Weekly Update – 05.07.2024

Weekly Update – 05.07.2024
July 5, 2024 Hannah Marshallsay

Vessel diversions around the Cape of Good Hope are creating a significant capacity shortage in the market. Ongoing port congestion and limited access to equipment in several regions continue to pressure supply chains.

The Red Sea crisis persists in disrupting shipping schedules, with vessels missing berthing slots and reducing port calls as they take longer routes around Africa to avoid attacks by Yemen’s Houthi group since November 2023.

Market Capacity Squeezed

The extended Cape of Good Hope route between Asia and Europe is consuming capacity due to longer voyage distances and transit times. The current capacity is insufficient to compensate for these longer routes, as all vessels in the market are deployed. This capacity pressure, coupled with heightened demand now entering peak season, has driven rates in the last week to new 2024 highs.

Demand Remains High

We are experiencing an early peak season, driven by Western retailers restocking inventories ahead of the Christmas shopping season. Strong demand growth, with retailers and manufacturers ordering goods earlier and in larger quantities to avoid supply chain issues typically seen from July to September has outpaced supply, with all available ships in operation.

Significant Port Congestion

Space constraints caused by vessels deviating from schedules and returning late to origin ports have led to longer rotations, impacting outbound traffic from Asia and creating significant congestion at major port hubs. Ships frequently arrive on unscheduled days, resulting in berthing conflicts and longer waiting times due to ship bunching. With nearly all containerships bound for Singapore arriving late, the port faces its worst congestion since the pandemic, with berthing wait times reaching 13 days in some instances. Some carriers are skipping westbound sailings to avoid the congestion, shifting the strain to Malaysia’s Port Klang and Tanjung Pelepas. Congestion has also extended to key Chinese ports, with Ningbo and Shanghai experiencing the longest delays.

European destination ports are also struggling with a spike in throughput. Key West Mediterranean container terminals are facing increased volumes of shipments from Asia destined for the East Mediterranean.

Equipment Shortages

Concerns over container shortages are growing due to diminishing container equipment availability in crucial regions. Shortages are now prevalent in Bangladesh, China, Taiwan, India, Cambodia, and Thailand. Equipment availability fluctuates daily based on vessel arrivals and the unloading of empty containers.

Future Outlook

Unfortunately, we anticipate that supply chain disruptions will continue throughout Q3 2024. We are experiencing significant impacts to vessel schedules, with the situation expected to worsen through July. Congestion and equipment shortages are likely to persist in the near term and may take months to resolve fully. This challenging period is expected to bring prolonged transit times and continued delays. Despite these difficulties, we remain committed to minimising disruptions and will provide regular updates to keep you informed.

If you have any questions or concerns regarding your shipment, please contact our Customer Service Team at 01376 533039.

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