Shipping lines moved the highest number of containers in a month in May amid a spike in Chinese exports as producers in China rushed to beat upcoming US tariffs on goods made there, and more ships were deployed into service on longer routes around Africa, sources Straits Times.
Port Congestion
The resulting congestion at Asia’s ports and jump in shipping rates are expected to continue until September at least, with retailers bringing forward orders to avoid bottlenecks and supply shortages during the year-end holiday season, analysts said.
Demand for container shipping hit a record high in May, with 15.9 million twenty-foot containers shipped globally compared with the previous record of 15.7 million in May 2021, according to data provider Container Trade Statistics.
Data from the same source also showed that 74 million containers were shipped in the first five months of 2024, beating the record set over the same period in 2021 by 150,000.
The increase has been largely driven by record-breaking exports out of China, as concerns mount over the implementation of US tariffs on Chinese goods later in 2024.
In May, China exported a record 6.2 million containers worth of goods, representing almost 40 percent of the world’s container volumes for the month, noted market intelligence firm Xeneta.
Attack On Vessels
According to maritime intelligence firm Lloyd’s List, vessel transits along South Africa have risen by 84 percent since Yemen’s Houthis first started attacking ships sailing through the Red Sea in October 2023, while transits through the Suez Canal are down by almost 60 percent.
Poor port facilities along the African coast have resulted in delays to the already longer sailings. Meanwhile, a move by shipping lines to omit some ports in a bid to stay on schedule has led to substantial changes in vessel arrival patterns and cargo loads at key ports in Asia, including Singapore.
Since the start of 2024, Singapore port operator PSA has seen high concentrations of vessels arriving on certain days of the week, causing a significant increase in waiting times at the port despite all of its berths being used.
Price Volatility
As a result, the cost shippers and consumers pay to move goods is expected to stay volatile and remain high until September at least, he said. This is compounded by an early start to the year-end peak season, as retailers and other shippers bring forward stock to avoid delays and supply shortages during the holidays.
Others anticipate potential strikes by port workers in the US and Europe later in the year and are shipping goods in advance, Mr Levine said.
Despite this, much of the additional demand seen since May has been unexpected.
“Carriers are surprised by the early increase in demand, at a time when available supply has been deployed to manage the situation in the Red Sea,” said Mr Levine.
According to recent data from freight forwarder Flexport, shipping lines have deployed more than 90 percent of their capacity into service since May, which has contributed to higher freight rates.
Mr Levine said that shipping lines such as Hapag-Lloyd and Maersk have already begun implementing peak-season surcharges of between US$1,500 (S$2,020) and US$2,400 per container, adding to what shippers are already paying to move containers.
According to Freightos, it now costs about US$6,000 to move a container from China to the US West Coast, and around US$7,500 to the US East Coast, before including peak-season surcharges.
Analysts at Xeneta warn that the high global demand “has allowed shipping lines to pick and choose which containers to load onto ships and seen shippers finding themselves paying higher rates and surcharges to secure space for their cargo”.
They warn that liners will take advantage of that situation and increase revenue by redeploying capacity away from smaller trading routes to the more lucrative major routes where demand is higher.
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Source: Straitstime
