Weekly Supply Chain Update: 19

Trade: Far East - Westbound

Last week’s WCI spot rates from Drewry show a continued decrease on the Asia to Europe and North America trade routes. The Asia to North Europe and Mediterranean lanes have now experienced 13 straight weeks of falling rates. However, despite these drops, rates to North Europe remain nearly $400 per FFE higher than the lows seen in spring 2024. On the Asia to Mediterranean route, rates have dipped slightly below the levels recorded in April.  Carriers are gearing up for a General Rate Increase (GRI) in November, as the post-Golden Week recovery remains slow. However, booking volumes for weeks 43 and 44 are increasing, as shippers aim to secure space before potential rate hikes. Space for the latter half of October is filling up following a 15% reduction in capacity due to blank sailings.

Three major alliances have already announced additional blank sailings for November, primarily to address vessel delays and maintain the balance between supply and demand, preventing further rate declines. Following the Golden Week holiday, the Shanghai Containerized Freight Index (SCFI) dropped by $210 per TEU. However, if the GRI is successfully implemented, rates are expected to stabilise or possibly increase in November.

While the equipment shortage is gradually improving, some less frequently serviced ports of loading (POLs) continue to experience occasional shortages due to rerouting and blank sailings.

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Trade: Trans Pacific - Eastbound

Ocean volumes have recovered following Golden Week, but overall market demand has remained steady over the past month. The planned General Rate Increase (GRI) has been withdrawn, and current ocean freight rates have been extended through the end of October, with some price adjustments on certain lanes. There is now sufficient space for shipments to both the East Coast and West Coast of the United States, and the impact of the ILA strike has been mitigated, leading to the removal of related surcharges.

Fixed rates remain in place, while Peak Season Surcharges (PSS) are still being applied and are likely to be extended beyond Golden Week, pending further market conditions. On Pacific trades to the US West Coast (USWC) and East Coast (USEC), rates remain more than $1,000 per FFE higher than they were in the spring, prior to the peak season.

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Saudi Arabia Unveils $267 Billion Investment Plan to Become Global Logistics Hub by 2030

Saudi Arabia has announced plans to invest over SR1 trillion ($267 billion) in its logistics sector by 2030, aiming to become a global logistics hub. At the Global Logistics Forum 2024, Saudi Minister of Transport, Saleh bin Nasser Al-Jasser, highlighted that SR200 billion has already been spent. The investment is part of Vision 2030, which seeks to enhance the Kingdom's role as a logistics bridge between Asia, Europe, and Africa. Key agreements were signed, including partnerships with Egypt and Mediterranean Shipping Co., and sustainability initiatives were also emphasised, such as reducing carbon emissions through the rail network.

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Maersk Launches New Black Sea Feeder Service Despite Rising Security Risks

Despite ongoing security concerns in the Black Sea, Maersk has launched a new weekly feeder service connecting Ukraine's Chornomorsk and its hub in Port Said, Egypt. The A. Obelix, with a 1,702 TEU capacity, will operate on this route, reducing transit times compared to the previous barge connection between Chornomorsk and Romania's Constanta port. Ukraine's return to global container trades began in May, despite recent Russian attacks on commercial vessels in the Black Sea and missile strikes damaging Maersk containers in Odessa.

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UK Cracks Down on Russia’s Shadow Fleet, Sparking Broader Global Sanctions and Stricter Insurance Regulations

The UK has begun cracking down on Russia's shadow fleet, detaining vessels passing through the English Channel with questionable insurance. This move could spark broader European action, with up to 10 shadow tankers transiting daily. Amid rising concerns, countries like Denmark are also considering barring Russian tankers from the Baltic Sea. The UK has sanctioned 18 Russian oil tankers and four LNG carriers, part of a broader initiative involving 44 countries, including the US and Canada, to tackle the risks posed by Russia’s shadow fleet. Meanwhile, India, a key Russian oil buyer, is implementing stricter insurance regulations for incoming ships.