Rate Related Update and Market Conditions
The market is currently undergoing significant disruptions due to upcoming holidays, strikes, and operational adjustments. Rates are expected to fluctuate, as demand and vessel capacity remain unaligned.
Market Overview
- October 1st Holiday Impact:As we approach China’s National Holiday on October 1st, carriers are maintaining high FAK (Freight All Kinds) rates, particularly for West Coast-bound cargo. However, bullet rates are gradually decreasing. The imbalance between actual demand and vessel capacity is likely to prompt carriers to implement blank sailings to manage the load factor on vessels.
- U.S. East Coast Labor Dispute:There is growing uncertainty regarding the labor negotiations with the International Longshoremen’s Association (ILA) on the U.S. East Coast, with a potential strike looming if an agreement is not reached by September 30th. The ripple effects of this strike could lead to a shift in volumes to the U.S. West Coast and Pacific Northwest ports, including Canada, which may result in rail congestion and increased port waiting times, especially for IPI (Interior Point Intermodal) shipments.
- Severe Weather Incident:The MSC Antonia experienced severe weather en route to the Cape of Hope, resulting in the loss of 46 containers and the damage of 305 more. This incident serves as a reminder of the ongoing operational risks during transit.
- Alliance Shifts:WAN HAI has received an invitation to join an alliance following Hapag-Lloyd’s exit from THE Alliance. Additionally, WAN HAI has entered into an agreement with Maersk, termed the “Gemini Cooperation.”
Rate Predictions
For September 15th:
• Rates are set to rise again, driven by the upcoming National Holiday in China (October 1st to October 7th), with carriers planning further rate hikes as part of the General Rate Increase (GRI) strategy.
Carriers have announced GRI for September and October, with rates expected to remain elevated throughout the period due to strong demand and upcoming market shifts.
Port Congestion
Demand Surge May Lead to Moderate Rate Increase on Intra-Asia Trades
A pre-holiday rush in early September is expected to lead to a rise in intra-Asia ocean freight rates, which had slightly dropped in August due to additional capacity and improved port congestion. Carriers are monitoring demand closely, particularly ahead of major festivals in Asia, including China’s Golden Week. Though rate hikes are anticipated, industry experts believe they will remain moderate.
Djibouti Plans to Grant Ethiopia Exclusive Port Access Amid Regional Tensions
Djibouti is considering offering Ethiopia exclusive management of a new port to alleviate tensions over Ethiopia’s pursuit of direct sea access. This proposal comes after Ethiopia’s attempt to gain access to Somaliland’s harbor led to a diplomatic standoff with Somalia. Djibouti aims to promote dialogue and prevent further escalation in the region, while Ethiopia seeks alternatives to establish a stable route to the Gulf of Aden.
North American LNG Export Capacity to Double by 2028
North America’s liquefied natural gas (LNG) export capacity is expected to more than double by 2028, according to the U.S. Energy Information Administration. The expansion will come from new LNG projects under construction in Mexico, Canada, and the United States. This surge in capacity highlights North America’s growing role in the global LNG market, driven by increasing international demand for cleaner energy sources.
US Spot Truckload Market Tightens, but Long-Term Outlook Remains Soft
The US truckload spot market is beginning to tighten as the pre-holiday shipping season ramps up, particularly in inland distribution areas like Allentown, Pennsylvania. While load-to-truck ratios are increasing in select markets, experts caution that the long-term outlook for the truckload market remains soft, with no significant demand spikes expected heading into 2025, despite short-term fluctuations.
