Maritime Sector Market Situation Note

As freight forwarders are still struggling to find space on board for their cargos, it is expected that an early peak season will see high freight rates that will extend throughout the year, meaning that with the current ocean supply chain working beyond capacity and more disruptions that are causing additional congestion and delays, there will more than likely be no rate relief this year. Consequently, cargo owners with pending orders are advised to seek the best options currently available to protect their supply chains and to book early for this year’s peak ocean freight seasons, as the current strong demand for space and limited capacity is likely to extend into next year or even extend into next year.

Similarly, and with even higher prices, demand is expected to continue to exceed currently available constrained capacity in both ocean and air shipping. Especially since disruptions in any region creates more congestion and delays, which puts even more pressure on prices and makes the availability of transport slots increasingly scarce.

A rate visibility specialist at Lloyds Loading List, says companies are already starting to move their Christmas goods. This is something that usually starts slightly later, but at the moment, if shippers have the chance to ship goods, they are taking advantage and already putting their goods in warehouses. Therefore, strong demand will continue  this year and there will probably be no short-term relief.

According to many sources, the current Covid pandemic and possibly a new 4th wave that some regions are experiencing is causing the early peak season that is happening right now, contributing even more to a continuation of high freight rates accompanied with an increased demand from shippers that are struggling to find space for their cargos, whether by ocean freight, air freight, rail or overland.

Along with the supply chain disruptions that happened last March in the Suez Canal and Yantian port congestion and partial-closures that are still continuing to impact pricing and equipment availability, there are already concerns over next year’s season and its freight rates. This has caused shippers who hoped for a pull back to be hit by higher rates and more worries than ever before.

Short-term rate levels to the West of the Far East remain exorbitant, in the range of 16,000 USD/FEU and, in some cases, higher for a guaranteed load.

In addition to this, other regional disruptions and conflicts are of greater concern to shippers as they could affect regional trade lanes, which in turn would cause additional delays on the main lanes. This can be seen in South Africa, for example.

According to Lloyd’s Loading Lists, like the major trade lanes, shippers on regional routes are being warned about the impact on freight rates, as capacity constraints on the major lanes are in turn impacting the secondary lanes. Thus, given that freight on regional trades is currently experiencing large increases, it is necessary to be prepared for smaller trade routes between Asia, Europe, and North America to experience a similar, but not as severe, price shock as the mainline routes.