Are we approaching the tipping point again? I remember being interviewed for a trade podcast a year after “normality” resumed following the Covid pandemic when sea freight rates were plummeting from their record highs, almost on a daily basis, back towards where they were before it all began. I forecast in that interview that rates would settle down at a level slightly above what we were used to, certainly not below the starting point. How wrong I was!
Freight Industry Insights May 2024
30-05-2024
Shipping lines worldwide have spent the last year firmly on the back foot, aggressively trying to keep hold of and win new cargo in a year when nothing much seemed to be moving. After several years of trying to cut out freight forwarders from the ecosystem, they were our new best friends, perhaps realising what they already knew. Far from being an added cost in the supplychain, we add real value AND we control a large share of global shipping volume.
Last years global economic slowdown had a predictable effect on rates on the water at least. On the spot market, they had fallen well below the accepted level and in some cases, we believe, lines were moving containers at a loss in order to keep market share.
Then came the Red Sea crisis.
As shipping lines carrying cargo on the Asia-Europe trade route continue to divert vessels around the Cape of Good Hope, and Houthi rebels continue their attacks on commercial vessels in the Red Sea and worryingly now into the Arabian Sea, shipping lines are once again raising rates at an alarming rate. And (maybe) justifiably so. As well as displaced vessels, demand for cargo in rapidly increasing as European traders are restocking. Or with the longer transit time around the Cape, needing to add an additional two-week buffer of stock in transit. I make no bones about it, this has come at a good time for shipping lines as they try to recoup what was a disastrous Q4 2023 and a somewhat slow start to Q1 2024.
With long term forecasts not predicting a resolution of the Red Sea crisis this year, and rates on the water rising rapidly, it may be a good time for you to consider flying goods from Asia into Europe and the UK. I think in a lot of cases you’ll be pleasantly surprised at the rates available and the transit times speak for themselves.
On the subject of ocean cargo, Espace lost a dear friend and colleague, Peter Allen after a shockingly brief illness on the 12th May. Peter was a well-known and well-liked member of the UK shipping community with a 49+ year career dedicated to moving freight around the world. It was his passion. I, along with two colleagues, had the pleasure of speaking to Peter in hospital 10 days before his passing and as well as an insight on “the other side”, TEUs and business opportunities were at the forefront of his mind even then.
In my last two hours with him, Pete’s message to the world was just to “be kind”. I think that’s something we should all take forwards in our own lives and careers. Be kind.
Have a super month,
Geoff
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