Welcome to our November 2024 newsletter

Shipping Update – China

Over the past few months, shipping schedules from China to Australia have been chaotic, with all services experiencing disruptions and vessel delays. Several factors have contributed to these issues, primarily due to multiple typhoons that have recently impacted major ports in China, along with severe port congestion at various locations across Asia. Carriers are frequently altering their schedules without prior notice, leading to missed calls and changing port rotations for vessels.

As a result, bookings are being rolled or cancelled by carriers, containers are not shipping as scheduled, and last-minute vessel changes are becoming the norm. Keeping up with these ongoing changes has been challenging, but it’s evident that nearly all vessels from China are currently facing delays. It remains uncertain when the situation will improve, as further weather events could disrupt ports in Asia, and carriers will most likely implement blank sailings to manage space and equipment demand.

Current Freight Rate Situation

Freight rates from China have seen a substantial rise in recent months, but changes are now emerging. Currently, these rates are fluctuating more frequently, with carriers advising rates on a per vessel basis. Each sailing now has a different rate based on the number of bookings compared to available space each week. When capacity is high, rates tend to increase, whereas excess space leads to lower rates.

Unfortunately, this information is often communicated only a few days before a vessel’s departure, making it difficult to provide accurate advance rates due to frequent adjustments by carriers.

We are hopeful that rates from China will decrease as the peak season concludes; however, several carriers have already announced rate increases effective December 1 and December 15. It will be interesting to see if these increases remain, as carriers are likely to employ a strategy of blank sailings to maintain demand for space and equipment leading up to the Chinese New Year holiday.

Chinese New Year Holiday

This is a reminder that the Chinese New Year holiday will begin on January 29th, marking the start of the Year of the Earth Snake. China will observe a 7-day holiday period for the celebrations.

In the weeks leading up to this holiday, shipping congestion and overbooked vessels are anticipated as factories aim to fulfill orders before closing for this holiday.

Airfreight Update

Airfreight shipments, particularly from China, have also been affected, with rates rising and services experiencing overbooking. This surge in demand is largely attributed to the increase in cargo being shipped by air in the lead-up to Christmas, coupled with the growing volume of goods being transported by online retailers like TEMU and Amazon. These companies often dominate available space with airfreight carriers, leaving limited capacity for general airfreight services. Consequently, securing space has become more challenging, and rates are significantly higher than usual

Further Restrictions on Battery Shipments

We have received updates from multiple carriers regarding intensified restrictions on shipments containing lithium-ion batteries. Some carriers have announced that they will no longer accept bookings for cargo that includes these batteries when combined with other hazardous materials. This decision follows a number of recent incidents involving fires and explosions on vessels linked to lithium-ion batteries. As a result, moving goods that include these batteries may become increasingly challenging, as there are likely to be fewer carrier options available for such shipments.

Free Trade Agreement Update

We would like to share an update regarding free trade agreements. A new agreement has been finalized between the United Arab Emirates (UAE) and Australia, which will take effect on November 6, 2024.

Unfortunately, progress on the free trade agreement with the European Union has stalled due to disagreements over trade terms related to agricultural exports, and there is currently no indication of when these issues might be resolved

Wharf Terminal Fee Increases

Once again, we’ve received notices from the terminals and the empty container depots that their fees will be increasing from the 1st January 2025. We’ve been advised that the terminal access fees at all ports around Australia will be increasing from this date along with the rates for the Vehicle Booking System (VBS), which is used to book slots to collect and deliver containers to and from the wharf and empty parks.

USA Update

Although the recent strike action by port workers in the US East Coast and Gulf ports was averted recently, it doesn’t appear that this industrial action has been resolved. Both parties have until January 15 to finalise a new agreement, but it appears that automation in the ports is a major stumbling block. It seems unlikely that a resolution will be reached before the deadline, leading to a strong possibility of further industrial action in these ports, which could severely impact shipping in the region..

Another factor that could possibly affect shipping to and from the USA is the impending change of Government coming in January 2025. The new incoming Administration has pledged to implement a series of new tariffs on imported goods, which could have significant long-term effects on global supply chains. But a short-term impact may be a rush by USA importers to pull forward their orders from overseas so that they arrive before these new tariffs come into effect. This rush could result in a surge of imports to the US, reminiscent of the disruptions seen in 2018 when tariffs were first introduced by this Administration, which led to global shipping service interruptions and increased freight costs to the U.S. We will have to closely monitor how this change in government affects global supply chains in the future.

As usual, please talk to you regular CFL contacts if you have any questions or need anything further.