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Market Newsletter - December 2024
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Welcome to the December Market Update.
As the year draws to a close with the last mile sprint from docks to stock rooms to satisfy the Christmas rush, industry analysts are already looking ahead at 2025. The carriers have been pushing steadily to regain rate levels, and recent rounds of discussions about pricing for Europe, North America and Intra-Asia shipping have not resulted in solid details of GRIs in the first part of 2025.
There has been some movement upwards on sea shipping spot prices, particularly for Asia-Europe and Europe-North America lanes, however opinions are mixed on whether this will translate into the contract pricing. To retain some kind of upper hand, the carriers continue to blank sailings, and Drewry’s Cancelled Sailings Tracker reported that around 10% of all global sailings originally planned for December were suddenly blanked. This element of schedule unpredictability is unfortunate, as reliability is important to anyone on either the import or export end of global transactions!
Air freight has been picking up a large share of shipping thanks to recent issues including extended timeframes for shipping transiting the Cape of Good Hope due to the Red Sea conflict, concerns around port shutdowns in the US due to industrial action, and concerns around schedule reliability due to the combination of blank sailings and congestion in key Asia cargo nodes.
Because the air carriers had planned effectively for extra capacity throughout Q4, rates have remained relatively stable, and space not hard to come by. There are some reasons to expect that this may change in Q1 2025, with an increase in rates fairly likely, especially if US ports continue to be affected by industrial action.
Overall, 2024 has been a year that foregrounded the importance of planning ahead while also ensuring there is some thought given to resilience and contingencies. These are aspects of your supply chain forecasting and planning your Client Service Specialist or Client Success Manager will always be happy to discuss with you.
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The vulnerability of this region to typhoon impacts was seen again last month, with operations halted briefly due to Typhoon Toraji. All operations at ports ceased and staff worked from home until the storm impacts eased.
Two GRIs were announced in November, the first of USD$300 per TEU, starting from 1 November succeeded in full due to the quantity of cargo backlog due to disruptions in October. Carriers then announced a second GRI of USD 200 per TEU from 15 November, however this price hike failed and rates remained steady. A new GRI of USD 300 TEU has been announced for 15 December, and it is expected this will succeed as there will be a rush on exports ahead of Chinese New Year in late January and the corresponding shutdown of factories, port operations and landside operations.
In general, operations are currently smooth from factory to wharf, and while the carriers continue to blank sailings there is a marginal improvement in sailing schedule integrity. Also, with the easing of congestion at Singapore and Port Kelang in recent weeks, sailings from North Asia to Western Australia are becoming more reliable.
Demand for air freight services remains high, particularly from eCommerce traders, and as a result space is getting tight, particularly for direct services ex-China. The traditional consumer shopping peaks of Christmas and Chinese New Year are going to add to the load, so we expect rates will start to climb in the next two months.
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Calm is the keynote for this market, with an easing of congestion at Singapore and Port Kelang, and generally efficient operations landside. Rates are also remaining in a holding pattern, with no GRIs in November and none announced for December. The carriers would prefer rates start to rise and will continue to blank sailings to try and achieve this goal.
In this region, air freight rates and space availability are generally stable, with the exception of parts of the Indian subcontinent, where factors including industrial action are affecting services and pricing.
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New technology can be a major ally in improving productivity and efficiency, until it isn’t. That’s the scenario currently facing cargo operators using Adani services at Kattupalli and Ennore. New terminal operating systems installed by Adani have been subject to a series of glitches across multiple applications that connect vessel, yard and gate operations, affective everyone involved in attempting to move cargo into and through the port systems. The extreme delays are causing angst for customs, shippers and carriers alike, and some are choosing to avoid the ports until the problems are sorted out. Ironically, the two ports had been the go-to for shippers and carriers looking to avoid bottlenecks at Chennai.
In coming weeks, however, all ports in India may be equally difficult, with unions and labour groups planning indefinite industrial action from 17 December. The work stoppages are a protest on behalf of both current workers and retired (pensioner) workers who have been in long-standing negotiations overpay rates and entitlements. The workers are calling for the Government to resolve the impasse. We will be monitoring the situation as it evolves, and if you are concerned about how industrial action in the final part of this year may affect your supply chain, please get in touch with your Client Service Specialist or Client Success Manager.
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Incoming US President Trump is already signaling some major cost increases for importers, with pledges to impose high tariffs on goods from Canada, Mexico and China. While this news is likely to prompt a sudden rush on orders to beat the legislation, industrial action in both the US and Canada may pose an additional challenge.
In Canada, Industrial action by workers at the Ports of Vancouver and Montreal resulted in a lock-out by operators. The impacts across the supply chain were massive, and in mid-November the Canadian Government stepping in to resolve the impasse. The Canada Industrial Relations Board (CIRB) was directed to order operations at both ports to resume and talks between unions and port operators have moved to binding arbitration. Because the lockouts were of a significant duration, with Port of Montreal’s workers locked out from November 10 and workers in Vancouver locked out since 4 November, it will take some weeks to clear the backlogs of cargo.
South of the border, in the USA, the main ports are experiencing major congestion, some of which is a legacy from the dispute between operators and the International Longshoreman’s Association and United States Maritime Alliance, as well as the impacts of multiple hurricanes and storms over recent months. The threat of further industrial action is still a concern, with discussions between workers and operators yet to achieve a formal agreement.
With a major backlog and congestion now causing additional strain, many shipping lines are rolling confirmed bookings to the next sailing citing congestion and vessel constraints. This of course simply shifts the space constraints forward and affects space availability for new bookings.
AXIMA sent out a customer notice recently that details measures we are taking in relation to Los Angeles terminal to support our clients to keep their shipments moving.
We have agreed to pay an SPGO fee (Seapriority Go) to shipping lines to secure container access, priority shipping and loading. ANL/CMA have already introduced this, and we expect all carriers will follow suit to ensure bookings are loaded on the original planned sailing.
This is a temporary charge while the situation remains so challenging. Once the problems subside, we will continue to book containers on standard service and remove the additional fees.
For further details, please contact your Client Service Specialist or Client Success Manager.
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The New Zealand Customs Service has been undertaking consultation on proposed changes to fees and levies charged to importers, exporters, freight companies, shipping companies and airlines. The proposal aims to recover part of the costs of border security and biosecurity requirements for goods being imported, and customs services for export goods.
A contentious aspect of the proposed changes is the fees could be applied to low-value goods worth less than NZD 1000. The Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) has engaged in discussions with executives from the New Zealand Customs Service and the Ministry for Primary Industries, advocating for an exemption for low-value goods to protect the viability of small to medium enterprises with low-value, small-volume import or export shipments.
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Snapshot of national trends
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The Maritime Union of Australia has called approved stop work meetings at all Australian ports for annual general meetings of the union’s various state and territory divisions. The half-day meetings in late November and early December did not cause major disruptions to overall goods flows.
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Peak season air freight volumes combined with ongoing technical difficulties and scheduling challenges have resulted in significant backlogs at Qantas Freight CTO in Sydney. The airline is working to resolve the situation through seconding additional resources from interstate and boosting the workforce through recruitment, internal upskilling and additional training for some staff.
The airline hopes to have cargo flowing normally as soon as possible.
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With Fremantle Port due to reach capacity in the coming years, the Western Australian government has committed to the initial planning and land acquisition for a new container port at Kwinana. The $273 million government investment will help move the project through the early stages to reach design finalisation. In addition, planning is underway for the enabling infrastructure including augmentation of the road and rail links that will connect the port to WA’s agricultural and mining producers. The project aims to have the new port operational by the late 2030’s.
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New Year, new rates is the new normal with the National Voluntary Guidelines (NVG) Pricing Protocol. The government initiative means that instead of giving you news of fee increases throughout the year, you get the news for all operators that have subscribed to the scheme just once, on 1 January. While this is a Victorian Government initiative we are seeing the Stevedores providing their fees for their national ports. For any local ports outside of Victoria rates may be provided separately and we will keep you informed.
Your rate cards from 1st January 2025 will include your new rate levels.
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Clearing the runway at Sydney airport
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The first slot regime reform in 27 years at Sydney Airport is expected to enable the airport to recover more quickly from disruptions, reducing delays for both passengers and freight. The Sydney Airport Demand Management Amendment Bill 2024 was passed by Federal Parliament, the legislation introduces key changes, including the Recovery Period mechanism, and is expected to ensure the airport can accommodate the growing freight sector utilising this essential gateway.
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Holidays are (almost) here
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As we eye off the final few weeks on the 2024 calendar, in amongst the Christmas wishes and the festive season events, we also prepare for some shutdowns.
While all Qantas terminals will be closed on Christmas day, operators including Dnata Cargo and Menzies Aviation will be open for business in many locations, and in some cases with revised operating hours.
To ensure you know exactly what options you have for movements of goods over the public holidays of Christmas day, Boxing Day and New Years’ Day, please check the specifics with your Client Success Manager or Client Service Specialist. Also, please note AXIMA Australia offices will be closed on the 25 December, 26 December and 1 January public holidays.
In any case, we hope you have plans for celebrating with family and friends or enjoying some well-earned rest during the festive season. Ahead of the break, take the time to have a chat with your Client Success Specialist or Client Success Manager about your plans for Q1 2025, there may be new options for you to consider, or opportunities to achieve improved resilience for whatever the market has in store for us next year.
Most of all, we’d also like to wish you and yours a delightful festive season.
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Merry Christmas and a Happy New Year to all.
Matt Ward
COO International
AXIMA Pty Ltd
www.axima.com.au
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