Ocean and Air July Market Update

Table of contents

At Freight Systems, we believe in keeping our customers up to date on the latest updates on Ocean and Air.

Ocean Market Update

Adapting to geopolitical shifts and supply chain disruptions shaping today’s ocean freight landscape

  1. Freight Rates: Increased geopolitical tensions have led bulkers and tankers to reroute around the Cape of Good Hope, stabilizing container shipping rates.
  2. Demand: Unprecedented demand on Asia to North Europe and Mediterranean routes has advanced the peak season by over a month, leading to increased rate levels and shortages in equipment.
  3. Operational Changes: Carriers shifting transshipment to Indian ports and carriers diverting cargo to Port Klang, exacerbating congestion and delays.
  4. Supply: Over 1 million TEUs added globally in 2024; another 2 million expected by year-end, increasing Asian ship deployments.
  5. Port Congestion: Houthi attacks disrupted global supply chains, increasing delays and rates due to yard utilization and vessel bunching. Ease in Singapore Congestion Jun’24 compared to May’24.

Ocean Freight

In most of the geographies, the ocean freight rates have doubled / tripled / quadrupled

Navigating Challenges: Current Insights into Freight Rates, Capacity, and Transit Times

  • Ocean Freight Rates: Increased rates due to supply-demand imbalances caused by operational disruptions, surge in exports out of China (EV push to US, Mexico)
  • Capacity Constraints: Reduced availability of container space and vessel schedules, affecting shipment planning and
  • Outbound Transit Times: Extended transit durations as vessels face delays in anchorage / docking and increase in dwell-time for imports & exports causing longer transit times for sailings / arrivals
  • Equipment Availability: Limited availability of containers (Chennai, Nhava Sheva) due to congestion and delays at The preference / prioritization for equipment is driven by global contracts.

Our Solutions

Empowering Your Supply Chain: Tailored Solutions for Seamless Operations

  1. Advanced forecasting: Provide early forecasts with precise cargo readiness details to book shipments at least 2 weeks before sailing. This will help secure containers as per your requirements.
  2. Alternate modes: Depending on safety stock availability, we would encourage our customers to utilize alternate modes or multi-modal to meet your production requirements.
    • SEA-AIR: Ex-India via Dubai / Ex-India via Colombo
    • Slow Air: Deferred Air service with longer lead time
    • LCL Mode: Part Shipments at regular frequency (weekly) to avoid longer production cycle time.

Major Trade: Regional Market Update

Asia -> Key Regional Trade-lanes

Ocean regional Market Update

Port Congestion

  • Asian ports, particularly in Southeast Asia, are significant hotspots, comprising 23% of the global waiting capacity for berthing slots.
  • North Asia and the Middle East/Indian subcontinent contribute an additional 20% and 11% to the waiting capacity, respectively.

Singapore Port: Congestion situation easing

Singapore port congestion

 

 

 

 

 

 

 

 

Port Delays

CountryPortDelay (Days)
UKFelixstowe5
UKBelfast5
USALos Angeles6
USANew York6
USACharleston6
USASavannah6
ThailandLaem Chabang5
ChinaShanghai10
ChinaNingbo10
GermanyHamburg5
AfricaMombasa6

Schedule ReliabilitySchedule reliability

Air Market Update

(Source: IATA, Seabury, World ACD Market Data)

  1. Demand:
    • Surge in Air Cargo Demand: Global air cargo demand rises by 14% compared to last year’s low levels, with Asia- Pacific and the Middle East and Africa driving volume growth.
    • Factors Driving Growth: Continuous e-commerce growth, disruptions in global maritime shipping, and increasing demand for high- tech products, perishables, and consumer goods continue to elevate air cargo volumes.
  2. Capacity:
    • Increase in Air Cargo Capacity: Global air cargo capacity increased by 9% year-over-year in May, driven by double-digit growth in widebody belly cargo in Northeast
    • Stable Global Capacity: Overall global capacity remains steady, with ongoing constraints on key routes such as Asia to the US and EU.
  3. Carriers:
    • Etihad’s Expanded Summer Schedule: Etihad will introduce 100 additional passenger flights for its summer schedule, including 23 weekly flights to new destinations and 77 to existing routes.
    • Delta and United Resume Tel Aviv Flights: Delta Air Lines and United Airlines will resume flights to Tel Aviv, while American Airlines is anticipated to restart services in October 2024.
    • Hong Kong Air Cargo Network Expansion: Hong Kong Air Cargo is expanding its network with new routes to Europe and Saudi Arabia, and adding new freighters for North and South America.
  4. Rates:
    • Increase in Global Airfreight Rates: Airfreight rates continued to climb in May, driven by robust e-commerce demand and increasing disruptions in ocean freight.
    • High Rates on Key Routes: Rates are especially elevated on routes originating from Asia and the Middle East to Europe.

Air Freight Rates to Europe and USA

Significant increase in air freight rates to Europe & USA

Key Insights on Air Cargo Demand Trends 2024

  1. Active Freighter Fleet: The active freighter fleet was at 75% in June 2024, a decrease from 85% in May 2019.
  2. Dominance of 737-800 and A321- 200: These models dominate due to their efficiency and adaptability, expected to continue leading the market.
  3. Rising Demand and Capacity: Air cargo demand and capacity are set to rise in 2024 compared to 2023.
  4. Market Value Trends: High feedstock prices support value retention in narrow-body markets, but lease rates are softening.
  5. Narrow-Body Conversions: Significant activity in narrow-body aircraft conversions, with 45 conversions in early 2024, mainly 737-800 and A321- 200 models.
  6. Shift in Wide-Body Conversions: A notable shift towards A330 P2F conversions, with increased activity compared to previous years.

Regional Capacity Development

Regional capacity

Our Solutions

For Sea-Air Solution,

  • Sea – Air to Europe: 20-24 days @ 80% of Airfreight cost
  • Sea – Air to US: 20-24 days @ 75% of Airfreight cost

To mitigate disruptions, we strongly advise planning shipments well in advance of their scheduled dates to secure space. Our teams continue to monitor the condition and are in contact with the sea port authorities for new developments that might affect operations. Rest assured; we will promptly share any new information with you.

Please feel free to reach out to our customer service or sales team if you need any further assistance

related to this. Please write to us at info@freightsystems.com

We appreciate your ongoing support and understanding as we navigate through these challenges.

Regards

Team Freight Systems

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