Weekly Supply Chain Update: 7

Weekly WCI Spot Rates Surge for Fifth Consecutive Week, Driven by Asia to Europe and US Trades

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The latest weekly WCI spot rate data from Drewry confirms sharp increases for the fifth consecutive week, driven by headhaul trades from Asia to Europe and the US. While backhaul trades such as USWC to Asia remain steady and North Europe to Asia has decreased by roughly $100/FFE over the past five weeks, Atlantic trades are holding firm. Pacific spot rates to both East and West coasts have surged, with USWC nearing $6,000/FFE and USEC exceeding $7,200/FFE. This represents 48% and 45%, respectively, of their pandemic peak levels. The Asia-Med route saw the highest weekly increase of $971/FFE, reaching $6,600/FFE, while Asia-N.Europe rates rose above $6,000/FFE. All four major headhaul trades now have spot rates significantly higher than pre-pandemic records (2011-2019), with Asia-USWC up by 118% and Asia-USEC by 47%. These WCI spot indices remain much higher than contract rates.

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Hapag-Lloyd and CMA CGM Announce New Peak Season Surcharges for Asia-Origin Shipments

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Hapag-Lloyd and CMA CGM, have announced new Peak Season Surcharges (PSS) for shipments originating from Asia. Hapag-Lloyd has revealed an increase in the PSS for shipments from the Far East, including Oceania, to North Europe and the Mediterranean. This adjustment applies to all sailings starting from 15 June 2024 and remains in effect until further notice. The updated surcharge is set at US$1,000 per TEU. CMA CGM announced a Peak Season Surcharge effective from 1 July 2024, applicable until further notice. This surcharge covers shipments originating from Asia bound for the United States. The rates are US$2,160 per 20' container, US$2,400 per 40'/40'HC/40'RF container, US$3,040 per 45' container, and US$3,840 per 53' container for dry, reefer, out of gauge, and breakbulk cargo. CMA CGM also advises customers of another PSS effective from 7 June 2024 for shipments from China to West Africa North Range and South Range. This surcharge, applicable to dry cargo, is set at US$500 per TEU.

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DP World Invests in Peru and Ecuador Port Expansions to Boost Capacity and Efficiency

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DP World is significantly investing in its port terminals in Peru and Ecuador to boost capacity and operational efficiency. In Peru, the US$400 million Bicentennial Pier expansion at DP World Callao will increase terminal capacity by 80%, allowing it to handle 2.7 million TEUs annually. The project includes state-of-the-art electric equipment and the first electric truck charging station in Latin America. In Ecuador, DP World plans a US$140 million expansion at the Port of Posorja, extending the berth to 700 meters to improve capacity and efficiency. This follows new service routes from Maersk, enhancing connectivity. Additionally, DP World San Antonio in Chile is piloting the MoorMaster NxG, an advanced mooring system. These investments underscore DP World's commitment to enhancing Latin America's role in global trade, improving connectivity, and promoting sustainable growth.

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Russia and China Collaborate to Enable Year-Round Shipping on the Northern Sea Route

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Russia is advancing a project with China to enable year-round container shipping along the Northern Sea Route (NSR). Rosatom, which manages the NSR, and China’s NewNew Shipping are forming a joint venture to develop a fleet of five ice-classed container ships for continuous operation throughout the year. NewNew has already completed several Arctic transits in recent years. Russian President Vladimir Putin has long advocated for increased traffic along the NSR, a goal accelerated by the full-scale invasion of Ukraine in early 2022 and the subsequent pivot to Asian export markets. The NSR offers a shorter alternative to the traditional Suez Canal route between Europe and Asia, spanning 13,000 km compared to 21,000 km, potentially cutting shipping times by more than half. With the NSR free from the risks of conflict seen in the Black Sea, shorter travel times compared to the Suez route, and no threat of piracy like at Bab el-Mandeb, it's clear why Russia is keen to develop this Arctic passage.