Climate, Conflict and China Tariffs Create a Covid-like Freight Environment

In our latest Market Update, we observe continued strong growth in the North American container market, with spot rates reaching a two-year high by the end of May. Factors such as the conflict in the Red Sea, Panama Canal adjustments, and potential labor strikes are influencing this surge. Meanwhile, the India to North America route shows a decline in rates due to increased capacity. Additionally, air freight tonnage is rising as businesses shift from sea to air transport to avoid delays, driven by e-commerce growth and heightened demand from Asia to Europe and North America.

Asia to North America

The North American container market continued to show strong growth during the week ending May 31, with container spot rates reaching their highest levels in nearly two years. In May, we experienced peak conditions for Transpacific Eastbound Ocean freight. Imports for the month increased by 6.8% year-over-year, and we anticipate that this demand will persist throughout the traditional peak season. We expect June imports to be 10.7% higher than the previous year. We have a perfect storm of events here between conflict in Red Sea, Panama Canal drought (though it’s getting better), potential labor strikes in Canada + East Coast of USA and the upcoming China tariffs going. Another $1000 GRI announced as of 6/15.

Fixed rates: As of June 1st, carriers implemented a Peak Season Surcharge (PSS), and it is likely that the PSS will be increased again on June 15th to narrow the gap between spot and fixed rates market.

PSS announcement:
Hapag: 20’/40’ – $1000/$2000
HMM – 20’/40’ $1600/$2000
ONE – 20’/40’ $800/$1000

India to North America

In contrast, container freight from the Indian Subcontinent to the East Coast of North America keeps softening as more capacity has been added.

Panama Canal Update

The Panama Canal has issued an advisory to shipping lines stating that, effective May 30th, it has increased the maximum authorized draft to 45’ (13.7 m) – 50’ is required for a return to normalcy. This adjustment, originally scheduled to take effect on June 15, is being implemented earlier due to the expected onset of the rainy season in the Panama Canal watershed and the current and projected levels of Gatun Lake over the coming weeks.

Asia to Europe

Demand remains higher than usual, and rates increased again in the first half of June, with another $1,000 rise per 40-foot container expected in the second half of June. This demand surge is driven by consumer needs and companies building up stock due to longer lead times and efforts to secure shipping space.

Asia to North America/Europe

Tonnage continues to increase as some sea freight is converted to air to avoid longer transit times. Ecommerce continues to support year on year volume growth across both markets Asia to Europe & North America.

LTL rates make gains as TL stalls
Less-than-truckload pricing kicked off Q2 with a blast, while a truckload pricing index remained lackluster.
– Read More

Panama Canal increases vessel draft ahead of schedule
The Panama Canal has issued an advisory to shipping lines stating that, effective yesterday, it has increased the maximum authorized draft to 13.7 m.
– Read More

A CBSA strike could soon snarl border traffic. Here’s what you need to know:
Just as the summer travel season gets into gear, Canadians and visitors could find themselves waiting in long lines at the border — delays that could also deal a blow to the economy.
– Read More

Full Reopening of Baltimore’s Ship Channel Delayed
The challenging task of removing the final piece of Baltimore’s Francis Scott Key Bridge will take a bit longer than expected.
– Read More

Transpac ecommerce freighters on pause as US Customs checks every parcel
The US Customs agency’s decision to boost compliance in ecommerce imports, which appears to have impacted ecommerce shipments coming from mainland China on freighters – is leading to airport congestion, delays and the cancellation or suspension of some flights.
– Read More

Questions? All you have to do is contact us.

#makingtheworldsmaller