America ocean route, rates have decreased after a planned March 1st General Rate Increase (GRI) of $1000/container was postponed to the second half of March, with the potential for cancellation if market conditions do not change. Vessel delays are causing capacity shortages, but the situation is expected to improve with new vessel builds, increased speeds, and idle capacity utilization. Equipment availability varies by carrier and port, with notable challenges at inland depots and smaller ports.
In the FEWB (Far East Westbound) sector, the Red Sea conflict has forced most vessels to reroute via the Cape of Good Hope, extending transit times by 2-4 weeks and causing schedule fluctuations and regional equipment shortages in Asia. Post-Lunar New Year (LNY), demand has softened, and bookings have slowed, but are expected to recover from week 11 onwards. Capacity was significantly reduced in the weeks before and after LNY due to blank sailings, with more potential voids if demand remains flat.
Rate development is affected by the Red Sea situation, maintaining current rates through GRIs, PSS, and contingency charges. However, there is pressure to reduce rates due to the additional costs of rerouting, with expectations for rates to decline from March 1st onwards, influenced by low demand.
Global Air Cargo Update
In recent weeks, air cargo volumes at Asia-Europe sea-air hubs like Dubai, Colombo, and Bangkok have surged, driven by shippers seeking alternatives to container shipping disruptions caused by Red Sea attacks. This surge aims to replenish European stocks delayed by longer voyages around the Cape of Good Hope. The first seven weeks of 2024 saw notable year-on-year increases in air cargo tonnages to Europe from these hubs, with Dubai, Colombo, and Bangkok experiencing growth of 71%, 61%, and 58%, respectively, surpassing other hubs like Singapore and Doha.
The analysis also notes the complicating effect of the later Lunar New Year in 2024 on comparisons but confirms the trend of increased tonnages to Europe. Despite uncertain pricing impacts due to various factors, including last year’s market decline, a post-Lunar New Year demand decrease is observed. However, there is a structural improvement in demand, particularly from the Middle East & South Asia, indicating a shift towards sea-air solutions.
Globally, despite a slight year-on-year drop in tonnages for weeks 6 and 7 of 2024, there’s an increase in air cargo capacity and a recovery indicating the industry’s adaptation to logistical challenges.
We are continuing to monitor all lanes, ports, and services to provide you with the best possible service at the best possible price.
M.E. Dey and Co. monitors the market daily to find competitive rates that pair well with exceptional transportation services. We provide fixed-rate contracts in addition to standard market rates. Contact us to talk with a representative or request a quote to get started.