Ocean freight disruptions, demand, and solutions

As the industry grapples with these issues, carriers, ports, and forwarders are seeking ways to mitigate the impact and stabilise operations.

Container capacity crisis
The reduction in vessel availability has compounded the challenges faced by global shipping, creating a capacity crunch that has driven up freight rates and intensified bottlenecks. This crisis, second only to the pandemic in its disruptive force, has strained supply chains worldwide.

Impact of blanked sailings
In an attempt to control container spot rates, carriers have increased blank sailings, particularly ahead of China’s Golden Week holiday. The cancellation rate for September sailings has reached 10% across key trade routes, with the transpacific route accounting for more than half of these cancellations. Despite these efforts to manage capacity, rates remain elevated, with Asia-North Europe prices 350% higher than last year, and transpacific rates up by 150-180%. The possibility of a US East Coast dock strike and new import tariffs could keep rates high, even as demand softens.

West coast surge and US labour concerns
As peak season nears, the US West Coast ports of Los Angeles and Long Beach are preparing for a significant surge in import volumes. Carriers are deploying 28 extra-loader vessels to accommodate increased demand, driven by strong consumer spending and the diversion of cargo from East Coast and Gulf Coast ports due to potential labour disruptions. Economic resilience is expected to sustain high import levels through the remainder of the year, further straining capacity at these key ports.

India
Container flows from India’s west coast ports, particularly Mundra, are facing severe disruption due to extreme weather and capacity pressures, resulting in significant vessel delays and cargo backlogs. While ports are working to clear the congestion, it may take a week or more to restore normal operations, further straining regional supply chains.

We are closely monitoring the situation and collaborating with our local partners to safeguard our clients’ supply chains, making any necessary adjustments swiftly to minimise impact.

Easing Port Congestion
The arrival of new container ships and fewer blank sailings globally offer some hope for easing port congestion, particularly as Red Sea diversions become routine. The introduction record-breaking new vessel capacity is expected to reduce delays and alleviate pressure on terminals. However, threats from potential labour strikes and severe weather events related to climate change still pose significant risks to maintaining smooth operations.

Equipment Shortages and Red Sea Disruptions
The extended transit times caused by the Red Sea crisis have led to a sharp rise in demand for containers, particularly 40ft high-cube units, which are now in short supply. Ocean carriers and container leasing companies have booked all available container production slots at Chinese manufacturers through mid-October, following a tenfold increase in deliveries in the first seven months of 2024 compared to the previous year. This scarcity of equipment has put additional pressure on carriers and manufacturers, complicating efforts to meet delivery schedules amid ongoing congestion and rising export volumes from Asia.

Looking Ahead
As the ocean freight industry navigates these ongoing challenges, the focus remains on balancing capacity, improving operational stability, and mitigating the risks posed by labour disruptions, severe weather, and environmental factors. Managing these complexities will be essential for maintaining the resilience of global supply chains in the months ahead.

With continued strong demand for ocean freight and ongoing capacity challenges, the upcoming peak season is expected to be both complex and unpredictable.

We encourage you to reach out now if you have high-priority shipments. By sharing your shipping forecasts with us, we can secure the space you need on the right services to meet your deadlines, while ensuring the best possible rates.

For tailored support in strengthening and securing your ocean supply chain, please EMAIL Matt Fullard.