Welcome to the September Market Update.

In the business world, the term ‘perfect storm’ is often used when a series of challenging, unexpected and complicated events coincide and disrupt plans. Of course, in the shipping sector, storms are something we regularly need to navigate, and there are very few challenges that come entirely out of the blue.

The current state of the market is a good illustration of this – rates are rising, carriers are squeezing, cyclones are causing disruption and relationships between workers and employers are strained in several markets. All of these complications are familiar territory, as are the signals we may see a return of peak season after several years of relatively stable demand conditions.  

Even when things change rapidly and unexpectedly, your Client Service Specialist and Client Success Manager are only ever a phone call or an email away to support you with practical solutions to support your supply chain success.

China, Vietnam, the Philippines and Hong Kong all felt the force of nature in recent days when one of the strongest cyclones of the past decades, Super Typhoon Yagi, passed through the region. Sadly, lives were lost in China and Vietnam, and shipping, logistics and warehousing operations briefly suspended in each nation due to the furious weather system. This has caused some delays; however, recovery of operational capacity is proceeding efficiently.

An entirely different type of pressure system is affecting pricing, with carriers pushing their advantage with a series of rate restorations and GRIs. Two were implemented in August, including one on 1 August announced at a quantum of USD 300 per TEU that succeeded at USD 200 per TEU - an uplift of 67% - and then a second of USD 300 per TEU, from 15 August that succeeded in full.

Not done with the cash grab, and with continued blank sailings constraining supply, Rate Restorations for 1 September and 15 September have also been announced. The 1 September hike will apply to all containers types from Asia to Australia and New Zealand. For North East Asia to AU/NZ the quantum proposed is USD 300-500/20’GP, USD 600-1000 40’GP/HC and USD 18.00W/M (LCL).

The 15 September rate rise for all container types ex-Asia to Australia and New Zealand has been announced by ANL as USD 500 per 20’GP and USD 1000.00 per 40’GP/HC, and by other key carriers as USD 300.00 per 20’GP and USD 600.00 per 40’GP/HC. The LCL tariff will also be increased by USD 10.00W/M.

There is good cause to believe these rate increases will be successful, due to both blank sailing tactics and the expected surge in demand for space as peak season ramps up.

This market is also still affected by schedule and timeframe disruptions associated with the congestion at Singapore, the carriers are responding with a restructure of services including a change of sailing schedule to East Coast ports.

For air freight we are also seeing steady upward pressure on rates, with high demand for services ex-China from e-commerce and due to the major new product release from Apple. Space is becoming tight, particularly for the direct service.

Prices continue to rise in this market also, although less rapidly than in the Northern region. The carriers announced two rate restorations in August, with the 1 August increase of USD 300 achieving partial success of between USD 150 and USD 200 per TEU. The second rate restoration of USD 300 per TEU from 15 August succeeded at 67% of the quantum.

It is not only competition for space and the blank sailing tactic giving carriers the upper hand, the ongoing effects of the Red Sea diversions, reduced capacity in the trade lane and congestion at Singapore are all affecting space availability.

Two further rate restorations have been announced for September, and there are grounds to believe they will succeed in part if not in whole.

From 1 September for all containers to Australia and New Zealand the rate increase has been announced as USD 300/20’GP, USD 600/40’GP/HC and USD 12.00W/M (LCL). From 15 September for all containers ex-South East Asia to AU/NZ, ANL is proposing a quantum of USD 500 per 20’GP and USD 1000 per 40’GP/HC, and other key carriers have planned an increase of USD 300.00 per 20’GP and USD 600.00 per 40’GP/HC. The LCL tariff will be increased by USD 10.00W/M

While there are some encouraging signals the congestion in Singapore and at Port Kelang is easing, many carriers are still blanking sailings or omitting Singapore Port as part of their strategy to not only avoid congestion but retain the upper hand on pricing by constraining space availability. In addition, the shift into peak season will further boost their ability to manipulate pricing to their advantage.

It’s been one thing after another in Bangladesh for weeks now. There was the shutdown of supply chains in August due to protests and government measures to control the civil unrest. This eased and container backlogs in Chittagong Port were starting to clear and then disastrous flooding hit resulting in both the loss of human lives and further disruption to freight and logistics operations. The main cargo route for trucking, the Dhaka-Chittagong Highway was swamped at multiple points and dramatically reduced the number of trucks able to reach the port.

Now the challenges are extending to air freight, with capacity limits causing headaches for shippers including lack of space, escalating rates and shifting schedules as carriers including Qatar Airways, Silk Way West and Emirates adding ad-hoc flights to try and increase capacity and meet the demand.

The cargo airlines are advocating for better services and lower costs in Bangladesh. At a meeting between carriers and the Bangladesh Freight Forwarders Association (BAFFA) the airlines stated they could provide more capacity if problems with airport scanners are resolved, and adequate handling infrastructure made available. Some carriers are also considering operating to Sylhet to relieve pressure in Dhaka.

Meanwhile, the challenges in Bangladesh are firing up the spirit of competition with manufacturers and exporters in India, who see an opportunity to claim a greater share of the market.  

Supply of goods out of India is ramping up, with Virgin Atlantic Cargo stating it will be increasing its belly freight out of India to the UK and US next year by around 40%, as it sees major opportunities for perishables, pharmaceuticals and textile products including garments.

A GRI has been announced for all container types ex USA and Canada to Australia and New Zealand from 15 September. The announced quantum for Australia and New Zealand ports are USD 250 20’GP and USD 500 40’GP/HC. It will apply to all equipment, which is received and moving on or after 15 September.

Industrial unrest continues to haunt the US freight sector, with US East and Gulf Coast ports preparing for strike action in October. Contract demands were presented early September in New Jersey by the International Longshoremen’s Association (ILA), and the dispute has not been resolved.

In Canada, rail strikes are still a risk, despite the Canadian government intervening in late August, ordering carriers Canadian Pacific Kansas City (CPKC) and Canadian National (CN) to resume operations and forcing the operators into binding arbitration with the Teamsters Union to resolve the dispute.

Sydney

Freight operations at Sydney’s main airport – Kingsford Smith – have long been limited by the curfew put in place to preserve peace for surrounding residential areas. The new Nancy Bird Walton airport at Western Sydney will offer an excellent alternative with 24-hour operational capacity providing for late night cargo departures.

Slated to open for operations in late 2026, Singapore Airlines have announced it plans to commence services when the facility becomes available. It is expected to utilise the Airbus A350-900 aircraft for this route, which boasts a cargo capacity of approximately 22,000 kg per flight. This will open new opportunities for managing time-sensitive shipments and enhance the overall capacity for freight moving between Sydney and Singapore.

It is anticipated that more airlines will follow suit.

Perth

It’s been a challenging few weeks for operations at Fremantle, with Industrial action threatened at the port, wild weather halting operations on 22 August and then an incident involving STS Leeuwin after the container ship Maersk Shekou collided with it in the inner harbor, causing some delays to operations while debris was cleaned up and preliminary investigations undertaken.

In good news, the industrial action did not proceed, the weather caused only minor delays to cargo movements, and there were no fatalities or vessel losses due to the ship collision.

Brown Marmorated Stink Bug season is upon us, and the FTA has expressed concerns there is a shortage of Approved Offshore Treatment providers. DAFF has replied that the department is continuing to assess applications by providers, and that the list of approved treatment providers should be regularly reviewed for updates.

You can find the list here.

Other changes for this season include:

• China and Republic of Korea added to the heightened vessel surveillance list.
• Offshore treatment providers from BMSB target risk countries that intend to conduct treatments during the BMSB season must register under AusTreat.
• The Vessel Seasonal Pest Scheme (VSPS) has been removed.

You’ll recall that in our August newsletter we advised of the upcoming DHL Demand Surcharge. This surcharge will be implemented effective 15 September until 31 January 2025.

It will be levied as AUD/KG and will apply to DHL Express Worldwide Time Definite International (TDI); DHL Express 12:00, DHL Express 9:00, TDExport, TDImport, TD3rd Country, TD3rd Country Domestic, Express Easy Export, Medical Express Export, Medical Express Import, Breakbulk Express Export and Import, Breakbulk Express 3^rd country shipments. Read full details here DHL Express Surcharges.

We sent a notice to all AXIMA clients on 2 September advising of our change of bank details from ANZ Bank to Westpac Bank for multiple currencies. Please make sure this notice was provided to your respective Finance teams for them to update.

We support verbal confirmation/verification of these changes to our AR Manager Cheryl Carpenter, please call the general office phone number +61 3 8368 5300 or Direct +61 3 8368 5330.

In the Northern Hemisphere, the early signals are that peak season is going to see a scramble for available space, with the majority of widebody freights already booked through Q4. The advice being given is for shippers to explore multiple options for shipping their goods out of Asia, including potential for land links via rail or truck to shift goods between potential upload point for air freight, or alternative ports.

This has already been a tactic deployed by importers and exporters in response to the challenges of the Panama Canal restrictions and the Red Sea conflict.

You can read more about the peak season scenario here.

The major takeaway for Australia and New Zealand importers is to start planning now for peak season and explore your options thoroughly by having a conversation with your Client Service Specialist or Client Success Manager. They can help you keep a wise weather eye on conditions for the final quarter of 2024 and ensure you have everything shipshape for the all-important holiday gifting season.

Best regards,

Matt Ward
COO International 
AXIMA Pty Ltd
www.axima.com.au

To unsubscribe from notices click here 
This message and any files transmitted with it are confidential and are intended solely for the use of those persons to whom the message is addressed. If you have received this message in error, please destroy and delete this message from your computer. Any unauthorised reproduction of this message or any files transmitted with it is strictly prohibited. AXIMA Pty Ltd's liability is limited to resupplying any affected attachments. All business is conducted pursuant to Axima's trading terms and conditions which may exclude or limit liability in certain circumstances.