Optimistic outlook for sea freight peak season

The outlook for the 2024 peak season appears optimistic, with carriers showing confidence through their planned levels of blank sailings and capacity deployment for the remainder of the third quarter.

We review the carriers strategic approach to blank sailing, for insights into their expectations and readiness for any demand surge.

Asia-North America West Coast
– Carriers have planned to blank only 4% of total capacity, similar to pre-pandemic and 2020 levels, and significantly lower than the pandemic years.
– Capacity growth for the same period in 2024 is projected to be 25% higher than 2023 and 10% higher than 2020.
– This strong capacity growth and low level of blank sailings suggest carriers are optimistic about the peak season on this trade lane.

Asia-North Europe
– Planned blanked capacity on the Asia-North Europe route is set at 6% for the next 11 weeks, slightly higher than 2020 and pre-pandemic averages.
– There is no year-on-year growth in deployed capacity for 2024, maintaining the high capacity levels from 2023.
– In 2023, year-on-year capacity growth was 13%, which was high relative to historical standards and exceeded demand levels.
– The willingness to maintain elevated capacity and low blank sailings indicates carriers have a strong and confident outlook for the peak season on this route.

Rate Trends and Market Dynamics
– The Drewry World Container Index (WCI) is 44% below its peak in September 2021 but 309% higher than pre-pandemic 2019 rates. The average composite index for 2024 is 40% higher than the 10-year average.
– Freight rates from New York to Rotterdam increased by 4%, while rates from Rotterdam to New York and Los Angeles to Shanghai rose by 1%, while rates from Shanghai to Los Angeles and New York decreased by 5% and 4%.
– Rates from Rotterdam to Shanghai and Shanghai to Rotterdam remain stable, and while spot rates may be peaking, ongoing shipping disruptions could keep them elevated.

Market Challenges and Shipper Preparations
– Shippers front-loading imports have contributed to the recent spike in container shipping demand from the Far East, potentially leading to a less intense peak season.
– Despite this, ongoing pressure on ocean supply chains raises concerns about a capacity crunch, especially if disruptions like union strikes and China tariffs occur. Carriers are keeping capacity elevated in response.
– Shippers should prepare for a challenging second half of 2024, but recent market movements suggest increased available capacity, reducing the risk of having cargo rolled.

Overall, the strategic deployment of capacity and fewer blanked sailings reflect carriers’ confidence in managing the peak season effectively, providing some reassurance amidst potential challenges.

Continued demand for ocean freight, coupled with ongoing capacity and cost challenges, indicates a complex and potentially turbulent peak season. We can secure your supply chain and help you avoid disruption.

– Expertise: Our team excels in navigating the most challenging shipping environments.
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– Competitive Rates: Benefit from the best possible rates, ensuring cost-effective solutions.

Don’t wait until it’s too late. If you have urgent or high-priority shipments, contact us immediately and share your shipping forecasts. We will ensure your cargo reaches its destination on time and within budget.

To discover how we can enhance your ocean freight solutions, please EMAIL Colin Redman.