Oceania September market update 06/09/24

Port congestion and equipment shortages

Port congestion challenges continue to be reported at the main South East Asia transhipment ports (Singapore, Port Kelang, Busan and Tanjung Pelepas); with the primary causes being the flow of peak season cargo volumes from North East Asia transiting west toward the UK, Northern European destinations and down into the Oceania region. Whilst there has been a slight improvement throughout August, the backlog is proving difficult to clear with dwell days averaging 2-3 weeks in most cases.

Terminal congestion is continuing to be experienced at all the major ports throughout North and South East Asia as high booking volumes remain. This is causing increased waiting times for containers waiting to be gated in to origin loading terminals putting further pressure on the availability of origin trucking services.

Equipment shortages into Oceania remains stubbornly high from North and South East Asia resulting in less time for suppliers to access, load and deliver the containers to the terminal prior to Close Out. This is especially so for 40’HC containers from the load ports in China, Taiwan, South Korea, Vietnam and Malaysia.

Red Sea situation

Unfortunately there does not appear to be any respite in situation with more merchant vessels targeted in August. Liner shipping sources are reporting it is now highly unlikely that any container lines will resume sailing through the Red Sea and via Suez Canal in 2024.

Capacity reduction for Oceania

As cracks begin to appear in demand from North East and South East Asia to Europe, The Mediterranean and the USA, bookings and the subsequent demand for space to Oceania are showing no signs of slowing. As carriers continue to invest their assets into these high yield markets it is expected that we will continue to experience higher freight rates and space constraints through September and into Golden Week.  This will be further exacerbated by more blank sailings planned by shippings lines in the lead up to Golden Week to ensure any reduction in production from China manufacturing facilities is not translated to space on ships.

Capacity and backlogs to Fremantle and Adelaide reached a critical point during August with several carriers withdrawing services to the cities.  Subsequently significant delays have been and will continue to be encountered for all bookings to these 2 destinations as the shipping lines struggle to navigate and schedule the supply/demand balance.  As a result we expect there will continue to be considerable disruption to shipments destined to both Adelaide and Fremantle through the first half of September.

As has been the shipping lines’ practice, further GRIs have been announced to come into effect throughout September ex North East and South East Asia to Australia and New Zealand in the quantum of up to USD300 per TEU from September 1^st with a second raft expected in the second half of September. To better understand the impact of these GRI and Rate Restoration programs, the SCFI (Shanghai Container Freight Index) which highlights the benchmark container freight index from Shanghai to Australian East Coast ports has increased by 62% in the 6 weeks to week 35 (the last week of August). We are now seeing container freight rates from the main load ports of China to East Coast Australia ports in the bandwidth of USD5000-USD5400.

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 at pools continue to accumulate at origin loading ports for southbound sailings to Australian East and West destinations, and this is expected to continue beyond Golden Week holidays in Asia.
• Bookings are guided/recommended to be made by suppliers 3-4 weeks in advance of predicted cargo ready dates to allow our teams to properly understand weekly volumes and to ensure adequate allocation of your containers.
• BCO and NAC space allocations continue to being reduced by the shipping lines in favour of higher yielding SPOT/FAK container freight prices.
• Shipping lines are pushing shippers to use and book SPOT/FAK in preference to their longer term (lower priced) BCO & NAC offerings or face the option of having their allocations significantly reduced or withdrawn completely.
• Shipping lines are reducing available free time at the origin loading ports (caused by congestion and equipment shortages) 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

Peak season and Golden Week

Golden Week Spring Festival holiday in China ’24 falls between 01^st-07^th October.  We encourage you to urge your factories and suppliers in China to ensure export bookings are placed in the next few days if the expected cargo ready date falls just prior to the break.  Ligentia will continue to operate during Golden Week to assist with enquiries however the carriers will not be available to take any bookings.

We also continue to witness increased booking volumes from North East and South East Asia, Indian Sub-Continent, Europe, Mediterranean, Middle East and US origins.  Importantly, for urgent orders, promotional orders and new season orders which may be time critical, we encourage you to please be cognisant of the above notes and factor them, into your planning. Please do reach out to your Ligentia team for further discussion and planning options.

September GRIs and PSS

As mentioned previously, shipping lines are continuing their GRI and Rate Restoration programs, applicable to both the Australian East and West coast destinations from North East and South East Asia and Indian Sub-Continent origins.

PSS enforcement ex North East and South East Asia and Indian Sub-Continent origins on BCO, NAC and even FAK ocean freight container contracts remain in place and being held firm.

Likewise, PSS enforcement ex Europe, the UK & Middle East origins on BCO, NAC and FAK ocean freight container contracts also continue.

We will further update about shipping line ocean freight costs, GRIs and PSS later this month.

We would like to thank you for your continued support. Should you have any questions at all, please do not hesitate to reach out to your Ligentia team.