Weekly Supply Chain Update: 32

Container Freight

Far East Westbound (FEWB)

Post-Lunar New Year cargo recovery is slow, but we expect more market activity to pick up by early March. No new blank sailings have been announced for late February, leading to an oversupply of space, which may push the market into a further decline. Despite weak demand, carriers are holding rates steady, but last-minute vessel voiding could occur to counter excess capacity. The Shanghai Containerised Freight Index (SCFI) dropped significantly in Week 7, following a period of stability during the CNY. While rates are expected to decrease in the short term, carriers will likely implement further measures to prevent a deeper downturn.

Trans-Pacific Eastbound (TPEB)

The market remains weak following the Lunar New Year, with floating rates continuing their decline. A gradual recovery is expected by Weeks 9 and 10. Shipping lines plan to restore much of the available capacity during this period, though additional blank sailings may be introduced to stabilise the market if the rate drop continues. To balance short- and long-term rates, lines are adjusting Peak Season Surcharges (PSSs) and spot rates across North American gateways. No equipment shortages have been reported.

Trans-Atlantic Westbound (TAWB)

Some carriers have lowered FAK rates for routes from North Europe and the West Mediterranean to the U.S., Mexico, and Canada. However, other carriers are introducing PSS charges starting in March, in anticipation of higher demand due to recent U.S. tariff changes. Demand has remained stable throughout February, and the overall market sentiment appears steady. SCFI data for North Europe shows a -10.9% decrease, with rates falling from $1,805 USD/TEU on February 7 to $1,608 USD/TEU on February 14.

Red Sea Update

If the ceasefire proves successful, we could see a redeployment of Asia-Europe services via the Suez Canal, which may lead to overcapacity, putting significant pressure on market prices.

However, any rapid shifts or fast movers in this situation may cause volatility. Challenges such as port congestion, limited storage capacity (warehouses and yards), and potential equipment shortages in Asia could mirror the disruptions seen post-COVID. In this scenario, while the outlook is hopeful, it’s important to note that the situation could worsen before improving, which would likely affect freight rates negatively due to capacity surpluses and logistical challenges.

Bulk

Capesize Market

The Capesize market continues to face pressure as demand remains weak and tonnage oversupply persists, especially in the North Atlantic. Limited fresh cargo is making it difficult for vessel owners to secure favorable rates, and charterers hold the upper hand in negotiations. In the South Atlantic, sentiment is still bearish, with corrections in forward positions, particularly for vessels ballasting to East Coast South America.

On the Pacific side, the market shows some signs of stability, bolstered by consistent demand from the North Pacific and Australia. While there has been an uptick in Indonesian coal exports, absorbing some of the excess tonnage, overall market sentiment remains cautious with rates still under pressure.

Panamax Market

In the Atlantic, the Panamax market remains under pressure due to weak demand and an oversupply of vessels, especially in the North Atlantic. Owners are struggling to secure solid rates as cargo availability remains limited. This has left charterers in control, driving down rates. In the South Atlantic, sentiment is negative, with further rate corrections expected, particularly for vessels heading to East Coast South America.

The Pacific Panamax market shows some stability, fueled by consistent demand from North Pacific and Australia. Despite some improvement in Indonesian coal shipments, market fundamentals largely remain unchanged, and the overall sentiment is still cautious.

Ultramax/Supramax Market

The Supramax/Ultramax market in the Atlantic continues to see positive momentum, with increased interest in the US Gulf and stronger sentiment in the South Atlantic. However, rate discussions remain limited, with the US Gulf showing signs of leveling off. The Continent and Mediterranean markets remain balanced, with steady demand.

In the Pacific, the Asian market has seen fresh activity, particularly with coal shipments from Indonesia to India and China. This has allowed owners to push for slightly higher rates as demand stays steady. Meanwhile, the Indian Ocean market remains positional, with some securing better rates. The increase in period interest reflects growing market confidence and stability in the region.