Weekly Supply Chain Update 30

Container Freight

Trans-Pacific Eastbound (TPEB)

• Rates & Demand: Soft demand following the Lunar New Year continues to push rates downward, with the SCFI declining for the third straight week.
• Vessel Utilisation: Carriers have set up roll pools at major ports to prevent underutilisation, leading to expected cargo rollovers in the coming weeks.
• Short-Term Outlook: No immediate rate changes expected due to Chinese holidays, but adjustments are likely in early February.

Far East Westbound (FEWB)

• Capacity Management: Carriers are implementing blank sailings after Chinese New Year to maintain utilisation, leading to roll pools at key ports.
• New Alliances: February will see the full rollout of new alliance services, with updates on service reliability forthcoming.
• Equipment Availability: Some shortages at origin due to blank sailings and vessel delays.

Trans-Atlantic Westbound (TAWB)

• Capacity & Service Updates: New alliance services have launched, improving reliability.
• Blank Sailings: Decreasing in Northern Europe, though certain services in the Eastern Mediterranean still experience disruptions.
• Space & Equipment: Space availability is improving on routes to the U.S. East and West Coasts. Equipment shortages persist in parts of Central Europe, with carrier haulage recommended to better manage supply.

Will Red Sea Shipping Normalise by Q2 2025?

Maritime experts predict a gradual return to normal shipping traffic in the Red Sea by Q2 2025, contingent on continued geopolitical stability following the Gaza ceasefire. The Suez Canal remains the preferred route due to cost and efficiency, but shipping lines remain cautious amid security concerns.

Industry leaders, including FIATA’s Vice President and executives from Maersk and Hapag-Lloyd, indicate that carriers will likely wait at least three months before considering a full return to Suez transits. Freight rates are expected to hold steady until June, with adjustments depending on supply chain shifts.

Shipping strategies for 2025 will be revealed in April, determining whether companies maintain Cape of Good Hope diversions or resume Red Sea routes.

Bulk

Panamax Market

The Panamax segment continued to struggle in both the Atlantic and Pacific basins. In the Atlantic, limited fresh demand kept rates under pressure, with trans-Atlantic routes weakening due to an oversupply of vessels. The North Atlantic saw some fronthaul inquiries, but this had little impact on overall sentiment. The South Atlantic showed slight stabilisation for P6 index dates, though nearby positions remained weak.

In the Pacific, the Lunar New Year kept activity minimal, with very few fixtures reported. Sentiment remained flat to negative, with longer rounds bid well below index levels. Indonesian cargo movement was sluggish, and market fundamentals suggested further rate corrections.

Supramax Market

The Supramax market remained slow, with the South Atlantic facing downward pressure due to high vessel availability. The US Gulf market appeared to find a temporary floor, though the lack of fresh activity made this uncertain. In the Mediterranean and Continent, limited demand left owners struggling to secure employment at last-done levels.

In the Pacific, the Lunar New Year further dampened activity, with rates continuing to drift lower. Cargo volumes from Southeast Asia and Australia remained weak, contributing to a lack of momentum. Overall, while the market showed signs of stabilisation after weeks of decline, demand and supply remain in balance, suggesting rates may have reached a floor.

Handysize Market

The Handysize market continued to show weakness due to oversupply, particularly in the West Coast South America (WCSA) region, where spot demand remains low. In the Atlantic, sporadic fixing in the Continent and Mediterranean failed to shift overall market sentiment. The US Gulf and South Atlantic saw some fresh inquiries, but excess tonnage prevented any meaningful rate improvements.

The Pacific market had an extremely quiet week due to Chinese New Year. With weak demand persisting and many players still away, there was little expectation of near-term improvement. The basin remained stagnant, with rates reflecting the soft market conditions.

Freight Rates & Market Trends

Rates remain significantly lower than the six-month average, reflecting continued market softness. In the US Gulf, Handysize rates saw a slight decline, with some charterers opting for Supramaxes instead for smaller parcel shipments due to better pricing.

Port Congestion & Seasonal Forecast

• Moderate congestion was observed in the USG and WCSA, though Chinese New Year had little impact beyond reducing shipping activity.
• Rates are expected to remain weak in the short term, but post-holiday restocking in February may provide modest rate support.

The market remains under pressure, but seasonal demand increases and potential shifts in vessel availability could bring slight improvements in the coming months.

Brazil's Grain & Fertiliser Trade Set to Drive Freight Demand in 2025

Brazil’s grain and fertiliser imports are expected to be a significant driver of freight demand this year. With potential U.S. tariff hikes on Chinese goods, global trade flows could shift, creating more demand for Brazilian exports and fertiliser imports. Brazilian soybean production is forecasted to increase by 10% year-on-year, making it even more competitive against U.S. grain exports. This could lead to stronger freight demand in the East Coast South America (ECSA) region by the second quarter of 2025.

Shifting Trade Routes: U.S. Tariffs and Energy Policies

U.S. trade policy is expected to play a major role in shaping global freight trends. The proposed tariff hikes on Chinese goods may lead to supply chain shifts, with businesses looking to India, Southeast Asia, and Mexico as alternative manufacturing and export hubs. However, shifting supply chains is complex, and while import routes may be adjusted, changing production hubs takes time. U.S. energy policies, which favor increased fossil fuel production, could also help lower transport costs for energy-intensive industries. In the short term, the anticipation of new tariffs is driving forward buying, increasing freight demand. However, once the tariffs are in place, trade volumes may slow down, putting downward pressure on freight rates later in the year.