July Shipping Rates Surge
In response to tight supply and limited shipping space, several shipping companies have recently announced significant adjustments to freight rates. These adjustments impact routes to the Americas, Europe, Africa, and the Middle East. Notices from shipping companies indicate that these rate increases will take effect from July 1st, signaling a continued trend of rising freight costs.
CMA Implements Peak Season Surcharge (PSS) from Asia to the US
Starting from July 1, 2024, until further notice, CMA CGM will be implementing a Peak Season Surcharge (PSS) from Asia (including China, Southeast Asia, South Korea, and Japan) to the United States.
Types of Cargo: Dry containers / High Cube containers / Reefer containers / Breakbulk
• Charge Rates:
• $2160 per 20-foot container
• $2400 per 40-foot container (Dry/High Cube/Reefer)
• $3040 per 45-foot container
• $3840 per 53-foot container
Given the challenges faced by just-in-time supply chains during the stock shortages of 2020 and 2021, many clients are now increasing their stockpiles of critical components and finished products in preparation for future sales. The industry as a whole has become more attuned to potential supply chain risks following the lessons learned from the pandemic.
Michael Aldwell, Sea Logistics Manager at global logistics giant Kuehne+Nagel, has also cautioned that unresolved issues in the Red Sea could pose significant challenges during this year’s peak shipping season.
Ports Facing Severe Congestion
The global shipping industry finds itself at a crossroads again after three years.
Algeciras Port, Spain
Algeciras Port, Spain’s largest container port situated northeast of the Strait of Gibraltar, is grappling with a substantial surge in cargo volumes, resulting in extensive piles of goods. Despite operating around the clock, the port is struggling to handle the influx efficiently. Alonso Luque, CEO of TTI Algeciras terminal, has reported that this year’s cargo handling requests far exceed their operational capacity. Shipping companies have requested TTI to handle 100,000 TEUs (Twenty-foot Equivalent Units), whereas TTI can only manage 40,000 TEUs, excluding regular customer stopovers.
Tangier Mediterranean Port, Morocco
Across the Strait of Gibraltar in Morocco, the Tangier Mediterranean Port is facing similar challenges amidst its TC3 development project. Carlos Laso, Vice President of TC3, has acknowledged that the terminal is unable to sustain high-intensity operations. In both Algeciras and Tangier ports, vessels can be seen anchored and waiting to berth due to congestion.
Port of Singapore
The Port of Singapore has witnessed a significant rise in vessel arrivals, particularly container ships. In the first four months of 2024, Singapore averaged 72.4 million Gross Tonnage (GT) in monthly vessel arrivals, marking a year-on-year increase of over 1 million GT. Total arrival tonnage has grown by 4.5% to reach 10.4 billion GT. This surge is attributed to disruptions in the global supply chain. Singapore has handled 13.36 million TEUs of containers this year, marking an 8.8% increase compared to the same period last year.
To alleviate congestion, the Port of Singapore Authority (PSA) has bolstered manpower and enhanced container handling capabilities. They have also expanded Pasir Panjang Terminal with the addition of three berths, increasing operational berths to 11 and boosting overall handling capacity.
These updates underscore the significant challenges major ports are facing globally amidst escalating cargo volumes and supply chain disruptions.
Continued Shortage of Shipping Capacity Until October
The shipping industry remains beset by formidable challenges, including substantial spikes in freight rates and acute shortages in shipping capacity, exacerbating overcrowding on various routes and making space procurement increasingly arduous. As of late May, charter rates for container ships have been escalating by 10% on a weekly basis, underscoring the premium placed on vessel capacity. Alphaliner, a leading shipping consultancy firm, has highlighted heightened activity in the container charter market over the past fortnight, particularly involving mid-sized and smaller vessels.
Recent reports from shipping consultancy Alphaliner underscore a dynamic container charter market in the past two weeks, marked by a significant uptick in vessel lease agreements. The focus has primarily been on mid-sized and smaller vessels in recent charter transactions.
- Hapag-Lloyd: Recently secured a 24-month lease for a vessel with a capacity of 2,702 TEU at a rate of $17,250 per day.
- Maersk (MSK): Secured a 24-month lease for a newbuild vessel with a capacity of approximately 2,862 TEU at a rate of $25,000 per day. The higher rate reflects the premium for a newly built vessel in 2024.
Demand remains robust across most vessel sizes, with a particular emphasis on mid-sized and smaller vessels. This trend does not indicate a lack of interest in larger vessels but rather reflects current market conditions where availability of large vessels for charter is constrained.
Despite the scheduled delivery of 600,000 TEU of new vessels in the next two months, the market currently has no available large vessels for charter, and the capacity shortage is expected to persist until October.
In April alone, shipyards delivered 59 vessels with a combined capacity of 342,200 TEU. This set a new record for both the number of new vessel deliveries and the monthly increase in capacity.
SHEIN Launches Semi-Fulfillment Model on US Site
On June 6th, SHEIN, the prominent cross-border e-commerce platform, introduced its “semi-fulfillment” model on its US site. This new service offers sellers the opportunity to store inventory overseas and fulfill orders locally, providing a straightforward setup with no initial costs. Sellers benefit from exclusive traffic support from the platform without encountering additional fees during store setup. This business model operates on a “zero-rent” and “zero-commission” basis, aiming to streamline operations and enhance seller accessibility. Currently available on the US site, SHEIN plans to extend this service to Europe by mid-June 2024.
Solutions Offered by Wakool Transport
In response to the current challenges of rising freight rates, port congestion, and shipping capacity shortages, Wakool Transport provides tailored solutions aimed at optimizing logistics efficiency and mitigating risks for its clients:
1. Freight Rate Risk Management:
• Wakool Transport secures long-term contracts with shipping lines, enabling clients to stabilize freight rates and secure shipping capacity. By locking in rates amidst market fluctuations, Wakool helps clients avoid unexpected cost escalations.
2. Port Congestion Strategies:
• Through strategic partnerships with multiple global ports, Wakool Transport optimizes shipping routes and schedules. This approach minimizes delays caused by port congestion, ensuring timely delivery of goods and reducing logistical disruptions.
3. Omnichannel Operations Planning:
• Wakool Transport offers comprehensive logistics consulting services to optimize omnichannel operations. By designing efficient fulfillment strategies, Wakool ensures that products reach consumers swiftly through various distribution channels. This capability enhances customer satisfaction and operational agility.
With Wakool Transport’s proactive approach and industry expertise, clients can navigate the complexities of the current logistics landscape effectively. These solutions not only address immediate challenges but also position businesses for sustained growth and competitiveness in the global market.
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