Global Freight Market Update: July 2024

Current ocean freight rate trends

From late April to mid-May, demand for space on Asia to U.S. vessels increased just as carriers reduced capacity with blank sailings after the Chinese New Year. This demand surge also affected other trade lanes, notably exports from Asia to Europe and Latin America.

Due to the necessity of rerouting via the Cape of Good Hope, new capacity added last year and early this year hasn’t been sufficient to meet growing demand. Carriers turned to the charter market for additional capacity, especially to the U.S. West Coast. However, no extra capacity is directed to the U.S. East or Gulf Coasts due to congestion and higher demand on the Asia-Europe lane.

Consequently, spot rates surged, with rates from China to North Europe tripling in May and rates from China to the U.S. East Coast more than doubling. Rates continue to rise, with carriers offering premium services for priority cargo.

4 strategies to manage rising ocean rates

1. Diversify carriers and ports
   Avoid limiting your cargo to a single carrier or port, as some regions may experience congestion or potential strikes. By diversifying it’s easier to gain greater flexibility with carriers, capacity and ports, which can help to mitigate disruptions and manage costs more effectively.
2. Utilise an established non-vessel operating common carrier (NVOCC)
   Choosing an established NVOCC that is connected to major ocean carrier alliances can provide access to more carriers, capacity, sailing schedules and ports. An experienced NVOCC can assist in exploring options and rerouting freight when needed, helping you navigate any challenging market conditions.
3. Implement less than container load (LCL) delivery
   Uncovering savings is crucial and one way to achieve this is by using LCL delivery. With LCL, shippers only pay for the space they use, which can be especially beneficial when full container load (FCL) capacity is tight. This approach helps keep freight moving and maintains manageable inventory levels.
4. Consider air or expedited LCL services
   When ocean spot market options are exhausted, air or expedited LCL services can help critical deliveries arrive on time. While these options are more expensive than standard ocean services, they provide a reliable alternative for urgent deliveries.

Adaptability is key

Shippers must navigate the spot market strategically amidst ongoing volatility.

There’s no single solution to avoid higher ocean rates, but it’s possible to mitigate the impact as long as you remain flexible. Above all, approach the spot market strategically, no matter which solution—or solutions—you choose to implement and be ready to change strategies quickly if necessary.

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Asia

Expect the trend of very tight capacity to continue throughout July. In fact, there is wide consensus that demand is expected to remain strong for the entirety of Q3. With ongoing seaport congestion, which began in May, as well as container shortages and continued restrictions in the Red Sea there is increased conversion of ocean to air freight.

General cargo demand is expected to remain strong in July, just as ecommerce demand remains stable. With so much capacity already devoted to ecommerce traffic, a rise in general cargo demand may potentially lead to capacity shortages.

Export demand from southeast Asia countries are also likely to intensify, this is perhaps caused by the recent trade tariffs imposed by the United States on key products made by Chinese manufacturers.

Europe

The addition of summer passenger aircraft has balanced supply and demand for lower deck cargo, while main deck capacity remains tight, driving higher spot market rates. The market for U.S. exports remains open and stable.

Latin America (LATAM)

U.S.-LATAM routes are stable, but still face lingering schedule reliability issues associated with aircraft maintenance, on-ground operations and surging demand (specifically into Peru and Buenos Aires).

Air export transit times for cargo departing São Paulo-Guarulhos International Airport (GRU) in Brazil are affected due to congestion at the terminal. This congestion is caused by urgent cargo being converted from ocean freight to air freight. Consider departures from other airports, like Viracopos/Campinas International Airport (VCP) when possible. Also expect this surge in demand to affect rates in Brazil.

Freight inbound to Mexico from Asia continues to show higher than expected rates and reduced capacity due to high ecommerce demand.

Flights to North America have become stable again and bookings are available within two to five days, while LATAM takes up seven days to get availability. For Europe, the high demand of the last several weeks has been normalised. Flights are available to both Europe and Asia.

North America

The U.S. export market remains stable with ample capacity to meet demand, especially for cargo that fits on passenger flights. The increased travel demand during the summer months in the northern hemisphere should anticipate this condition to remain in place through the third quarter at least.

Added passenger capacity has affected how some airlines position their freighter aircraft. For example, on the Trans-Atlantic market the significant addition of passenger capacity has spread out demand, leading to less utilisation of the cargo flights.

With high demand and yields for Asia export cargo, some airlines are repositioning freighters into that market, lessening the main deck capacity elsewhere. For this reason, there are substantial differences in air rates and transit when freighters are required.

Oceania

Oceania to North America passenger aircraft capacity has reduced slightly with some direct flights removed and redeployed for the Trans-Atlantic summer holiday season. Some freighter capacity was also removed due to the softer demand from North America to Australia. These shifts have kept rates at a stable level during Q2.

Oceania to Europe has also seen some interruption due to extended flight paths avoiding air space above areas of geo-political concern. Longer flight paths add flight time and the additional fuel required reduces weight allowance for cargo. There have been some additional flights returning to the Europe to Australia market, which has kept rates stable.

Oceania to Asia has abundant capacity, with availability open on many lanes. Rate levels reflect pre-pandemic conditions in most cases.

Trans-Tasman markets are also quite stable. Capacity can cater for current market demands. Rate levels are also stable.

Overall, import markets have been subdued, which is not atypical of end of financial year periods. However, these are expected to increase in Q3 as ocean markets increase rates and equipment shortages develop.

South Asia, Middle East and Africa (SAMA)

The India market remains steady on U.S. exports, but the U.S. imports market remains congested. Backlogues have lessened in recent weeks and spot rates are trending down, but rates remain elevated compared to January 2024. The U.S. to India export market is relatively well-balanced between capacity and demand.

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Asia

Bullish container freight rates continue with carriers pushing rate hikes across Asia outbound lanes, specifically, Trans-Pacific, Asia-Europe, Asia-LATAM and Asia-Oceania. In addition, Asia-ISC and Asia-Middle East/Africa lanes have been experiencing the same trend since the second half of May.

For the Asia-Europe lane, spot rates continue to surge. The gap between Mediterranean and North Europe rates is narrowing as North Europe rates are rising faster than the Mediterranean.

For the Trans-Pacific lane, the high season surcharge from carriers also applies to contract rates that did not include a no-PSS clause.

Rising port congestion has placed added pressure to an over-stretched container market that is already reeling from a shortage of container equipment and vessel space. Singapore has become the new congestion hotspot, with berthing delays of up to seven days. The total capacity waiting to berth has been as high as 450,000 TEUs. This has forced some carriers to omit their planned Singapore port calls, which will exacerbate the problem at downstream ports that will have to handle additional volumes.

Europe

The Olympic Games are being held in Paris this summer, running from 26 July through 8 September. The influx of tourist activity and the establishment of security measures are expected to cause disruption, congestion and delays to deliveries into and out of France during this period.

LATAM

On 19 May, 2024, the port unions labour strike in Chile ended and the port of Coronel returned to normal operations.

There has been an increase in cargo from the South, but this increase is likely from the congestion produced by the strike in the South of Chile. Another contributing factor could be ships of the regular lines are not the largest ones available for these services. Consequently, there is a shortage of space on the Asia, United States and Europe lanes.

Brazil ports

Santos
While operating normally, the port is experiencing some disruptions due to the high volume of cargo. This is likely due to congestions in the southern region (i.e., Navegantes, Itapoa, Imbituba, Paranagua and Rio Grande).

Nevertheless, Santos has better regularity on the slings and greater operational capacity to lessen the volume. Consider moving critical deliveries from/to the southern region through Santos.

Rio Grande
The port is currently open, but carriers are often omitting it to recover the sailing schedule and because moving containers out of port is still impossible due to flooding. With more rain expected, operation capacity can change quickly.

Navegantes/Itapoa
Currently operating with just two berths, one handling solely international vessel flags and the other for national flags. This causes a lot of delay on delivering windows and consequently overloading at the terminal. There are many changes on deadlines with no margin for cut-off extensions, this causes difficulty in the windows to pick up the empty units and deliver the loaded ones.

Paranagua
This alternative port supports the demands of Santa Catarina and Rio Grande do Sul, but is struggling with delivering window congestion. The main difficulties are equipment availability and gate-in/out windows.

North America

Canada labour negotiations

Montréal
Contract negotiations continue at the time of this publication. The last scheduled mediation session was 14 June 2024. There has been no strike vote and the unions have not planned a meeting to call a strike. At present, all port operations are fully functional.

British Columbia
Negotiations continue to reach a deal between the BC Maritime Employers Association (BCMEA) and the International Longshoremen and Warehouse Union Ship & Dock Foremen Local 514. No 72-hour notice has been filed at the time of publication, nor have there been any labour disruptions. The port remains fully operational.

Canadian National Railways (CN)/Canadian Pacific Kansas City (CP)
CN and CP continue their negotiations with the union. While the threat of a strike is not removed, the union will not be able to take strike action until the Canada Industrial Relations Bureau (CIRB) renders their decision. The deadline to file submissions to CIRB concluded on 14 June, 2024.

As news breaks on any of these port negotiations, watch for Client Advisories for the latest information. Keep in touch to your C.H. Robinson representative with questions.

Exports

United States-Asia

Carriers are starting to see more demand for services via the U.S. West Coast (USWC) due to the continued challenges with obtaining appointments through the Panama Canal and the extended transit times through the Cape of Good Hope. Volumes at USWC ports have increased approximately 20% compared to the same period in 2023.

Demand has continued to show some strength on the Trans-Pacific Eastbound (TPEB) lane, therefore the number of planned blank sailings continues to be relatively low. However, port congestion in Asia and at some U.S. East Coast (USEC) ports is causing some schedule unreliability, which can lead to blank sailings.

Congestion at transshipment ports in Asia remains a growing issue. Deliveries can be delayed by as much as three weeks at many major transshipment ports, such as Busan, Shanghai and Singapore. This is believed to be due to the increase in transshipment services caused by carriers choosing to omit port calls to re-establish schedule integrity and catch Panama Canal transit appointments.

There have also been severe weather events in the past few weeks, specifically at China ports, which has added to port congestion. Carriers report it takes as much as one week to have their vessels worked at some large Asia ports like Singapore and Shanghai.

Imports

Based on water levels in Gatun Lake, the Panama Canal draught and booking slots timeline has evolved.

Effective 15 June 2024, Neopanamax locks imposed a maximum authorised draught of 13.71 metres (45 feet) TFW.

Supply and demand

From Asia

On the TPEB and Asia-Latin America/Mexico lanes, the sudden demand surge in May and June has continued. Rate increases have been steady on a weekly (to LATAM/MX) or biweekly (to EU and North America) cadence and more increases were announced in June on both spot market and long-term agreements.

Liners are bringing in extra-loader vessels (additional vessel for a given week, not initially planned in the rotation) to alleviate the freight backlogue. However, cargo rollover for one week or two has been noticed on these lanes. As steamship lines (SSLs) are sharing very strong July loadings, the challenge is likely to continue. Equipment shortages out of Asia are also an increasing concern.

From Europe

On Trans-Atlantic westbound (TAWB) lane, there is a slight uptick in demand. There are also some equipment shortages in the hinterland, as well as port congestion in the Mediterranean. These factors put some pressure on a previously balanced lane.

From India

This is another lane directly affected by the Suez Canal disruptions. While it seems balanced, equipment and vessel space issues from Asia are spreading. Liners are shifting some capacity and equipment away from lower-paying India freight to North America deliveries to accommodate the very strong Asia exports demand, yielding higher rates. The effect is mostly felt out of South India, where competing Asia exports can connect and use the space to move to the USEC.

Capacity

Continuous blank sailings, service reshuffles and equipment shortages due to Suez and Panama Canal disruptions are expected to keep estimated time of departures (ETDs) volatile.

What does this mean for high-demand trade lanes?

• Book early: Bookings should be placed four weeks prior to cargo ready date.
• Work around delays: Be aware that rolls/last minute lack of container equipment are possible. Identify time-sensitive deliveries and develop solutions with your provider prior to booking. Expedited options may be available.
• Manage higher costs: Ensure your organisation understands the current market and high costs associated with transportation on these lanes.
• Plan ahead: Work on forecasting your future needs with your provider.
• Be flexible: Different routings and/or modes may help you to achieve better space allocation and timely delivery.

What does this mean for low-demand trade lanes?

• Expect a potential “butterfly effect”: Small adjustments have a big impact. Discuss your own unique outlook with your provider.
• Understand how global services connect: Because so many global services connect at port hubs, congestion may affect your freight—even when demand is slow.
• Plan for capacity to decrease: Because container and vessel equipment is limited to current capacity, if Steamship lines shift equipment and vessels to trade lane with high demand, there is a possible capacity in low-volume lanes will decrease and eventually space/equipment becomes more challenging.
• Plan and forecast: When the market is slow is an ideal time to optimise your supply chain and uncover savings, not to mention set up processes that can handle market shifts.

U.S. container import volume year-over-year comparison

Source: LINERLYTICA

New containership deliveries have reached 1.62m TEU this year, but there remains a shortage of ships globally. Freight and charter rates continue to surge ahead as the market enters the traditional summer high season.

The vessel diversions from the Red Sea to the Cape route have effectively eroded more than 1.6m TEU from the market since the beginning of December 2023, while the recent increase in port congestion has taken out a further 0.5m TEU of vessel capacity from circulation. The active fleet currently stands at just over 25m TEU, which is below the 25.5m TEU at its peak in December 2023.

Oceania

Market conditions from North America remain stable with space and schedule integrity maintaining availability and regularity. There are also more vessels being allowed to transit through the Panama Canal each day, which will mean some services will return to this route.

The Europe to Oceania market is tightened due to the disruption in the Red Sea/Suez Canal with carriers continuing to implement contingency surcharges. This also affect transit times with the 14-day transit via the Cape of Good Hope. In addition, European arrival schedules on relay services are experiencing disruption due to delays in Asia transshipment ports and subsequent routeing adjustments. Expect to see schedule disruptions continue throughout Q3. Consider forward planning ahead of the current European summer high season.

Northeast and Southeast Asia capacity continues to tighten following blank sailings and port omissions. Rates remain unstable with the implementation of general rate increases (GRIs) and high season surcharges (PSS) throughout the last couple of weeks and continuing in July.

The escalation in pricing is reminiscent of 2022. Expect this trend to continue. There have been record volumes from China in 2024 with an increase of +17.5% January-April and +23.1% increase for the same period on import volumes from Southeast Asia to Australia based on Ports Australia trade data. Expect continuing space issues, so forecasting and early bookings are essential. Schedule reliability is affected with transshipment delays and subsequent routeing adjustments.

The Trans-Tasman market is affected by ongoing delays along the New Zealand coast affecting schedule integrity. Delays at port have reduced and range from 0.5-1 day at DP World, Patricks Terminal and New Zealand ports. While schedule reliability is affected, space remains open with equipment readily available.

Australian coastal delivery currently has no delays or issues with schedule integrity from east to west coast. Capacity remains out of key ports, with rates holding firm (e.g., Brisbane, Sydney and Melbourne).

Export rates are under pressure with strong load factors creating competition—expect this to continue into July. Capacity is tightening from Australia and New Zealand, accordingly, consider booking two to three weeks in advance. New Zealand will be entering peak produce season and space is tightening to the United States.

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LATAM

The transportation sector in Brazil showed significant growth in the first five months of 2024, driven by various factors, including the post-pandemic economic recovery, infrastructure investments and the digitalisation of logistics processes.

Digitalisation continues to transform the surface transportation sector in Brazil. The main trends include:

• Use of big data and Internet of things (IoT) for route optimisation and real-time fleet monitoring
• Adoption of integrated logistics management systems for supply chain management
• Beginning of tests and implementation of autonomous vehicles and drones in specific areas

Sustainability has become a priority in the transportation sector, with initiatives such as electric and hybrid vehicles, programmes to reduce the carbon footprint of logistics operations and practices for recycling and reuse materials.

Economic indicators

• Volume of cargo transported: Increased 8% compared to the same period in 2023.
• Sector revenue: Grew 10%, driven by high demand and increased tariffs.
• Employment: Increase 5% in the number of transportation sector jobs.

How the catastrophe in Rio Grande do Sul affects economy and logistics

Recently, the state of Rio Grande do Sul has faced a series of catastrophic events, including floods, landslides and severe storms. These natural disasters have caused considerable damage to infrastructure, directly affecting the region's economy and logistics.

The economy of this state is based on agricultural producers and the reduction in agricultural production directly affects the local and national economy, increasing food prices and reducing supply.

The floods and landslides damaged highways, railways and bridges, interrupting the flow of goods. The recovery of infrastructure is essential to restore logistics in the region.

The interruption of transportation routes makes it difficult to distribute goods, resulting in delays and increased logistics costs. Transportation and logistics companies face challenges in maintaining efficiency and meeting demands. These difficulties affect the supply of essential products, such as food, medicine and fuel, worsening the situation for the affected population. Operations have been interrupted or reduced at the Port of Rio Grande, one of the state's main ports.

North America

Southeast

Port of Norfolk
Currently, most vessels arriving to the Port of Norfolk berth on arrival, however, bigger vessels have been waiting approximately two days for a berth. Average gate turn times are 32/46 minutes for single and double transactions, respectively and overall berth congestion has eased.

Port of Charleston
The Hugh K. Leatherman terminal is ramping up operations after the South Carolina Ports Authority (TC Ports) and the International Longshoremen’s Association (ILA) reached a settlement in a long-running dispute that has kept the terminal largely off-line since its opening in 2021. This agreement is expected to increase Charleston’s container handling capacity by a third at a time when the port is working to clear a backlogue of five ships waiting to unload.

Savannah
Import dwell time is four days and the waiting time for vessel berth at the terminal is up to one day, depending on the vessel's size. Effective 7 July 2024, Georgia Ports will begin locking vessels expected to be at berth and working. The first day of receiving (ERD) will be seven days prior to the vessel going to work. The terminal cut will be set at 16.00 hours—two days prior to the vessel going to work. This could cause issues with getting exports back in prior to the cut.

Central/Ohio Valley

Cleveland
Carriers report issues with equipment again, with chassis inventories seemingly low. Because of this shortage, some are looking into options of purchasing chassis or getting additional equipment through long-term leases.

Memphis
The I-55 bridge, which is the most direct route to the UP Marion, was closed for a couple of weeks to make repairs. Now, only one lane in both directions is open due to bridge pavement replacements in the northbound lanes.

Chicago
The UP G4 is experiencing challenges with their system and drivers are experiencing increased wait times. For the industry they indicated a 3.6% planned increase.

• BNSF LPC has been slow with lift times. Drivers are waiting more than four hours. Some carriers are attributing this to the change in labour from Parsec over to ConGlobal in the past month.
• TAA Logistics recently opened a new facility in Mokena, IL, next to their terminal for transloading, crossdocking and dry cargo.
• The UP G4 has had a lot of issues with their system recently and with driver wait times. One company reported having six drivers each wait over eight hours.
• NS Landers is still pending a full roll out of a new appointment system. The beta testing of this platform is in progress at the 47th street CY. Once this testing is done, they will roll out to NS Landers.
• Whimsy Inc is still in progress with their new facility build out in Joliet, IL.

West/Gulf

Los Angeles/Long Beach
The potential for ILA strikes at USEC ports could disrupt the region unless a deal is reached. This may drive volumes to the USWC as some shippers may want to avoid the USEC.

Week 27 is seeing significant increase in volumes, by 42.01% over previous week and by 51.04% year over year (y/y). Volumes are predicted to drop again in the next two weeks.

SEA/TAC

Wait times are growing:

• Husky: 3 day average
• Washington United: Up to 3 days
• Seattle: 2 days average

Rail dwell times are also long:<?p>

• Husky: 3.7 day average
• Washington United: 6.1 days average
• T18: 1-3 days average

Expect rail car supplies to be in severe deficit over next couple of weeks in Tacoma. This is already contributing to higher import rail dwell times. Washington United Terminal 1 are limiting their operations to a maximum of three gangs on vessels and one berth operation until further notice due to lack of rail cars to evacuate imports. They are also delaying startup operations on vessels for the same reason.

Oceania

National empty parks have given notice of pricing increases through last month. Review the Wharf Ancillary Charges Client Advisory for more information.

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North America

Visit our Trade & Tariff Insights page for the latest news, insights, perspectives and resources from our customs and trade policy experts.

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