Date: 27.06.2024

Port congestion (amongst other things) continues to push rates up

With increasing amounts of ocean freight capacity soaked up by COGH (Cape of Good Hope) diversions and port congestion, spot rates are spiking, with indexes up significantly on 2023 and market led spot/FAK rates up by nearly 500%. Now, carriers desperate for ships and more capacity are setting new chartering records, to try and accommodate the shortfall in supply against demand.

Over 1.6milllion teu of capacity has been added to the global container fleet so far this year, as new vessels have been delivered, and all that new capacity has been fully absorbed by the market’s diversion round the Cape of Good Hope.

So, despite the record-breaking new vessel deliveries, there remains a shortage of capacity and container ships globally, with freight and charter rates continuing to surge ahead as the market enters the traditional summer peak season.

Port disruption and bottlenecks are tying up capacity, which is making already tight vessel availability worse. Analysts suggest that the recent increase in port congestion in Asia and the Mediterranean has taken a further 500,000 teu from circulation, reducing vessel schedule reliability and impacting equipment availability.

The Loadstar reports that 2.5m teu were on ships queueing for berths at ports worldwide last week, which is equivalent to nearly 9% of the global fleet, and the bunching of ships arriving from Asia is creating berthing delays in northern Europe, particularly Rotterdam.

Freight rates from Shanghai to Rotterdam increased 11% per feu, while rates from Shanghai to Los Angeles grew 7% and up 3% to New York.

Drewry expects that freight rates from China will continue to rise, due to congestion issues at Asian ports, the continued ongoing situation in the Red Sea and further port delays now occurring around the globe, as an impact of the market conditions.

Ship bunching and congestion has spread to ports in Asia including Port Klang, Shanghai, Qingdao, Guangzhou and Shenzhen, and while equipment availability has improved vessels have been waiting up to four days to berth at Shanghai, two days at Qingdao and up to three days at Port Klang.

Singapore’s berthing delays have improved, but there are longer dwell times as carriers discharge more containers to forgo subsequent voyages and catch up on sailing schedules.

Routing away from the Suez Canal means that cargo is now being dropped at western Mediterranean ports for transshipment to the east of the region, with ships having to wait longer for a berth.

In the north of Europe, ports and terminals are performing pretty well, though Rotterdam, Hamburg, and Aarhus have experienced increases in yard densities, with customers requesting to pick up import containers as soon as possible after discharge.

Strikes update
Port workers in Germany implemented a ‘warning’ strike which affected the ports of Hamburg, Bremerhaven, Bremen, Emden, and Brake, and the Verdi trade union has threatened more action if negotiations for a new collective labour agreement do not progress.

After 24 hour stoppages at the container ports of Le Havre and Marseille-Fos, French trade union members had been threatening a month of strikes at major ports, but the snap election called by president Macron means that the Fédération Nationale des Ports et Docks CGT (FNPD) has no-one with whom to negotiate and has therefore suspended action until late September.

We are monitoring all the issues outlined here, while working closely with our local partner office network and carrier partners to mitigate any impact on our customers.

We will keep you updated and provide alternative solutions where appropriate or necessary.

If you have any questions, concerns, or would like any further information regarding the situation outlined here, please EMAIL our Chief Commercial Officer, Andy Smith.