Weekly Supply Chain Update 28

Container Freight

Trans-Pacific Eastbound (TPEB)

• Rates: Short-term rates have been reduced to stimulate demand before Lunar New Year. FAK rates remain higher than NAC rates, with PSS adjustments unlikely until mid-February.
• Equipment: No significant issues at origin.
• Space: Pre-CNY rush has constrained space, especially on fixed allocations, but some availability exists for the West Coast and limited availability for the East Coast. Carriers plan 11% blank sailings during CNY.

Far East Westbound (FEWB)

• Demand: Pre-CNY demand has slowed, leading to lower vessel utilization rates and a softer market.
• Capacity: Carriers are implementing void sailings, reducing weekly capacity to 223k TEU (from 300-320k TEU). Updates to alliance services are expected post-CNY, but no clear capacity strategy has been revealed.
• Carrier Availability: Declining pre-CNY activity has shifted freight demand into holiday mode. Price competition is expected to increase under the 2025 alliance structure.
• Shippers should leverage soft market conditions: Use the current softening in demand to negotiate favorable rates or secure premium services for priority cargo.
• The SCFI’s Comprehensive Index dropped by 6.97% week-on-week (WoW), reflecting a significant decline in freight rates across major routes.

Trans-Atlantic Westbound (TAWB)

• Labor Dispute: The ILA and USMX have reached a tentative agreement, avoiding the January 16 strike. Disruption charges have been canceled.
• Rates: Rates remain stable for January and are being extended into February.
• Blank Sailings: Blank sailings continue due to service restructuring and new service rollouts.

Is The Red Sea Situation Coming To An End?

The Gaza ceasefire appears to be holding, with the Houthis announcing they will cease attacks on non-Israeli ships. However, they continue to threaten wholly Israeli-owned or flagged vessels until phases 2 and 3 of the ceasefire are implemented. Attacks on US or UK-affiliated vessels will resume if either country conducts strikes in Yemen.

While the ceasefire brings hope for a return to Suez routings, its stability remains uncertain. Shippers planning 2025 contracts face risks: a breakdown could favor carriers with higher peak season rates due to Africa detours, while a stable ceasefire may result in rate drops, albeit with potential temporary congestion in Europe.

Bulk

The Capesize market opened the week on a strong footing, with the BCI 5TC climbing by USD 1,381 to reach USD 13,391, driven by robust miner activity in the Pacific and stable demand in the Atlantic.

In contrast, the Panamax market saw a slower start, with the BPI timecharter average dropping USD 242 to USD 8,332.

The Supramax sector began the week under pressure, reflecting negative sentiment in both the Atlantic and Pacific basins.

Handysize activity remained subdued, with limited movement in the Continent-Mediterranean region, though there was slight optimism emerging in the South Atlantic and US Gulf.