Welcome to the November Market Update.

For the third consecutive year, just as we all prepared for peak season, the expected rush for space did not materialise. There could be a few reasons for this, including exporters and importers having planned strategically to avoid the rush by ordering in advance or businesses maintaining a more consistent flow of shipments over multiple months rather than focusing on a larger, pre-holiday order strategy.

The benefit of this is there is less congestion compared to years when peak season did occur, and this has flow-on benefits for scheduling and reliability. However, for the shipping lines, the relatively subdued demand for space means they are continuing to blank sailings in an attempt to keep competition lively and retain high prices.

There is another factor in play as well, in terms of generally flat times for the global economy. The World Trade Organisation announced in mid-October that it had halved its forecast for growth in global trade in goods due to factors including high-interest rates, persistent inflation, a slowing in the Chinese economy and the continued war in Ukraine. Experts are also closely watching the situation in Israel and Gaza, as any escalation of the conflict into the wider region could have significant impacts for trade and further rein in global economic growth.

Remember that these are predictions about growth slowing, not demand and general economic conditions reversing and economies sliding backward. Perhaps the market signals right now tell us all that holding steady, looking out for customers' interests to retain market share, and being prudent with planning is how we all win the commercial race. It’s a conversation your Client Success Manager or Client Service Specialist will always be happy to have with you! 

North Asia

This region is always affected strongly by conditions in the Chinese economy. With economic growth slowing, it’s no surprise that the GRI at USD150 per TEU announced to take effect from 15 October was not fully implemented. Less than 50% of the announced amount was successful, and that price gain was possible mainly because the carriers are artificially shaping demand by implanting blank sailings to reduce space availability.

This manufactured scarcity is designed to keep freight rates from sliding backwards, and the carriers are optimistic it may also enable them to push rates back up, with a GRI of USD 100 per TEU announced by key carriers for containers ex-North Asia to Australia and New Zealand, effective 1 November 2023.

We do not expect more than a small fraction of this GRI will actually go through because demand remains subdued.

Air freight, however, is seeing more flights continuing to be added to the trade lane, schedules becoming more regular and no shortages of space. Rates have also substantially improved ex major airports.

South East Asia

No GRI was announced for October, although a small part of the unsuccessful GRI announced back in September was carried through to October and affected pricing at a few of the region’s ports. No further GRI has been announced for November, but with the carriers implementing a significant number of blank sailings to try and retain rates despite generally slowing demand for space, schedule disruptions can be expected, and there is some competition for bookings.

That said, it is different from the surge in demand we used to see in peak season, and generally, all the operations from dock back to factory are functioning smoothly and efficiently. There are some minor transhipment delays expected at Singapore and Pt Kelang, but again, this is not at anywhere near the scale of congestion and delay seen in the 2019 and 2020 peak seasons.

Air freight is functioning well, with sufficient space in the market for commercial goods and shipments, schedules firming up to being more regular and rates now approaching pre-pandemic levels.

North America

As drought continues to grip the Panama Canal watershed, the Panama Canal Authority has announced further restrictions on vessel slots, effective 1 November 2023. Only 31 vessels per day will be allowed through the locks, and a maximum of 30 booking slots will be offered – eight in the Neopanamax locks and 22 in the Panamax locks. This will further worsen the congestion and lengthen the queue times.

Also, new slot distributions per booking period have been issued that impose limits on the period prior to the booking date in which reservations will be permitted. If your shipping plans do include a carrier that will need to transit the Panama Canal, please have a conversation with your Client Success Manager or Client Service Specialist so we can ensure your booking arrangements will meet the new requirements and that your timeframes will include a suitable margin for any congestion-related delays.

UK

Road freight carriers in the UK have been experiencing the most significant rate increases seen for almost a year, with pricing rising 3.3% month-on-month in September. By contrast, rates have been sliding in the EU, and experts are saying they have not yet found the floor.

The UK hikes result from multiple factors, including reintroduction of the Heavy Goods Vehicle (HGV) levy, clean air charges, higher business costs and rising fuel prices. Concerningly, fuel prices are again showing signs of instability, and some are preparing for diesel prices to head upward.

According to the Loadstar, the demand for road freight is most significant for domestic trade within the UK, rather than long-haul to Europe. This is good news for the carriers, as they face fewer charges and customs complexities servicing the local market.

Australia

Industrial action continues to affect some of Australia’s key import and export operations, with union stoppages and work bans relating to DP World extended until 6 November at Brisbane, Fremantle, Sydney and Melbourne and then continuing in Melbourne until 13 November at this stage.

The announced actions include a 24-hour ban on loading and unloading trucks on 6-7 November and 10-11 November, which will have had some impact on the flow of containers through the terminal.

There will also be road closures from Sunday 5^th November at DP World Melbourne due to the industrial action from 10:00pm to 6:00am. These closures are in conjuction with existing 2 hour stoppages as previously advised and in addition to the 24 hour ban from 6 – 7 November.

The road will NOT open at 6:00aM on Tuesday 7^th November but will resume operations that night at 10:00pm.

Qantas is still in catch-up mode after last month’s major disruptions due to the IT system change-over, but the situation is steadily improving. As ever, our team are working closely with the terminals to mitigate delays and ensure shippers are kept informed as to the status and progress of their consignments.

Checking off your Christmas list

We can all be sure that 25 December is getting closer, and no matter what the global economy does, customers will still be looking for well-stocked shelves in the brick-and-mortar stores and for their online purchases to arrive in time for stocking-stuffing. Even though peak season looks like a no-show again, booking at least four weeks ahead is essential, so, make sure you have made arrangements to secure your slots and strengthen your supply chain.

This summer we are also likely to experience El Nino conditions, with elevated risk of heatwaves and bushfires, so it is wise to ensure you have made appropriate safety and risk management plans with your staff and check the contingency plans of your local suppliers.

If your own contingency planning could use some expert advice, or you are wanting to examine your options for those last pre-gifting season orders, get in touch with your Client Success Manager or Client Service Specialist today.

All the best,

Matt Ward

COO International – YKGA

AXIMA Pty Ltd

www.axima.com.au