Market Review: October

Chinese port activity and export demand remain strong following Golden Week, influencing capacity across sea and air freight. In air cargo, demand from Asia-Pacific routes to Europe and North America remains robust, while overland transport in key regions continues to adjust to seasonal trends and market shifts.

Economic indicators point to some improvements in inflation and monetary policies, yet critical areas like production and new orders remain subdued. In North America, labour disputes and political developments continue to weigh heavily on freight capacity and rates.

AIR
Demand continued to rise across China and the Asia-Pacific region, with strong growth on routes to Europe and North America. China’s air cargo volumes remained high, bolstered by eCommerce and consumer demand. Notably, routes from Hong Kong to Europe saw substantial year-on-year volume increases, with corresponding rate growth reflecting high demand for these lanes.

Spot rates globally have risen in response to increased tonnages from major hubs, particularly in Asia. As capacity constraints continue in ocean shipping, demand for air freight alternatives is helping sustain elevated rates. Despite the pace of growth slowing from earlier in the year, China remains a critical driver of air cargo volume and pricing trends.

– Hong Kong to Europe volumes rose by 25% YoY, with spot rates up 13% YoY, reflecting strong demand.
– Air cargo spot rates rose by 5% globally in October’s final week, fuelled by demand from Asia-Pacific.
– Demand growth on Asia-Europe routes is up 10.5% YoY, driven by high e-commerce demand.
– Asia-Pacific tonnage increases from Thailand and Vietnam to Europe grew by 27% and 26% YoY, respectively.

SEA
The ocean freight market saw stable export demand from China post-Golden Week, contributing to strong flows on Asia-Europe and intra-Asia routes. Although global capacity increased with record container ship deliveries, the influx of older vessels may lead to increased scrapping in the coming years. Ocean carriers are working to balance supply with projected cuts in November, aimed at stabilising rates as demand fluctuates seasonally.

Freight rates, which dipped earlier in the quarter, rose again after Golden Week, with rate hikes planned for November. However, sustaining these rates may prove challenging as additional void sailings and capacity cuts come into effect.

– China’s export demand remains steady, supporting robust flows on Asia-Europe and intra-Asia routes.
– Capacity rose with 2.5 million TEU of new container ships delivered this year, with another 0.5 million TEU expected.
– Freight rates increased after Golden Week, with further hikes planned in November, although challenges remain.
– Schedule reliability was 51.4% in September, with delays averaging 5.67 days, as global fleets manage rising demand.

ROAD
UK road freight saw softened consumer demand as October’s Budget raised public concerns over the economy, impacting the TEG Road Transport Index and the haulage sector. However, signs of optimism could emerge in the lead-up to Black Friday and Christmas. Road transport prices saw slight month-on-month declines, but overall year-on-year increases reflect a resilient yet cautious market.

Diesel prices, which fell again in October, have helped support the sector, as did the government’s decision to maintain a fuel duty freeze. As seasonal demand picks up, the transport sector is hopeful for a boost in consumer spending and demand.

– The TEG Road Transport Index dropped by 1.32% in October, aligning with similar trends in 2023 and 2022.
– Haulage sector index fell by 1.57%, although year-on-year figures are 9.14% higher than in 2023.
– Courier index dropped by 1.08% month-on-month but showed a modest 1.83% increase year-on-year.
– Diesel prices fell by 23.05p per litre over the year, providing welcomed relief to hauliers.

We continuously monitor the evolving logistics environment, to share breaking news and developments, so that you can make the informed decisions that will protect your supply chain.

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