Weekly Supply Chain Update: 24

Container Freight

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Trans-Pacific Eastbound (TPEB)

• Rates on the West Coast have remained steady, with plenty of space available, especially in the Pacific Southwest and Northwest. In contrast, East and Gulf Coast rates are holding firm, supported by well-utilised service routes expected to remain stable through mid-December.
• Carriers are gearing up for a possible General Rate Increase (GRI) on East Coast routes starting December 1, although this has not been finalised. Meanwhile, West Coast rates are being extended without any immediate adjustments.
• Reductions in PSSs are starting to appear for West Coast routes from December 1, but no changes have been announced yet for the East or Gulf Coast routes.

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Far East Westbound (FEWB)

• A slight increase in demand has been observed in the latter half of November, largely driven by anticipation of December's GRI. However, activity is expected to stabilise later in December as the holiday season slows down European markets.
• Carriers have proposed a December GRI ranging from $6,000 to $6,200 per TEU. While some adjustments are likely, reductions may occur depending on vessel utilisation.
• The Shanghai Containerized Freight Index (SCFI) saw a small drop of $31/TEU in Week 48 due to extended FAK rates for late November. Looking ahead, the index is expected to rise slightly in Weeks 49 and 50 as December’s GRI takes effect.
• Although there are occasional equipment shortages at major Chinese ports, the situation remains under control. Premium services are available for those needing guaranteed space on early departures or specific transit times.
• Maersk has adopted an aggressive pricing strategy on Asia-Europe SPOT rates, offering lower rates in December to boost load factors and then gradually increasing prices through AI-driven models. Current rates are notably lower than November’s target FAK prices and have returned to early November levels.

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Transatlantic Westbound (TAWB)

• Demand for North and South Europe continues to be strong, with particularly high activity in the West Mediterranean. Shippers aiming for mid-January arrivals are prioritising early sailings to secure space.
• Blank sailings planned for Weeks 47–52 are creating some backlogs, as demand for earlier departures has exceeded the available capacity.
• Overall, equipment availability remains healthy, although shortages are being reported in certain hinterland regions where carrier haulage is more prominent.
• Rates for December are holding steady across most carriers, maintaining the trends observed in November for both North and South Europe.

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General

• Donald Trump announced plans on Truth Social to issue an executive order imposing 25% tariffs on all goods from Mexico and Canada and an additional 10% on imports from China, starting January 20th. The timeline for implementation depends on the extent of his authority under U.S. law. Importers may accelerate shipments of non-time-sensitive goods ahead of this date, particularly if they have extra warehousing capacity.
• The container shipping industry is set for its most profitable year outside the COVID era, with Q3 2024 net income reaching $26.8 billion—a 164% increase from Q2's $10.2 billion, according to Blue Alpha Capital. This represents an 856% year-over-year increase, vastly surpassing any annual pre-COVID earnings. The Red Sea shipping crisis, alongside the Panama Canal drought, has fueled the most significant growth in tonne-miles since 2010. This has maintained highly profitable freight rates across major trade lanes, significantly boosting industry earnings in 2024.

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Bulk

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Capesize

• The Baltic Exchange's Capesize Index has declined, with rates dropping approximately 4.6% to 1,509 points, marking the lowest level since November 8.
• This downturn is attributed to a scarcity of coal cargoes and balanced operator positions, leading to reduced freight rates.

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Panamax

• The Panamax Index has also seen a decrease, falling 15 points to 1,068, reaching a one-year low.
• The North Atlantic market faces pressure, with transatlantic grain shipments fixing around $6,000/day, and mineral cargoes from the Continent at mid $7,000s/day.