Asia Ocean Update June 24 |
Summary |
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| Severe ocean disruption is fuelling the rate rises that the industry is currently experiencing. Recent data shows that container spot rates are now at a level not seen since 2022. The catalyst for this disruption was the onset of diversions around the Cape of Good Hope, which were brought about by Houthi rebel attacks on containerships in the Red Sea, which is a continuing issue. |
Unintended consequences |
| In a bid to ease the impact of the Red Sea diversion, carriers have implemented a number of measures, including increased transhipments in Asia and realigning capacity from other major trades to cope with longer sailing distances around the Cape of Good Hope. Congestion Unfortunately, these measures have led to some unintended consequences. Major ports have become congested, including Singapore, the world's second busiest port, which reached critical congestion levels at the end of May with container ships having to wait up to seven days to berth. Singapore port has now put emergency measures in place to try and ease the congestion, but this will take time to filter through. The severe congestion at Singapore port forced some carriers to omit their planned port calls, exacerbating the problem at downstream ports. These delays also resulted in vessel bunching, causing spillover congestion and schedule disruptions. Equipment shortages The strong market combined with lower vessel capacity is creating a shortage of equipment. Port congestion and omissions are wreaking havoc with equipment planning. North China has been particularly affected by short supply, with availability varying daily based on vessel arrivals and the discharge of empty containers. Early peak season Importers have gained valuable insights on how to safeguard their supply chains during times of ocean disruption. One of the most effective measures being to expedite shipping processes and transport as many goods as possible in a timely manner. A sudden and earlier than expected surge in bookings has seen the usual August/September peak season demand moved forwards, further exacerbating the already difficult conditions. |
A difficult cycle to break |
| Unfortunately, there seems to be no end in sight yet for the Red Sea crisis. It is evident that the numerous knock-on impacts and unintended consequences have resulted in heightened levels of uncertainty for ocean freight shipping. There was some cause for optimism as market rates levelled off in mid-June, which we had hoped indicated a slight easing in the situation. However, carriers have now notified further significant increases to rates, affecting shipments moving in the latter part of June. |
Assistance and support |
| We have a wealth of experience handling supply chain disruptions and are ready and equipped to support our clients. Our ocean freight teams are closely monitoring any delays/issues and will make direct contact with clients with affected shipments. Recommendation Where possible, we would advise shippers to book early and incorporate additional lead time into inventory planning, in order to help reduce the risk of stock shortages, missed delivery deadlines, and other logistical challenges brought about by the current ocean market conditions. Alternative options for time-sensitive goods Rail freight: We have deployed more equipment on our Express China Rail services and have increased to four departures per week for LCL shipments. Rail services are currently achieving an average transit time of 18 days from the China rail hub to arrival at UK port. Air freight: Our award-winning airfreight services provide an extensive range of scheduled, charter and specialist carrier options. Contact us We have a large team of ocean experts throughout the UK who are on hand to answer your questions and provide options to help mitigate the impact of this disruption. If you have any concerns please do not hesitate to speak with your usual Davies Turner contact. |
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