Weekly Supply Chain Update: 21

TPEB (Trans-Pacific Eastbound)

Volumes have picked up substantially post-Golden Week, with East Coast routes facing full bookings and some capacity constraints. China is pushing exports due to anticipated tariff hikes, driving strong demand. Fixed rates and Peak Season Surcharges (PSS) are stable in early November, but space is tight. Rates vary across routes, and premium services are now available at $2,000 per container for shippers requiring priority on transit times.

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FEWB (Far East Westbound)

To avoid cost increases later in November, bookings are being expedited as vessel space is projected to be full. November is seeing a 15-18% capacity reduction with ten void sailings, and this tight supply has already raised rates. The first November General Rate Increase (GRI) has pushed rates to approximately $4,400-4,500 per FEU, with a second anticipated GRI aiming for $5,400 per FEU by mid-November. Space is limited, and the SCFI rose $277 per TEU, indicating further price increases.

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TAWB (Trans-Atlantic Westbound)

Demand in North Europe and the Mediterranean remains strong as the holiday peak approaches. North Europe routes maintain high utilisation and stable rates. Carriers are reviewing PSS charges, particularly following the ILA strike. Demand in both East and West Mediterranean regions is high, and rates are expected to continue their upward trend, with increased utilisation and blank sailings.

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November Rate Hikes on Far East-Europe Routes Likely Temporary

As of November 1, spot rates from the Far East to North Europe and the Mediterranean are set to rise by 15-25%, according to recent data from Xeneta. While this may signal a shift, European importers should not interpret it as a lasting trend.

Peter Sand, Chief Analyst at Xeneta, highlights that this rate increase reflects carriers’ efforts to stabilise spot rates amid recent declines rather than a permanent shift. “European shippers might be concerned by the November rate hike, but there’s little reason to be. Carriers are attempting to keep spot rates up and counter recent drops. Although the Red Sea conflict does add some volatility, the overall trend is still pointing downward, and the November spike is unlikely to hold long-term.”

For European importers, the key takeaway is to keep a broader perspective on market conditions and avoid reacting to short-term price adjustments.

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Maersk Q3 Results Summary

In Q3, Maersk’s Ocean segment posted $2.8 billion in EBIT and $4.0 billion in EBITDA, though annual EBIT margins declined to 6.4% due to market downturns. Despite a 0.3% increase in Ocean volumes, Maersk’s global market share fell from 14.1% to 13.4% amid 5.6% overall market growth. Fleet expansion of 2.3% couldn’t keep pace with increased transit demands from disruptions like the Red Sea crisis.

Logistics saw $200 million in EBIT, but only achieved 2% organic growth over the past year, below its 10% target. Maersk’s average freight rate rose by 54.4%, exceeding the market’s 46.5% increase. Intra-regional trade volumes grew by 7.6%, while East-West volumes declined by 3.1%. Despite cost-control efforts, Maersk faces challenges in maintaining market share and meeting growth targets.

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Houthi Forces Escalate Red Sea & Arabian Sea Tensions with Attacks on Vessels

On 28 October, Yemen’s Houthi group claimed responsibility for attacks on three Liberian-registered vessels in the Red Sea and Arabian Sea, aiming to impose a naval blockade on Israel. According to Houthi spokesperson Yahya Sarea, the strikes targeted ships bound for Israeli ports. The bulk carrier Motaro, last seen off Yemen’s coast, was reportedly en route to Shanghai, while container ships SC Montreal and Maersk Kowloon were also allegedly targeted, though Maersk has denied any attack on its vessel.