Sea freight market review

The sea freight market in October 2024 is facing continued challenges from geopolitical tensions and industrial actions, with strikes on the US East and Gulf Coasts contributing to significant disruptions.

Although the three-day US East coast strike in early October has been resolved with a tentative agreement, the backlog of vessels could take weeks to clear. Montreal has also faced industrial action, adding to the strain on transatlantic trade.

Demand remains moderate, with global GDP growth projections modest due to ongoing geopolitical tensions and weak manufacturing performance. The ocean freight market has been challenging due to disruptions, including congestion caused by rerouting vessels around the Cape of Good Hope, following the Red Sea crisis.

Carrier alliances are reshaping trade routes. The 2M alliance between Maersk and MSC will dissolve in 2025, replaced by new alliances such as Gemini Cooperation and the Premier Alliance. The introduction of these new structures is expected to streamline services, particularly on Asia-Europe trades, but could cause shifts in port calls, with some major hubs benefitting and others losing direct connections.

Freight rates have fluctuated as a result of these disruptions. The muted Golden Week in Asia didn’t bring the anticipated rush, but rates on Asia-Europe routes saw some pressure, rising 1-2% in early October. Carriers have implemented cost-recovery surcharges in response to strikes and rerouting delays. The Shanghai Containerised Freight Index (SCFI) dropped from its July peak, but rates remain well above 2023 levels.

Capacity continues to tighten due to vessel bunching and delays, with 10% of the global fleet currently waiting at anchorages, the highest level recorded outside the pandemic period. Schedule reliability remains volatile – hovering just above 50% – especially on key routes from Asia to Europe and the Americas, with congestion at major Asian ports like Shanghai and Ningbo adding to delays.

In the near term, shippers should expect continued volatility, with upcoming industrial actions and new carrier alliances potentially altering trade patterns. While freight rates are stabilising in some regions, capacity remains limited, and schedule reliability a concern.

With ocean freight demand remaining high and capacity challenges on the horizon, the peak season could still be unpredictable. We encourage you to reach out now if you have urgent shipments and share your forecasts, so we can secure space on services that align with your deadlines and offer competitive rates.

To explore how we can strengthen and safeguard your ocean supply chain, please EMAIL our Chief Commercial Officer, Andy Smith.