Oceania Mid July Market Update - 23/07/2024

We're sharing with you today our mid-July Market update, summarising salient shipping market conditions and observations to assist you with your import and export shipping planning to/from ANZ.

Port Congestion & Equipment Shortages

Port congestion challenges continue to be reported at the two main SE Asia transhipment ports (Singapore and Port Kelang); with the primary causes being the flow of unseasonally high cargo volumes from NE Asia transiting west toward UK and North European destinations. Extra inventory being sourced to build additional safety stock buffers whilst contending with the significantly longer transit times (and associated heightened shipping prices per container) due to ocean vessels navigating to UK/Europe via the Cape instead of through the Red Sea and utilising the Suez canal; combined with an “early” start to Northern hemisphere’s peak shipping season, and higher than forecast inter/intra-Asia cargo flows which feed into the main manufacturing centres of China, Taiwan, Japan, Thailand, Malaysia, Vietnam, Bangladesh and the ISC.

Dwell days being reported at both Singapore and Port Kelang are ranging from 3 up to 6 weeks of delay currently, with vessels either sitting idle at anchor in queue awaiting berthing slots for cargo transhipping, and/or awaiting transhipment through the congested port facilities.

Major NE Asia ports, particularly those in China and Taiwan, also continue to experience terminal congestion; resulting in waiting time longer than scheduled for vessels to gain berths and load out from the likes of Shanghai, Ningbo, Qingdao, Xiamen, Shenzhen and Kaohsiung.

Equipment shortages, particularly of 40’HC standard containers, also continue in major and tier 2 loading ports spanning China, Taiwan, South Korea, Thailand, Malaysia, Vietnam, Bangladesh, Indonesia and India.

Empty equipment repatriation from North America, and particularly Europe and UK, due to extended sailing times on the westbound services caused by the Red Sea situation; remain challenged as the shipping lines continue to push for higher %’s of dependency with their sailing schedule integrity and transit time calendars.

Red Sea situation

Liner shipping sources are reporting it is now highly unlikely that any container lines will be willing (nor insured) to risk resumption of sailings transiting through the Red Sea and via Suez Canal within 2024; and whilst the Houthis program of terror by land, air and sea against commercial vessels in that expanded region of ocean continue unabated, it is difficult to reliably determine when commercial vessel scheduling through the Suez Canal will resume.

Capacity Reduction for Oceania (Important to read and be aware of please)

Due to the current high rates and high volumes which the shipping lines are servicing on TransPacific (Asia to North America) and FEWB/FEMED (UK/Europe/Med) trades; shipping lines are actively shuffling their assets to maximise profit.

Most of the shipping lines with larger tonnage invested in the Oceania basin have temporarily withdrawn their larger TEU ships and seconded them into their larger volume trades, as “extra loaders”, to clear origin backlogged cargo pools, and reap the higher freight rates available to them in those trades presently.

The larger vessels which have been seconded temporarily to service other trades, have been replaced in the Oceania trade with significantly smaller capacity container ships operating from NEA and SEA to ANZ destinations.

As a result of this, there are numerous additional challenges now being forced onto the Oceania import/export trade . To clarify and share a few of the relevant impacts from these actions and which are important for you to be aware of with your shipping planning:

• Rollover pools are building at the origin loading ports for southbound sailings to AU EC and WC destinations, and this is expected to continue beyond Golden Week holidays in Asia
• Bookings are guided/recommended to be made by suppliers at least 3-4 weeks in advance of predicted cargo ready dates, and so as to gain cargo space for the desired sailing schedules
• BCO and NAC space, even being “VIP” with fixed pricing over lengthy validities (but without space guarantee unless paid for via priority surcharges); allocations are being reduced by the shipping lines in favour of higher yielding SPOT/FAK container freight prices
• Bookings being made under BCO/NAC deals are not being space protected by the shipping lines, and carriers are recommending paying their priority surcharges to assure the containers go on the booked vessel
• Shipping lines are reducing available free time at the origin loading ports (caused by equipment shortages at these origin ports); impacting suppliers who are being rushed to pack cargoes and clear export Customs, in order to contend with days less of free time before containers must be gated into CY terminals for export sailings
• Shipping lines are pushing shippers to use and book SPOT/FAK in preference to their longer term (lower priced) BCO & NAC offerings – no guarantees are being given to BCO/NAC bookings in terms of firm commitment of containers onboarding to the booked vessels
• Bookings for Adelaide and Fremantle destinations, regardless of origin and which use transhipment services to connect their cargoes to final destination ports via Singapore (etal PKL and TPP); are becoming increasingly pressured due to backlogged cargo at T/S hubs, and could very well be suspended (temporarily at least, for new cargo bookings) at the originating port in the coming days/weeks

Peak Season and Golden Week

Golden Week Spring Festival holiday in China ’24 falls between 01^st-07^th October. Factories and suppliers will be urging for production completion and export bookings prior to closures for the holidays. September month will be space pressured due to this, and when considering in parallel the above notes; we anticipate space and freight rates will be at a premium.  

We are certainly witnessing booking volumes building currently from NEA, SEA and ISC origins (and also from Europe, Med, MEA and US origins): importantly, for urgent orders, promotional orders and new season orders which may be time critical from a ETA into country perspective, we encourage you to be cognisant of above information, factor these into your planning, and please do reach out to your Ligentia support team for further discussion and planning options.