Sustained demand for sea freight, increased transit times and port congestion continue to drive spot freight rates upwards, despite record-breaking new container ship deliveries, with recent increases in port congestion in Asia and the Mediterranean taking a further 500,000 teu from circulation.

Over 1.6 milllion teu of capacity has been added to the global container fleet so far this year, as new vessels have been delivered, and all that new capacity has been fully absorbed by the market’s diversion round the Cape of Good Hope.

The global container fleet now exceeds 30 million TEU, an increase of 50% in just seven years and is expected to grow further – and faster – with 478 containerships (and another 3 million TEU) scheduled for delivery this year.

So, despite the record-breaking new vessel deliveries, there remains a shortage of capacity and container ships globally, with freight and charter rates continuing to surge ahead as the market enters the traditional summer peak season.

In just one week last month, the equivalent of 2.5m teu were on ships queueing for berths at ports worldwide, which is the equivalent of almost 7% of the global fleet, and the bunching of ships arriving from Asia has been creating berthing delays, with global schedule reliability just over 50%.

Spot rate indexes from Asia are up significantly on 2023, with FAK rates up by nearly 500% and analysts expecting them to continue to rise until demand eases.

Ship bunching and congestion spread to ports in Asia including Port Klang, Shanghai, Qingdao, Guangzhou and Shenzhen, although this has been easing partly due to increased transshipment through India, which is now experiencing its own congestion issues.

Singapore’s berthing delays have lessened, but there are longer dwell times as carriers discharge more containers to forgo subsequent voyages and catch up on sailing schedules.

Routing away from the Suez Canal means that cargo is now being dropped at western Mediterranean ports for transshipment to the east of the region, with ships having to wait longer for a berth.

In the north of Europe, ports and terminals are performing pretty well, though Rotterdam, Hamburg, and Aarhus have experienced increases in yard densities, with customers being asked to pick up import containers as soon as possible after discharge.

And while it is promising to see the OECD, WTO and IMF are all predicting that global trade growth could more than double in 2024, there will still not be enough freight to fill all those container ships – when the Suez Canal route reopens.

We are monitoring this evolving situation closely, while working with our offices in Asia and carrier partners to mitigate any impact on our customers.

If you have any questions, concerns, or would like any further information regarding the situation outlined here, please EMAIL us.