Jaguar Freight | Routes and Rates

In this week’s Roar: Record high port congestion, optimism in the Red Sea, rising air rates from Asia to the EU, contrasting East Coast to West Coast rates, and unpredictable lead times for South American importers.

In conditions reminiscent of the pandemic, port congestion has hit a record high, with 4.31 million TEU of container capacity stranded around the globe. The situation has worsened due to delays in Asia and Europe and longer routes around Africa, which have also helped push some ocean rates up 156% since the Iran war began. Recent storms in China and draft limits at the Panama Canal are adding to disruptions, and congestion is expected to persist.

Ocean freight market analyst Lars Jensen supports the belief that container shipping through the Red Sea could normalize by the end of the year, and carriers like MSC and Maersk will restore key Suez routes. This has made it possible for MSC to reduce its fleet deployment at a time when vessel supply is tight. Even though traffic at the canal is rising, conditions remain touchy, with Houthi attacks and war risk insurance continuing despite an improving outlook.

Air freight rates from China and Hong Kong to Europe have increased after recent price and volume instability following the EU’s new customs duty on low-value parcels in July. The general trend has seen spot rates rise weekly, as cargo rates remain well above last year’s levels, supported by the well-documented broader disruptions in the global supply chain and high jet fuel prices.

US importers may need to revisit their choices and assumptions about destination ports on the East vs. West Coast. Trans-Pacific spot rates to the U.S. East Coast are now as much as $3,000+ per FEU higher than they are to the West Coast and above pre-war shipping costs. That means shippers could save by choosing West Coast gateways even when they factor in inland logistics. Strong demand, blank sailings, and Asian port congestion continue to push rates upward.

South African companies, dealing with congestion at Asian ports and renewed disruptions at Durban, are facing longer, unpredictable lead times. And there is an expectation that things could get even worse with China’s holiday schedule narrowing the shipping window for year-end inventory, not to mention weather and port delays. Analysts are urging businesses to focus on supply chain flexibility and early planning instead of freight rates.

For the rest of the week’s top shipping news, click here.

Compliments of Jaguar Freight – a member of the EACCNY