Weekly Supply Chain Update: 25

Container Freight

Trans-Pacific Eastbound (TPEB)

• Rates: Shipping lines are aiming to implement a General Rate Increase (GRI) on December 15th, driven by a surge in U.S. holiday shipments and the typical rise in cargo movement ahead of Lunar New Year. These rate adjustments are being used to capitalise on the current peak season demand.
• Equipment Availability: Equipment supply is stable, with no reported shortages. Carriers are prepared to accommodate current booking levels without disruptions.
• Peak Season Surcharge (PSS): Carriers have signalled that PSS increases are planned for January 2025, which could affect shipping costs in the new year.
• Takeaway: Shippers should consider finalising bookings as soon as possible to secure current rates before the GRI takes effect. The steady equipment availability provides an opportunity to lock in shipments without delays.

Far East Westbound (FEWB)

• Rates: The overall SCFI increased by 127.94 points (5.67%), reflecting a broader recovery in container freight rates. This suggests stronger market demand or tightened capacity across major trade lanes.
• Space Availability: Space remains adequate as additional loaders are scheduled for late December. Carriers may lower or extend current FAK rates to maximise vessel utilisation in the second half of the month.
• Equipment: Carriers are advising shippers to collect empty containers as soon as they are released to avoid potential shortages, especially in cases of vessel delays or blank sailings.
• Weight Restrictions: Strict weight policies remain in place, with heavy 20’ containers at risk of rejection to optimise vessel capacity. Shippers are encouraged to adjust their cargo plans accordingly.
• Takeaway: Shippers have an opportunity to secure favourable rates while demand remains moderate. However, they should act quickly to avoid delays and ensure compliance with weight restrictions to prevent issues during loading.

Transatlantic Westbound (TAWB)

• Capacity: January sailings from Northern and Southern Europe are expected to operate at full capacity due to consistent demand.
• Blank Sailings: Carriers have announced blank sailings for Weeks 51, 52, and 01, particularly affecting U.S. East Coast and Canadian routes. These cancellations could result in short-term capacity shortages.
• Equipment Supply: Equipment remains tight in some areas, particularly in parts of Central Europe and Southeast Germany. Advanced planning is crucial to avoid container availability issues.
• Rates: Current FAK rates are expected to hold steady until the end of January, with no immediate rate hikes anticipated.
• Takeaway: With upcoming blank sailings and tight equipment availability in certain regions, early planning and collaboration with carriers are essential to secure space and containers. Rates are stable for now, presenting an opportunity for cost certainty on future shipments.

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Insights from the Shanghai Container Freight Index (SCFI) Table

Comprehensive Index:

• The overall SCFI increased by 127.94 points (5.67%), reflecting a broader recovery in container freight rates. This suggests stronger market demand or tightened capacity across major trade lanes.

Europe (Base Port):

• Rates decreased by $67/TEU (-2.21%), indicating a softening demand or increased capacity on the Europe trade lane. This could be tied to seasonal adjustments as the pre-holiday rush winds down.

Mediterranean (Base Port):

• A slight drop of $15/TEU (-0.40%) suggests stable demand with marginal downward pressure on rates. Carriers are likely maintaining capacity to balance the market.

US West Coast (USWC):

• A significant increase of $714/FEU (21.57%) shows strong demand recovery or tighter capacity on this route, potentially driven by pre-Lunar New Year shipments and strong consumer demand in the U.S.

US East Coast (USEC):

• Rates rose by $570/FEU (11.58%), aligning with the demand uptick seen on the West Coast. This increase could also reflect ongoing efforts by carriers to capture higher revenue on these lanes during peak shipment periods.

Persian Gulf and Red Sea (Dubai):

• A modest increase of $33/TEU (2.24%) suggests stable demand with slight upward pressure on rates. This aligns with consistent trade flows and balanced capacity in this region.

Australia/New Zealand (Melbourne):

• Rates surged by $153/TEU (8.65%), pointing to increased demand or limited space availability. Seasonal factors or cargo shifts might be driving this growth.

South America (Santos):

• Rates fell by $103/TEU (-1.80%), indicating weakening demand or overcapacity on this route. Seasonal adjustments may also contribute to this decline.

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Bulk

Baltic Exchange's Capesize Index (BCI)

• The BCI fell significantly earlier in the week, dropping to 1,535 points—a decline of approximately 28% compared to the previous week. This marks a sharp downturn following softer demand and increased vessel availability across key trade lanes.
• The decline in the BCI reflects seasonal pressures, with year-end disruptions and oversupply exacerbating market softness. However, these declines are not unusual for this period and may be followed by a recovery once 2025 commences.