Ocean freight remains constrained by port congestion and equipment shortages, while air freight sees increased rates due to capacity limitations on key routes. In road freight, operational costs and high demand are pushing prices higher, particularly in the haulage sector.
OCEAN
Ocean freight continues to face several challenges as industrial unrest and capacity issues persist across key regions. The Canadian government quickly resolved a rail strike in August, and labour disputes in India were averted, but unresolved issues in Germany and ongoing negotiations with US East Coast port workers pose further risks. A potential strike at US ports in October could lead to congestion and rising rates as shipments are diverted to the West Coast. Additionally, ocean carriers are adjusting alliances, with MSC collaborating with the Premier Alliance on Far East-Europe routes by 2025.
Demand for ocean freight has lessened, though port congestion, equipment shortages, and rerouting around the Cape of Good Hope continue to strain supply. Asia and the Americas continue to drive much of the demand, with volumes maintaining some pressure on rates.
Freight rates have largely stabilised, but they remain much higher than pre-pandemic levels. Recent rate declines on Transpacific and Latin American routes reflect softer demand, while Oceania and India see higher rates due to equipment shortages. Seasonal rate reductions ahead of China’s Golden Week and expected port strikes may further impact pricing, with potential rate increases in Q4 driven by peak season demand. The Shanghai Containerised Freight Index (SCFI) shows a significant year-on-year increase of 206%, indicating the volatility in global shipping costs.
Schedule reliability remains low, with global figures hovering around 52%, as carriers continue to manage capacity through blank sailings and yield adjustments. Weather events, political unrest, and port strikes are likely to prolong disruptions and challenge improvements in global ocean freight operations through the rest of 2024.
AIR
The global airfreight market remains robust, driven by continued demand for high-tech goods, disruptions in ocean freight, and geopolitical factors. Tight capacity, especially on routes from Asia to North America and Europe, has led to rising rates, particularly as peak season approaches. New security measures in the US and Canada, implemented to address risks posed by incendiary devices in cargo shipments, may further tighten capacity and increase costs.
The airfreight market faces ongoing challenges due to supply chain issues, including delayed wide-body aircraft deliveries and geopolitical instability. Recent data highlights rising spot rates, with Asia Pacific routes showing the sharpest increases. Rates from China to Europe spiked by 18% in early September, while those from Asia to the USA increased by 64% year-on-year, reflecting the intense pressure on air cargo capacity.
Demand continues to outpace supply, particularly in Asia-Pacific, where shipments to Europe and North America are growing. Europe has seen steady growth in shipments to North and South America, while Middle East demand remains high, driven by sea-air shipments out of Dubai. The tight capacity on key routes is expected to drive rate increases in Q4, particularly with peak season surcharges already being announced by several carriers.
As peak season demand intensifies, particularly with the holiday season and major product launches, shippers should anticipate continued pressure on rates. Capacity constraints in regions such as Northeast Asia and the Middle East will exacerbate the situation, with additional disruptions from potential labour strikes in the US further straining the market. Overall, the airfreight market will remain tight through the end of 2024, with rising demand likely to keep rates elevated.
ROAD
The European road freight market saw significant growth in August 2024, as evidenced by the TEG Road Transport Index, which tracks changes in Price per Mile (PPM). The haulage sector, in particular, experienced a 9.5% year-on-year increase in rates, driven by rising operational costs and sustained high fuel prices. Despite the uptick in demand, operational challenges such as labour shortages and high costs continue to put pressure on the market.
Haulage prices rose by 3.47% in August, compared to July, reflecting the strain of growing long-haul transportation demand and high fuel expenses. The combination of rising demand and higher operational costs is leading to price adjustments across the board, with both haulage and courier sectors contributing to an overall 2.24% rise in the TEG Road Transport Index.
LTL (Less-than-Truckload) carriers in the U.S. continue to navigate a market in flux following Yellow’s collapse in 2023. While the initial surge in freight volumes has dissipated, the sector is seeing stabilisation in rates, though with softer demand. Haulage providers remain focused on managing operational costs and capacity, while courier services continue to show growth in line with increasing eCommerce activity.
As freight volumes and demand rise, businesses will need to prepare for continued rate increases across both haulage and courier services, with the road freight market remaining competitive through the rest of 2024.
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