MÄRKTE | MARKETS
MÄRKTE | MARKETS Container shortage in Asia drives market up Container shipping is experiencing a full-blown rallye with lack of capacity worsening and freight rates rocketing since early May. By Michael Hollmann For the second time within six months container liner shipping has entered a phase of massive capacity strains and surging freight and charter rates. Cargo spot rates ex Far East shot up by around 40 % between end of April and 24 May, according to the Shanghai Containerized Freight Index (SCFI) which logged a fresh two-year high at 2.703 points. Rates for bookings from China to North Europe have more than doubled within a few weeks, from 2,500 to over 5,000 $/FEU, market sources report. Despite record deliveries of newbuilding tonnage, container shipping is facing a perfect storm again as deviation of east/ west services around the Cape of Good Hope and growing port congestion limit effective capacity while cargo volumes are trending up, especially from the Far East to North America, the Middle East and to South America. Space on services ex China was reportedly reasonably relaxed up until April but dried up completely at the start of May, with utilisation on services to North Europe and the Mediterranean reaching 100 %. Sailings are reportedly fully booked several weeks in advance with little prospect of relaxation in the coming weeks or even months. Even if new fleet capacity popped up, container lines would be struggling to book more cargo as container equipment in Asia is basically sold out. All new containers leaving factories in China until August are already committed, according to market sources. As Hamburg container trading platform Container X-Change reports, leasing rates for boxes in China jumped by 150 % and buying prices by 88 % in early May. TEU mile demand growths fast Although more and shippers are complaining that carriers are manipulating the market, the fundamental facts speak a plain language. Singapore-based research firm Linerlytica has calculated that TEU mile demand has grown almost 3 % faster than nominal fleet capacity over the past twelve months, mostly driven by disruptions in the Red Sea and deviation of services around the southern tip of Africa. There is no doubt that the situation could turn around completely if the Middle East crisis got resolved and liner services returned to the Suez route (See viewpoint interview below), but expectations for a speedy normalisation of trades have been squashed. Vessel networks will remain As things stand, vessel networks will remain as they are for the entire summer peak season this year, with the earliest possible opportunity for a rejig to Red Sea transits after the Golden Week in October – provided, of course, that the risk environment in the Red Sea allows it. Any changes in the interim would be difficult to accommodate without risking service stability and fixed allocations during the peak demand period, according to experts. Meanwhile, the scramble for charter tonnage by carriers has notably intensi- VIEWPOINT »Short-term chaos when Suez route opens up« Stable market conditions in container shipping are still some way off. Port congestion and lack of equipment could escalate further in the coming weeks, warns Trine Nielsen, senior director/head of ocean freight EMEA at logistics provider Flexport. Also, there’s another shakelooming the day the Red Sea crisis ends. Prolonged lead times on Asia-Europe, lack of space, congestion and soaring freight rates. Shippers just wonder: How much worse can it get? What are the things to watch in the coming weeks? Trine Nielsen: One thing this industry has taught us is to expect the unexpected. Polycrisis or black swan events seem to have become the norm, presenting challenges that are often hard to predict, especially when multiple disruptions cooccur. Currently, if demand continues to rise, the market could worsen due to increasingly constrained capacity—potentially more constrained than anticipated. Port congestion and a lack of equipment exacerbate the situation. Additionally, changing buying behaviours, such as companies increasing bookings to avoid stockouts, could further spiral the challenges we face. In the coming weeks, it will be crucial to monitor demand trends closely, assess capacity constraints, and observe how port operations are coping with the current pressures. How are container lines handling the Red Sea crisis and necessary service restructurings from your point of view? What’s going well, what’s missing? Nielsen: Some carriers have successfully Trine Nielsen, Senior Director, Head of Ocean EMEA, Flexport benefitted on their agility, quickly placing capacity where demand is highest. This adaptability has allowed them to benefit from increased rate levels and provide better service to their customers. In contrast, other carriers have struggled to reposition their ships where they are most needed, often because they are tied to fixed © Flexport 12 HANSA – International Maritime Journal 06 | 2024
1000 750 23.11.23 500 ConTex 23.05.24 TMI – Toepfer's Multipurpose Index May '23 14,360 $ May '24 12,483 $
