Weekly Supply Chain Update: 22

Ocean Freight

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Trans-Pacific Eastbound

Asia’s volumes remain robust in November, fuelled by anticipated tariff hikes, the potential ILA strike in January, and the early Lunar New Year in 2025. While rates vary across routes between China and Southeast Asia, pressure is intensifying on U.S. West Coast lanes. East Coast volumes are stabilising, but some carriers and service routes are already fully booked or facing capacity constraints through the month. Fixed rates and Peak Season Surcharges (PSS) have stayed consistent, though adjustments may occur due to the volatile short-term market.

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Far-East Westbound

Space will remain constrained in late November due to blank sailings and a growing roll pool. Bookings are being deferred to avoid arrivals during Christmas and New Year holidays in Europe. This has cast doubt on the November GRI materialising, with carriers focusing on a projected December GRI of $3,900/$6,000/$6,000. The SCFI climbed $100/TEU to $2,541/TEU in week 46, with another slight increase expected in the coming week. Rates may stabilise or decline depending on December GRI developments. Equipment shortages at major Chinese ports remain sporadic but manageable. Premium services are available for shippers needing firm space, earlier ETDs, or specific transit times.

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Transatlantic Westbound

Demand in Northern Europe remains strong, with most services to New York fully booked. Capacity in Southeast ports is more readily available, and rates have stayed stable through November’s second half. In the Western Mediterranean, overbooking persists, with utilisation surpassing 100%. November rate increases have been widely implemented, and carriers are now evaluating December adjustments. The Eastern Mediterranean market remains tight due to high demand in recent months. While competition among carriers is intense, rate increases are being reviewed to align with market conditions.

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China’s Growing Shipbuilding Dominance Sparks Global Pushback

China has solidified its position as the global leader in shipbuilding, now accounting for 74% of new orders across bulk carriers, tankers, gas, and container ships in 2024, up from 63% in 2023. Chinese shipyards control 42% of global yard capacity and have secured 57% of vessel capacity on order, far outpacing South Korea and Japan. By 2026, 70% of new bulk carriers and 67% of tankers are expected to be built in China.

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This dominance has drawn global scrutiny. The U.S. Trade Representative is investigating China’s shipbuilding subsidies, while Canada and Europe push for tariffs on Chinese-built ships. Canada recently imposed a 100% surtax on Chinese electric vehicles and is considering extending it to ships. European shipbuilders, represented by SEA Europe, are lobbying for stronger policies to counter China’s pricing and financial advantages. South Korea is seeking to strengthen ties with the U.S. following pledges to support its shipbuilding industry, while the U.S., Canada, and Finland have formed the ICE Pact to boost polar icebreaker construction and counter China and Russia’s influence in strategic industries. Amid geopolitical tensions, analysts warn of increasing protectionism and a shift toward national fleets and tariffs, reshaping global shipbuilding and trade.

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Kazakhstan, Azerbaijan, and China Partner to Enhance Middle Corridor Trade

Kazakhstan, Azerbaijan, and China have signed an agreement to establish a 40-hectare intermodal cargo terminal in Baku's Alyat suburb. The terminal, with an initial capacity of 350,000 containers annually, aims to enhance container train traffic on the Trans-Caspian International Transport Route (TITR), also known as the Middle Corridor. This key trade route links Southeast Asia and China to Europe via Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and Turkey, offering the shortest path between Western China and Europe. Trade volumes along the Middle Corridor are surging, exceeding 3 million tonnes in 2023 and projected to reach 4.2 million tonnes this year.