Market Newsletter - November 2024
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Welcome to the November Market Update.
It’s full speed ahead into the Christmas shopping rush, with some retailers already decking the halls with everything Santa-themed and sparkly. It can make for some odd juxtapositions when the Halloween skeletons are right next to candy canes!
Because planning ahead has been the motto of the past few years, most shippers will already have their goods at the docks, on the water or in the warehouse. For those needing the just-in-time option offered by airfreight, a word of caution – space is getting tight, rates are rising, and the air freight carriers are adjusting their deployments to capture the demand.
Recent reports say the Asia-Pacific including routes to the US end of the Pacific is where the real action is. In addition, routes are being shifted to avoid Middle East air space due to the recent rise in military activity including missiles. With the ongoing problems for cargo ships in the Red Sea zone added into the mix, being up to date with who is uploading from where and likely schedules, rates and space availability are essential.
Your first port of call should be your Client Service Specialist or Client Success Manager to plan any new consignments in the coming weeks. Be aware also that tightened security rules for air cargo now apply, and we will update you on that situation in this newsletter.
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Despite carriers announcing a GRI of USD 300 per TEU last month, due to take effect from 15 October, the move was not successful. Instead, a slight drop in demand partly due to the China National Day long weekend from 11-14 October saw rates ease slightly in the favour of shippers.
This month the carriers are trying again for a rate increase, with a GRI of USD 300.00 per 20’GP and USD 600.00 per 40’GP/HC for all shipments from North Asia to Australia and New Zealand announced for 1 November.
To boost their case for higher rates, the carriers did blank a number of sailings in this market over the past fortnight, which combined with the long weekend will result in some backlogs that constrain capacity in early November. Once the backlogs clear, however, we can be optimistic rates may again ease a little.
The blank sailings are causing issues with schedule reliability between North Asia and Australian East Coast ports, similarly, sailings to Western Australia remain affected by the ongoing congestion in Singapore.
In terms of air freight, the demand for space for eCommerce shipments combined with holiday season cargo is causing space to become tight, particularly ex-China. Rates are rising and we do not think they’ve hit the ceiling yet.
One other important piece of news for this market - our AXIMA Hong Kong office has moved.
The new address is:
AXIMA Hong Kong Limited
1-2, 10/F., 135 Bonham Strand Trade Centre,
135 Bonham Strand,
Sheung Wan,
Hong Kong
Phone: +85 (2) 2176 7000
Fax: +85 (2) 2176 7099
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While the carriers didn’t announce a GRI for October, they did marginally adjust rates on the basis of capacity, equipment and transit times out of the port of origin. AXIMA was, however, successful in keeping rates for our customers unchanged throughout the month.
A GRI is possible this month though, with carriers announcing from 1 November an increase of USD 300 per 20’GP, USD 600 per 40’GP/HC and USD 12 per W/M (LCL) for all shipments ex South East Asia to Australia and New Zealand. It may not succeed in full, as most Christmas orders are already on the water or nearly completed, so booking demand is stable. The most likely scenario is the carriers keep rates stable throughout November and potentially beyond.
Sailing schedule integrity remains a challenge, due to ongoing congestion at Port Kelang and Singapore. For air freight, demand remains stable, as do rates and service reliability.
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Indian Sub-Continent - Bangladesh
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The situation remains problematic in Bangladesh. For example, there are ongoing technical difficulties at Dhaka Airport due to malfunctioning explosive-detection scanners, which has caused some shipments to miss their flights and generally slowed the processing of export air cargo. This mainly affects cargo bound for the US and Europe.
At Chittagong Port, industrial action in October by transport operators left export and import containers stranded and has caused a backlog of cargo. As the freight sector is still in recovery from the severe unrest in September and August, this does add to the cumulative toll on reliability of logistics timeframes.
In addition, the escalation of tensions in the Middle East is causing major congestion for air freight as more airlines cancel flights to avoid the high-risk air space. As a result some Bangladeshi freight forwarders have started sending air cargo to the US west coast via China, as elevated airfreight rates elsewhere mean this is more cost-effective than using Middle East hubs.
Some cargo is also being diverted to India via overland trucking, and then uplifted for the EU and US, with Delhi gaining the largest share of this increased trade traffic. India generally is seeing a rise in demand as a transshipment hub, particularly as freight rates on major trade routes ex-India are on a downward slide.
India is also becoming more popular as a transhipment point for US and EU-bound cargo from Bangladesh, with goods trucked to Delhi and flown from there.
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Conditions in the US have been unrelentingly challenging through October, with the fallout set to continue across sea, air and land cargo movements. Yet another major storm, Hurricane Milton, added to the woes for ports still playing catchup after Helene. Airports and sea ports were both closed as Milton moved into the Florida West Coast area, with flow on effects also for trucking movements.
On top of the literal storm, an industrial relations clash shut down the East Coast and Gulf Coast ports for three days at the start of October, causing enormous concern for carriers, and shippers alike. Fortunately, the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) reached an agreement on 3 October and work resumed on 4 October.
Even though the strike was short, there has been an impact for land carriers, with many shippers redirecting freight. In addition, precautionary movement of cargo inland to warehousing to avoid storm impacts has squeezed available space and reduced the number of available truckers to move goods.
Meanwhile, in Canada, the Port of Montreal Longshoremen’s Union commenced industrial action on 10 October, placing a ban on overtime for an indefinite period. While this does not halt port operations, it does slow down operations considerably.
Another important issue to be aware of for the US market, particularly for import and export involving Europe and the UK, is the US Customs and Border Protection has extended the deadline for compliance with the Air Cargo Advance Screening (ACAS) directive to 12 November. This new regulatory measure, which responds to heightened security concerns, requires additional information to be added for air cargo shipments heading into the US. More detail is available from US CBP about acceptable descriptions.
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London is set to get a boost to its export and import capacity with DP World announcing it is proceeding with a USD 1.3bn plan to develop the fifth and sixth berths at its London Gateway facility. This will make it the largest container port in Britain within five years, with the overall London Gateway masterplan featuring a quayside that will extend for more than 2.5km with provision for handling six ultra-large container vessels simultaneously.
For air freight into the UK, there are heightened security concerns following investigations into recent incidents involving courier packages spontaneously bursting into flame. There have been multiple incidents across Europe in recent months, with counter-terrorism authorities stating that unconventional incendiary devices are being sent via freight services.
As a result, security requirements for freight are being tightened across multiple European countries.
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Qantas Freight Sydney terminal appears to be experiencing some technical issues, with the Freight & Trade Alliance (FTA) and Australian Peak Shippers Association (APSA) receiving multiple reports from members of delays due to some shipments showing in the system as ‘unable to locate’. In addition, there have been some problems reported with visibility on dock direct and import collection lists, resulting in some shipments requiring manual lodgement. These issues have probably been a factor in another challenge being encountered, which is considerable wait times for truck drivers, in some cases exceeding three hours.
At Western Sydney International Airport, the options for air freight are continuing to expand, with Menzies Aviation, the latest service provider announcing it will open a facility within the Nancy Bird-Walton Airport precinct. A 22,500 sqm facility is being leased for an initial 20-year period and will specialise in handling cold chain products and pharmaceuticals, and a second 12,500sqm warehouse will handle e-commerce and heavy cargo. Menzies is planning to commence operations in 2026.
Qantas has also committed to the new air node, with a strategic partnership between the Qantas Group and the airport resulting in the carrier becoming the first freight airline to operate within the 24-hour cargo precinct. Operations are expected to commence in late 2026.
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Be aware that the ‘race that stops the nation’ will also stop operations at Melbourne Port facilities on Tuesday 5 November. In addition, most other businesses will be closed, except for those that serve the crowds for race day.
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Patrick Terminal in Brisbane will be shut down for scheduled yard infrastructure and system maintenance on Tuesday 5 November from 7am to 11pm.
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Truck movements may be delayed, or routes changed into and out of Port of Fremantle until mid-November due to construction works to replace the Fremantle Traffic Bridge. There will be intermittent lane closures on the Canning Highway and impacts for feeder roads including Tydeman Road and Swan Street.
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Security tightens for air cargo
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The Department of Home Affairs has revised measures for import cargo, tightening requirements in response to heightened threat levels for aviation security.
Cargo originating from any of the 55 identified countries weighing over 500g and lodged by a sender that does not have an established business relationship will not be permitted on passenger aircraft and will only be allowed on cargo aircraft after undergoing a physical inspection in addition to other checks. This applies not only to cargo entering Australia, but also to cargo being transferred within Australia.
Shippers are also reminded that the new ACAS requirements Qantas Freight is implementing are coming into effect, with the deadline for compliance now midnight on 12 November.
See the list of the 55 countries here – and contact your Client Success Specialist or Client Success Manager for advice if this is going to affect your shipments.
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After the ongoing deluge of rate hikes, new fees and additional charges shippers have been hit with in recent years, including those coming from the terminal operators, it is something of a relief that the Victorian Department of Transport and Planning has implemented a Voluntary Pricing Protocol that means container terminal landside charges fee announcements will only happen once per year and all must happen on 1 January, starting from 1 January 2025. While this doesn’t mean there will be any reductions in price hikes, it does mean they won’t be coming continually throughout the year as they have recently.
We are expecting the 60-day notice of fees from stevedores subscribing to the VPP is likely therefore to land on 1 November and the 30-day notice issued on Monday 2 December.
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There are signs that the turbulence we have seen this year from geopolitical tensions, industrial unrest, and economic ups and downs is not at an end. The US election outcome, in particular, could see a rush on orders out of China by US importers keen to avoid the tariff hikes on China imports promised by the Trump campaign.
We are also familiar here in Asia-Pacific with the push for product ahead of Chinese New Year closedowns, which next year will be from 29 January to 3 February 2025.
This is likely to see a scramble for space, at a time when the market is already looking to new routes and new solutions to circumvent challenges including the escalation of conflict in the Middle East, industrial action in the US, and the escalation in security concerns in the UK, Europe and Australia.
A good strategy is the ‘belt and braces’ approach – think ahead, plan for contingency and have a backup plan. This is something your Client Success Manager or Client Service Specialist will be always be glad to help you with, so as you map out your next steps in supply chain planning, just get in touch, and together we’ll help ensure those Christmas season wish lists are fulfilled.
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Best regards,
Matt Ward
COO International
AXIMA Pty Ltd
www.axima.com.au
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