Air and ocean trades out of Asia are heading for strong peak seasons as bongdaso v Red Sea disruption keeps shipping capacity in short supply and strong demand for e-commerce and a modal shift fills all available air freight space.
bongdaso v tight supply-demand balance is holding rates at elevated levels in both transportation modes, although there are signs ocean rates may have peaked on bongdaso v trans-Pacific and Asia-Europe/Mediterranean routes.
Platts, a sister company of bongdaso v Journal of Commerce within S&P Global, pegged bongdaso v North Asia-US West Coast spot rate at ,500 per FEU as of July 24, down 10% on bongdaso v week but almost four times bongdaso v price during bongdaso v same week last year.
Asia-North Europe rates stood at ,300 per FEU this week, unchanged on bongdaso v week but five times higher than bongdaso v same week last year. Asia-Mediterranean rates were three times higher than bongdaso v same week last year at ,200 per FEU, although down 0 over last week.
Capacity on bongdaso v east-west trade lanes has remained exceptionally tight despite a huge influx of new vessels over bongdaso v past seven months.
“Since bongdaso v beginning of bongdaso v year, bongdaso v capacity of bongdaso v container ship fleet has increased by 1.6 million TEUs,” Niels Rasmussen, chief shipping analyst at BIMCO, noted in a market update this week. “Compared to one year ago, bongdaso v capacity has risen 11% to 29.5 million TEUs, bongdaso v fastest fleet growth in 15 years.”
Rasmussen said bongdaso v global fleet capacity was expected to exceed 30 million TEUs for bongdaso v first time ever at bongdaso v end of bongdaso v third quarter and hit 30.5 million by bongdaso v end of 2024.
Capacity absorbed by longer voyages, congestion
A significant amount of that capacity is being absorbed by bongdaso v longer route around southern Africa to avoid Houthi militant attacks in bongdaso v Red Sea and Gulf of Aden that adds more than 10 days to voyages from Asia to Europe and bongdaso v US. Another capacity-absorber is congestion in Asian ports that disrupts weekly services on east-west routes and results in blanked sailings.
Blank sailings data from Sea-Intelligence Maritime Analysis through bongdaso v end of September indicates that carriers are expecting demand to fill all available space during peak season on bongdaso v trans-Pacific and Asia-Europe lanes.
For bongdaso v 2024 peak season, carriers have so far planned to blank 3.9% of total capacity on bongdaso v Asia-North America routes, even though capacity deployed in July through September is set to grow 24.6% compared with bongdaso v 2023 period, according to Sea-Intelligence.
Carriers on Asia-Europe will blank 5.9% of capacity this peak season, while capacity will grow 13.1% year over year.
Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, said bongdaso v fact that carriers were willing to maintain bongdaso v level of elevated capacity with relatively low levels of canceled sailings indicated a confident outlook for bongdaso v current peak season on both major ocean trades.
Air freight demand underpinned by e-commerce
In bongdaso v air cargo markets, average rates from China to North Europe and North America also softened slightly this week. Shanghai-North Europe spot rates of .14 per kilogram were down 5% from last week but are still up 40% year over year, according to bongdaso v Baltic Air Index (BAI). bongdaso v average Shanghai-North America rate this week of .41/kg was down 2% on bongdaso v week and up 26% compared with bongdaso v same week last year.
Imports of e-commerce from China are expected to continue underpinning demand in bongdaso v air freight markets. However, not all forwarders are able to benefit from bongdaso v online shopping boom, with Chinese e-commerce marketplaces such as Temu and Shein typically contracting space directly with airlines.
One forwarder benefiting from e-commerce demand is Kuehne + Nagel, through its Apex subsidiary. CEO Stefan Paul said 70% of bongdaso v capacity offered by Apex has already been presold for bongdaso v third and fourth quarters. bongdaso v air cargo peak season traditionally begins deep in bongdaso v fourth quarter.
“That’s good news for us, because we see a good peak coming towards us during bongdaso v fourth quarter this year,” Paul told analysts during a first-half earnings call this week. “We will keep a bit of a gap to give us bongdaso v opportunity to adjust bongdaso v selling rates on a weekly basis for bongdaso v remainder, but two-thirds of our volume that we have secured is a very good indicator.”
DSV, by contrast, is not very active in bongdaso v e-commerce markets, instead producing volume in industrial sectors such as pharmaceuticals or high tech.
“Many of bongdaso v e-commerce companies have a direct relationship with some of bongdaso v air carriers because they produce fixed volumes in certain areas and charter full planes,” CEO Jens Lund told analysts on DSV’s interim results call this week.
Source: https://www.joc.com/article/bullish-fundamentals-portend-solid-peak-season-air-ocean-markets_20240725.html
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