- Record-Breaking Growth in the Far East to South America Trade.
- Massive Capacity Surge Reshapes Key Trade Lane.
- New Services Boost Far East-South America Connectivity.
Global trade patterns in 2024 have seen significant changes, exemplified by the Far East to South America East Coast trade lane. In the first nine months, a record-breaking 1.6 million TEUs were shipped, driven by a 14.8% increase in Chinese exports compared to 2023. Capacity also reached an all-time high, averaging 63,900 TEUs in early October—up 73% year-on-year (source: Xeneta/Sea-Intelligence), reports Xeneta.
Breakdown of Increased Capacity
On offer, capacity has grown across all services on this trade lane, largely driven by major operators:
- ESA/SA3/ASE1 Service by CMA CGM, COSCO, Evergreen and PIL: Year-on-year growth was more than double.
- Carioca Service by MSC: Launched in 2024 as a single service, it operates around 11,100 TEUs per week between South Korea, China and Southern Brazil.
This development diverges from the usual alliance-service offering as most of these services are operated collectively by non-allied carriers.
Declining Transit Times and Reliability
Despite the surge in capacity, the transit times and schedule reliability have worsened.
- Transit Times: Average time journeys rose to 47 days in Q3 compared to 42 days in Q2, as against the carrier’s promise of 38 days.
- Schedule Reliability: Hits a record low of 19.5% in September, as against 53% at the beginning of the year.
Before 2024, the percentage of on-time arrivals for the trade lane had never dipped below 33%. ZIM had the highest reliability in September at 30.4%, and the lowest was HMM at 10.3%.
Effect on Spot and Long-Term Rates
Increased capacity softened the spot market: spot rates declined to $6,610 mid-November from a July peak of $9,840 per FEU, a 33.8% fall. Still, they are 80.7% higher than last year.
Long-term rates also increased by 84.6% year over year, averaging $4,200 per FEU. In contrast, long-term rates dropped slightly from November, while a $2,500 gap remains between spot and long-term pricing and is impacting today’s contract negotiations.
2025 Outlook
With increased capacity, shippers’ exposure to increased risks of congestion, delay, and strain on port infrastructure is expected to increase. Further trade shifts are forecasted in 2025, considering China’s increased exports to South America and possible US tariff increase with a new Trump presidency.
Data-driven decision-making will become crucial for managing freight costs and ensuring supply chain resilience in these changes.
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Source: Xeneta
