Challenging Times for Asia Export Trades

Asia’s export trades are as challenging today as they were during the pandemic, with extremely tight vessel space, equipment shortages, and port congestion leading to a surge in spot rates, which analysts forecast could reach stratospheric levels.

Vessel schedule reliability from Asia to Europe and the US East Coast fell to just 52% in April, with further deterioration expected across all trade lanes, while spot freight rates on the major Asia export trades have increased significantly over the last year: Asia-Europe up 300%, Asia-US West Coast 200%, Asia-Mediterranean 200%, and Asia-US East Coast by almost 150%.

The level of increases is not slowing, with week-on-week rises of 10-20% becoming a sustained pattern with no sign of abating and the rapid increases have created market nervousness, generating more demand and “highest bidder” pricing.

Typically, retailers start importing goods for the November Black Friday sales and Christmas shopping season between late summer and autumn. However, having experienced the pandemic’s capacity crisis, they are front-loading orders, fearing a capacity squeeze during the Q3 peak season. 

The recent BBC news article “Shops rush for Christmas stock as shipping costs surge,” confirms that retailers are placing orders early as soaring costs and disruptions threaten their supply chain deliveries, with many booking well in advance to ensure their Black Friday and Christmas stock arrive on time.

Even though this impacts cash flow and creates warehouse capacity challenges, as goods must be stored for longer, businesses cannot risk ordering later and potentially paying even higher freight rates or failing to secure vessel space altogether.

Many recent articles in the trade press report that container shipping lines are restricting allocations to beneficial cargo owners and freight forwarders alike, as carriers try to allocate space and equipment in a market where demand far exceeds forecasted volumes. 

These reports often refer to “sources” rather than specific examples and while we are not immune to these challenges, our carrier partners continue to be supportive, and our strategic agreements remain intact, underpinned by strong relationships and decades of partnership.

In the current market, providing advanced forecasts and early bookings will help our team to plan and allocate capacity optimally, reducing the risk of shipping delays, keep your supply chain optimised.

To learn how we can enhance your ocean freight solutions, please EMAIL Matt Fullard.