A surge in the number of global idle vessels

Ocean carrier loop suspensions are poised to increase the already significant tonnage of idle ships, unless these surplus vessels are redeployed or chartered-out, although these options appear unlikely given the current market conditions.

This means that there could potentially be reduced options in terms of available shipping services, routes, and scheduling flexibility. The idling of vessels might lead to a reduction in the overall shipping capacity, which could affect the timely delivery of goods, especially during peak seasons or periods of heightened demand.

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Suez Canal fee increase sees mounting costs for shipping lines in 2024

The Suez Canal Authority's plan to raise northbound transit fees by 15% starting from 15th January 2024 is set to impact container shipping lines significantly.

The transit fee will increase for tankers transporting crude oil, petroleum products, LPG and liquefied natural gas, container ships, transport and cruise ships. The fee increases will also affect most vessel types, excluding ro-ro ships which will face a 5% rise.

The increase in fees will not affect container ships going from the ports of northwestern Europe directly to the ports of the Far East.

If you have any concerns, speak to your Unsworth representative who can help make necessary adjustments in scheduling and inventory management to ensure the smooth and timely delivery of goods.

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Carrier blank sailings continue due to the downturn in volumes

In the major East-West shipping trades, 8% of scheduled sailings have been cancelled between weeks 46 and 50, totalling 53 out of 650 sailings.

Service reliability is improving modestly, with an average expectation of 92% of ships sailing as scheduled in the next five weeks.

Ocean freight spot rates rose 7% week-on-week, driven by November General Rate Increases (GRIs) and capacity reductions.

However, maintaining these rate levels may be challenging. Carriers negotiating contract rates on the Asia-Europe trade are under pressure to increase spot rates, leading to anticipated GRIs in December. The trajectory of long-term rates depends on spot rate fluctuations.

We believe that transparency and communication are essential in problem-solving. We recommend anyone shipping globally to stay informed about these developments to anticipate potential challenges in their supply chain.

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Oversupply of ships and strict environmental regulations: What it means for shippers

As the global market stabilises and recovers into the new year, trade is estimated to grow by around 3.3% according to the World Trade Organisation.

However, with the oversupply of ships and stricter environmental regulations on shipping practices, the scrapping of older vessels and the adoption of slower speeds are measures that might be taken to address the issue.  

According to a shipping industry representative, there will be too many ships next year, and because of stricter rules about pollution, more old ships will be taken apart and ships will move at a slower pace.

While the market is expected to remain oversupplied in the near term, the efforts to alleviate supply-side pressure could ultimately contribute to a more balanced and sustainable shipping environment, which may positively impact the reliability and cost-effectiveness of goods transportation in the long run.

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Air Freight rates from China and Hong Kong rise with increased demand

Airfreight rates are rapidly increasing, with significant growth in airfreight indices since 1st October. TAC Index data shows a recent rise in rates from China to Europe by 4.6% while, rates from Hong Kong surged by 9.7% to Europe at $4.26/kg.

This rise in rates is attributed to a surge in e-commerce demands and a rush by retailers to stock up for the upcoming Christmas season.

Space is becoming increasingly tight leading to higher rates for larger cargo, indicating airlines' difficulty in handling sizeable shipments. This peak in demand is expected to continue through the current month and until early December, driven by the ongoing need for Christmas shipments.

Unsworth advise pre-booking where possible. Larger cargo has attracted higher rates than smaller cargo, which indicates that it’s more difficult for some airlines to take on larger consignments.

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What will the market look like for Air cargo in 2024?

2023 has been a tough year for the air cargo industry, with uncertainties causing some challenges. Leading indicators suggest a potential downturn with retailers, still rebalancing inventory levels after the pandemic, are cautious about placing new orders, impacting import volumes.

Despite relatively strong consumer confidence, global industrial production is 6% below pre-pandemic levels. China's slowdown, higher energy prices, and uncertainty from the Ukraine war contribute to this decline.  

The overall increase in the available space for air cargo has led to a relatively weaker market demand, yet despite this trend, some airlines are still moving forward with plans to handle more cargo volume, indicating their continued investment and confidence in the market despite the current challenges.  

It's expected the market will improve either in the second or fourth quarter of 2024. While the year 2024 might have some ups and downs, there is hope for some small growth. Despite the overall drop in tonnage globally, some specific areas, especially those related to e-commerce, are still performing well.

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Air Freight: Operations in Israel continue

Operations in Israel continue although a number of airlines have cancelled flights to and from Tel Aviv. Many partner carriers continue to use the airport and cater to air freight demand.

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At Unsworth, we pride ourselves on being more than just a service provider; we are a team of experienced individuals passionate about delivering outstanding freight and supply chain management.

As always, we're here to answer your questions, address your concerns, and provide expert guidance whenever you need it. Please don't hesitate to reach out to us.