Freight Market Update: December 19, 2023
Updates From the Global Supply Chain and Logistics World | December 19, 2023
Welcome to the December 19 edition of the Freight Market Update newsletter! Before we dive into this week’s trends, we wanted to share some important company updates:
This week’s FMU newsletter will be our last edition in 2023. Our first edition of 2024 will land in your inbox on January 10, 2024.
Join us TOMORROW, December 20, at 8:00 am PT / 11:00 am ET / 4:00 pm GMT / 5:00 pm CET for a special edition of Logistics Rewired: Navigating the Suez Canal Fallout. Following attacks on commercial vessels, including container ships, almost every global ocean carrier has announced they’ll halt vessels bound for the Suez Canal or re-route around the Cape of Good Hope. Soon, shippers could face a market with about 25% less effective capacity, extended transit times, and increasing rates. Join ocean freight experts in this special edition of Logistics Rewired for the latest updates, what to expect, and how you can prepare for the volatility ahead. Save your spot here!
Trends to Watch
[TAWB - Ocean] All carriers have now introduced a Panama Canal Surcharge to deal with the extra costs caused by the low draft situation. Around 20-25% less capacity is expected in the last two weeks of December and the first two weeks of January as The Alliance introduced their Winter Blank Sailing program and CMA is downsizing their vessel capacity on the Liberty Bridge service going to the U.S. East Coast.
[FEWB - Ocean] Asia-North Europe: Market demand is moving up in December, and all ships are filling up. Spot rates for the first half of January shot up significantly due to the Red Sea threat which is causing almost all carriers to re-route vessels from via the Suez Canal to via the Cape of Good Hope. This is significantly increasing the slot cost, and we expect the total transit time to be extended by 1-4 weeks, depending on the vessel’s destination. We anticipate that these spot rate increases will not easily go away even after the Lunar New Year, as the Eastbound vessels are also impacted by this incident. An equipment shortage might also be expected as a direct impact. Due to all the combined situations above, together with the largely widened gap between the spot rate and the long-term deal, the long-term deal space is restricted further by carriers. As we have predicted before, a significant peak season surcharge (applicable to both spot and named accounts) is expected before the Lunar New Year. In other news, ONE Orpheus (FP1 service calling Asia-NEUR at the moment) struck a bridge during its transition in the Suez Canal. The temporary repair has finished, and the vessel is moving out from Port Said and is expected to arrive in Rotterdam by December 26. MED trade: Following North Europe, MED GRI effective first of January is very strong (similar reason as Northern Europe trade) and we also expect a Peak Season Surcharge (PSS) will be implemented shortly.
Please reach out to your account representative for details on any impacts to your shipments.
North America Vessel Dwell Times
For more details, please visit Flexport’s Ocean Timeliness and Air Timeliness indicator pages.
Upcoming and On-Demand Webinars
Logistics Rewired: Navigating the Suez Canal Fallout | Wednesday, December 20 @ 8:00 am PT / 11:00 am ET / 4:00 pm GMT / 5:00 pm CET
The State of Trade: Reflecting on 2023, Looking Ahead to 2024 | Available On-Demand
Logistics Rewired: Air Market Predictions for 2024 | Available On-Demand
This Week In News
Costs Will Skyrocket as Westbound Voyages Are Paused or Diverted Freight rates from Asia to Northern Europe are expected to surge due to the impact of westbound voyages being halted or re-routed around Africa to avoid attacks on ships approaching the Suez Canal. Some carriers have chosen to redirect ships via the Cape of Good Hope, adding at least 10 days to voyage times. The security crisis in the Red Sea region has prompted others to pause voyages, anticipating the intervention of a U.S.-led task force. This disruption will likely result in port congestion, equipment shortages, and supply chain complications.
Nearshoring Key Supply Chain Risk Strategy for Euro Firms According to a study by Inverto, a majority of European businesses consider nearshoring as the optimal strategy for mitigating supply chain risks, with a focus on Eastern Europe. The survey reveals that 42% of companies view regionalization as the primary approach to restructuring their supply chains. To enhance supply chain resilience, companies are aiming to enhance efficiency and flexibility and reduce delivery times by relocating orders to neighboring countries.
CBRE Forecasts Online Returns Could Total as Much as $82.1 Billion This Holiday Season A new report from commercial real estate services and investment firm CBRE, in partnership with Optoro, a returns technology provider, estimates eCommerce returns are expected to total as much as $82.1 billion in the U.S. this holiday season, representing a 50% increase equal to $149 billion since 2018. As many retailers have waived return shipping fees to attract consumers, their reliance on third-party logistics companies (3PLs) has increased as the companies can assist with regionalized reverse logistics and tailored inventory operations.