Table of contents
Topic of the week:
Both the sea and air freight markets seem to be looking positive as multiple ports report surges in volume, and carriers begin to profit thanks to rate hikes surpassing Red Sea diversion costs. Also, according to Cathay Pacific, recent volume boosts and other factors suggest strong performance in key markets throughout the remainder of 2024.
Despite Cathay Cargo seeing a revenue drop in 2024, around 17.9% year on year, the carrier seems positive looking at the year ahead. A surge in volume during 2023 and revenue tonne being 40.3% above their 2022 figures, as well as a 19.7% tonnage increase cause Cathay Cargo to state “We anticipate strong demand from e-commerce in our home market of Hong Kong and the wider Greater Bay Area.” Cathay’s long haul air services from North Asia to Europe and the Americas has shown decent growth in north and south-east Asian markets. Could this mean that other carriers experience similar demand in these markets or will demand fall over 2024?
A boost in traffic throughout January has Mexico’s container ports concerned that continued growth could surpass available capacity. The cause of this boost in volume has been attributed to the Chinese lunar new year surge combined with Chinese port congestion. Both Lazaro Cardenas and Manzanillo ports reported record volumes being handled with up to 41.2% growth. With Chinese manufacturers setting up production facilities within Mexico in order to satisfy the US market, volume could continue to increase and experts have reported that they don’t see it slowing down any time soon.
Prince Rupert’s Port has gone through recent expansion and is now reminding North American shippers ahead of possible port congestion issues later in the year. DP World Canada Chief Executive, Doug Smith, has said that initiatives to boost efficiency are in place to increase throughput potential, whilst the recent expansion of the Fairview container terminal has increased the port’s annual capacity to 1.6m teu.
The credit rating agency, Fitch has said “The recent container rate hikes exceed the additional costs of re-routing and will boost near-term profitability for container shipping companies and vessel lessors. We estimate that shipping companies’ operating costs on the affected routes have increased by about 50%, which is significantly lower than the actual rate increases.” It has also said that the impact on carriers caused by lower demand would be mitigated by elevated spot rates. This is because they would result in higher average rates per teu. However, a resolution to the Red Sea Crisis, could lead to freight rates falling back to pre-conflict levels, meaning that profits will drop.
Sea:
- Over the last two weeks China/East Asia to North America West Coast spot rates have decreased by 8.1% from $4,809/FEU to $4,419/FEU according to Freightos data.
- China/East Asia to North America East Coast spot rates have fallen over the last two weeks, decreasing by 8.95%% to $6,107/FEU.
- Global container spot prices have fallen over the last two weeks, and are now sitting at $3,069/FEU, a 8.4% decrease over the last two weeks, but a 119% increase from spot rates this time in 2023 according to the Freightos Baltic Index (FBX)
- The most recent vessel to be targeted by the Houthi rebels has escaped without any damage or harm caused to the crew and is now continuing its journey. The SeaLead Shipping vessel, Pinocchio, came under fire on Monday whilst travelling through the Red Sea, however “All crew members are accounted for and unharmed, and there was no damage to the Pinocchio and cargo.” “We are grateful to the crew for their courage and adherence to safety protocols during this event,” said SeaLead.
Air:
- Global Air Freight spot rates currently sit at $2.45, as rates continue to fluctuate according to the Freightos Air Freight Index (FAX)
- Europe to Northern America spot rates currently sit at $2.08 (100-3000kg), says FAX, increasing by 2.9%
- Europe to Central Asia spot rates have increased by 1.4% currently sitting at $2.14 (100-3000kg), says FAX
- Europe to Asia, Greater China spot rates currently sit at $1.41 (100-3000kg), says FAX
- Munich Airport has announced that it was the only major air hub in Germany to have experienced an increase in air freight traffic over 2023. The Germany gateway stated a 6.6% year on year increase, totalling 284,000 tons of freight with an 11% belly cargo increase.
That’s all for this week’s update…
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