The container shipping lines are burning a lot more fuel going around Africa and they are passing that cost on, but with the post-Lunar New Year lull impacting demand we think that carriers will be more open to negotiation. So, if you have shipments pending from China and Asia, this would be a very good time to talk to us.

Situation Summary
At the start of February, 431 container ships, representing 22% of the global fleet, were operating between Asia and Europe, to maintain a weekly sailing frequency for all the loops that are diverting away from the Suez Canal to sail around the Cape of Good Hope.

Global air cargo demand was up 13% in the first two months of the year, with demand continuing to surge from Middle East & South Asia origins.

While road freight capacity has improved significantly spot rates, though softer, stay at a historic high level.

Ocean
The Xeneta* index for European imports rose by 8.6% in February, a marked turnaround from the bigger drop it registered in January, while the index for European exports rose by a much smaller 1.3% in February.

However, ocean freight is now in its traditional slow season and the expectation is that with rate increases far exceeding most estimates of the additional costs faced by carriers, rates would come down from recent highs, but the lines are removing capacity to protect rates.

Across the major East-West headhaul trades: Transpacific, Transatlantic and Asia to North Europe and the Mediterranean, 50 cancelled sailings have been announced between week 11 and week 15, out of a total of 650 scheduled sailings, representing an 8% cancellation rate.

During this period, 44% of the blank sailings will occur on the Asia-North Europe and Mediterranean routes, with 44% on the Transpacific Eastbound and 12% on the Transatlantic Westbound trade.

*The Xeneta XSI index is blend of a spot and long term (contracted) rates, which means it smooths out short-term spikes.

Air
February’s air cargo tonnages were up 8%, year on year (YoY), which follows a 17% increase in tonnages in January, based on figures from WorldACD.

Global air cargo demand was up by 13% in the first two months of this year, compared with last year, with demand continuing to surge from Middle East & South Asia origins as tonnages recovered from the Lunar New Year (LNY) seasonal dip.

It’s a surprising start to the year and not something the market anticipated, with demand much higher than it was a year ago, driven by Red Sea disruption, but this is not the only factor, with eCommerce a significant factor

More consumers are buying on cross-border eCommerce platforms and the the speed with which they expect to receive delivery is benefiting air cargo, with eCommerce traffic representing half of some airlines’ revenue ex-East Asia.

Ocean schedule reliability for Asia to Europe trades dropped to 39.4% in January, the lowest level since October 2022, and this has further contributed to the strong increase in air cargo demand for shippers with time-sensitive consignments.

Road
With prices relatively low, road freight operators will be hoping to attract more business in the quieter months of the year, before prices are predicted to increase later on in 2024.

The upcoming year will be particularly challenging one for smaller hauliers as they struggle with substantial increases in labour (28%), maintenance and repairs (20%), tyres (21%), spare parts (13%) and insurance (8.7%) which they are not always able to pass on.

Further normalisation in the demand and supply environment is expected and while lack of capacity is not expected in the medium-term, Easter business might cause a further reduction.

Experience suggests that road freight demand will increase in March and by June, the demand for vehicle space could be holding steady across Europe, however, it is unlikely that demand or spot rate levels will match those seen in 2021 and 2022.

Our teams in the UK and across Asia continuously scan the evolving global multimodal operating environment, to identify potential issues and adapt operations, to avoid pitfalls that may challenge our customers’ supply chains.

We share the most important news and developments, so that you can make informed decisions that protect your supply chain.

To discuss any questions or concerns you might have, about the issues highlighted here, please EMAIL us for our immediate attention.