Welcome to the latest Global Logistics Update. As of July 2024, the global port situation continues to face challenges and fluctuations due to various factors including congestion, demand surges, and geopolitical issues.
South African Ports
Every importer / exporter wants to know what is happening at our ports as this impacts pending customer orders, stock levels, ability to manufacture and mostly business profitability, so we keep our focus on this. South African ports certainly still experience significant congestion issues, leading to severe delays and economic impacts.
Port congestion and delays have been reported with Durban at 10-15 days, Cape Town 10 days and Coega 7 days on average. Week 29 brought about positive improvement in Durban landside operations but unfortunately a ripple effect in vessel ETA’s moving out from the recent extreme weather conditions. Cape Town and Coega showing an increase in port congestion compared to weeks prior and major shipping lines have reported a decrease in vessel time out at anchorage but still verify that port congestion is a real challenge and will remain so into the latter part of 2024. We highlight in the images below, vessels currently at anchorage pending berth at our major ports as well as delays recorded for the last week.
Carrier schedules are still erratic, and we continue to see changes last minute especially with vessel split discharges and delayed ETA’s.
So what is a split discharge importers ask? Vessels offload batches of containers at one terminal on first ETA and then move to another terminal to offload the remaining units. All sounds simple but it can take up to a week to offload before moving to the next terminal and some terminals have less equipment and facility than others. To add to the delay, Durban Point can only take certain vessels and this then becomes a very slow offloading process. Split discharges can create a lot of frustration, not only must containers be tracked from first ETA, but it also creates a major delay and unknown for importers who wait on delivery.
Important to note – sailing transit times have changed. Pre-Covid, the standard shipping time from example China to South Africa was around 25-30 days. Currently, transit time has increased to about 44-45 days, representing a 50% rise compared to pre-Covid. We urge importers to factor these delays into your planning considering the time required to place an order, load it into a container, and ship it. A practical guide is to take the booked sailing with ETA to final destination RSA and add 14-21 days to determine when you will receive the goods. This affects exporters too as the vessels are arriving later and the delays at the ports need to be factored in when loading containers.
Global Port Congestion and Statistics
Space Shortages, Elevated Rates, and Container Equipment Shortages
Due to strong demand, many shippers are paying above quoted rates to secure space. Space availability from Asia to Europe has dropped by 30%-40%, leading major importers to pay space guarantee surcharges.
Higher rates are expected to persist until Golden Week, with some Asia-North Europe spot rates already breaching five figures. An early peak season, lasting until Golden Week in October, driven by importers’ determination to avoid Christmas stock shortages, indicates strong orders lasting at least until then. Should the peak extend, the market may not significantly decline until Q2 next year, even with additional capacity coming in.
Additionally, container equipment shortages are becoming more prevalent, with average container prices in China reaching their highest level in two years, and leasing rates on China-Europe routes tripling.
Ports are becoming congested globally – on all continents. The outcome of this is increased port blanking’s or sliding’s. These can be voluntary by the carriers, but more often than not are now involuntary and caused through long waits outside the port and an inability to discharge vessels, without having a major impact on their schedules.
The result is, whether you are on contract, spot or FAK pricing – if a vessel doesn’t call at the port, you will not get your product moved until the next one does. And then, when the following vessel from whichever alliance does call, you do not get any retrospective protection on capacity that is simply ‘lost’.
Every importer and shipper who trades with China and Asia on a wider scale is being affected – it is impossible in the current and short term market to avoid the disruption.
In summary, spot rates show substantial growth, with space shortages increasing and elevated rates likely to persist until at least Golden Week, compounded by container equipment shortages and rising costs. https://metro.global/news/peak-season-impact-on-container-freight-rates/
Global Capacity Surge:
Both Alphaliner and Linerlytica have reported that global container capacity has surpassed 30 million TEU for the first time. This milestone reflects a substantial increase in active ships and new orders. The first half of 2024 alone saw the addition of over 1.6 million TEU, with another 1.49 million TEU expected by year-end.
BUSA-SAAFF Summary
The latest trade figures for South Africa, released by UNCTAD, indicate a significant decline of approximately 8% both quarterly and yearly. This underscores the critical need for an efficient logistics network, which has been lacking in South Africa. While logistics operators cannot generate more trade, they play a vital role in facilitating it. Efficient logistics systems are crucial for economic prosperity, streamlining global value chains, and enhancing the ease and cost-effectiveness of international trade, a major contributor to global GDP.
A robust logistics infrastructure reduces trade costs and timelines, boosting trade volumes and driving economic growth. This virtuous cycle is essential for trade-dependent nations like South Africa, where improved logistics can significantly uplift socio-economic standards. Effective participation in global value chains is not just strategic but necessary for socio-economic advancement. For South Africa, optimising logistics performance is key to achieving higher economic development through international trade.
Adapted from :BUSA
Freight News
We understand the importance of staying up to date with the latest trends, challenges, and advancements in our industry and we wish to highlight just a few articles which you might find of interest.
Container spot rate rises moderate – Peak in sight?
https://theloadstar.com/container-spot-rate-rises-moderate-peak-in-sight/
What will stop ocean freight container spot rates reaching pandemic levels?
https://theloadstar.com/what-will-stop-ocean-freight-container-spot-rates-reaching-pandemic-levels/
Ramaphosa reaffirms commitment to improved logistics capability
https://www.freightnews.co.za/article/ramaphosa-reaffirms-commitment-improved-logistics-capability?utm_source=newsletter&utm_medium=email&utm_campaign=daily-news-2024-07-21&utm_content=ramaphosa-reaffirms-commitment-to-improved-logistics-capability
African Development Bank loans Transnet R18.85 billion
https://www.freightnews.co.za/article/african-development-bank-loans-transnet-r1885-billion?utm_source=newsletter&utm_medium=email&utm_campaign=daily-news-2024-07-21&utm_content=african-development-bank-loans-transnet-r18.85-billion
Sources & References
Seatrade Maritime / Loadstar / Freight News / GoComet / Maersk / MSC / Transnet / WeFreight / Beacon / Joc / MSC / Maersk / Container Statistics / DHL Market Update / CS News