Welcome to the August edition of the Global Logistics Update! We continue to bring you the latest insights, trends, and updates from the world of logistics. As we navigate through the second half of the year, the logistics industry continues to face dynamic challenges and opportunities, from technological advancements to evolving market demands.
South African Ports
South African ports are experiencing significant challenges due to adverse weather conditions, equipment failures, and operational inefficiencies, leading to severe delays. A quick overview of July’s performance:
- Cape Town: The Cape Town Container Terminal (CTCT) has been affected by high swells and severe winds, leading to vessel berthing suspensions. Crane issues persist, and recent rains added to the delays. Overall, operations have lost over 70 hours due to weather disruptions in the last month. We are however expected to see a positive bounce back in operations going into August.
- Durban: The situation in Durban remains critical, with 20+ vessels still anchored off the port and significant delays in clearing the backlog. Equipment constraints and severe weather conditions exacerbated the congestion especially the most recent wind speeds recorded. Pier 1 and Pier 2 face substantial delays, with Pier 1’s backlog expected to remain into the first week of August and Pier 2 reported to be in recovery status with several weeks needed to clear the congestion.
- Richards Bay: High vessel congestion is a major issue, particularly at the coal terminal, which is still underperforming. Additionally, pilot boat issues caused further delays. On the positive, plans to open a new staging facility aims to ease truck congestion at the port.
- Eastern Cape: Ports in the Eastern Cape, including Port Elizabeth and Ngqura, are also struggling with vessel congestion and weather-related disruptions. Recent July floods and ongoing strong winds have significantly slowed down operations.
Port congestion and delays have been reported with Durban at 20 days, Cape Town 6-8 days and Coega 10 days on average. Durban Pier 2 is currently experiencing low straddle availability and slower operations, causing cancelled appointment slots in attempt to ease port congestion as well as truckers waiting up to 17hrs in queues to be loaded. Importers are mostly affected by delayed deliveries due to port bookings not being made available.
We highlight in the images below, vessels currently at anchorage pending berth at our major ports as well Transnet statistics for Durban showing most delayed vessels with the number of days at anchorage:
Overall, South African ports continue to grapple with significant delays, and it is recommended that shippers factor these delays into their planning to mitigate disruptions.
Global Port Statistics
Trends to Watch: Ocean – TPEB
- Volumes remain strong, exceeding last year’s numbers on Transpacific routes. We’re seeing structurally blank sailings due to Cape of Good Hope (COGH) routings and port congestion in Asia and North America. Due to bad weather conditions around the COGH, please expect further delays and capacity challenges en route to the U.S. East Coast (EC). Since extra loader (XL) space was injected into the Transpacific trade lane, we’ve seen less space pressure on the U.S. West Coast (WC), specifically the Pacific Southwest (PSW), from China’s main ports.
- Floating rates: Shipping lines have started to reduce rates for the EC and WC to match supply and demand. We’ve seen shipping lines try to stabilize rates for the second half of August by introducing an early General Rate Increase (GRI) announcement.
- Fixed rates: Peak Season Surcharge (PSS) discussions are very intense at the moment, as the gap between FAK rates and NAC rates do not support mitigations, specifically in light of a potential GRI in August.
Ocean – FEWB
- Port congestion in Asia is improving, but overall on-time performance for Asia-Europe trade remains suboptimal due to reroutings via the Cape of Good Hope. Blank sailings will continue in August. A few extra loaders have been injected into the FEWB to compensate for downsized vessels, and to maintain schedule reliability.
- Demand is strong, and floating rates remain on the higher end. The Shanghai Containerized Freight Index (SCFI) dropped slightly over the past two weeks. With blank sailings in place, we’re expecting the floating market to remain critical.
- Long-term named account space remains limited and restricted by carriers for space and equipment priority.
- Equipment shortages have improved a bit since May and June. For some Port of Loadings (POLs) with less direct calling, we still foresee potential equipment shortages for certain container types, such as 20’GPs.
- Port congestion in Netherlands/Belgium, coupled with on-and-off strikes in Germany and France, has impacted terminal operations and last-mile deliveries. We recommend closely monitoring container movements.
- For urgent cargo with a target delivery date, we recommend selecting premium options as early as possible for an earlier estimated time of departure (ETD) and space with higher equipment priority.
Ocean – TAWB
- North Europe: Carriers have begun noticing the effects of reduced capacity due to full vessels. Demand remains stable, and some factories on the Northwest of the continent are closed for the months of July and August.
- Congestion in the Mediterranean region remains, with an average wait time of 4-7 days outside of the main ports of Italy and Spain. Also, strikes at ports in Southern Italy have exerted more pressure on certain services. The effects are now being felt in the East Mediterranean, where rates are increasing.
- North Europe: Yang Ming Line announced a GRI for the 1st of September. Mediterranean Shipping Company and Ocean Network Express are considering applying for a PSS in September. The intention is to stop rate deterioration.
- Mediterranean: Carriers already increased their rates for August. No news about new increases in September.
- We expect to see signs of the usual slack season in August starting next week.
Indian Subcontinent to North America Update
- Rates continue to increase due to capacity constraints. Structural and unexpected blank sailings, increased transit time around the COGH, and rising demand have caused freight rates to surge into 2H July. Rates are expected to continue climbing into August, as yet-to-deploy capacity faces delays around the COGH.
- Large rollover pools have added further stress to upcoming sailings. Due to changing vessel sizes and an over-acceptance of bookings on each vessel, ocean carriers are being forced to roll cargo onto the next available sailing—not only delaying your shipments, but also taking away capacity for net-new bookings. As a result, some carriers have temporarily paused bookings to normalize loadings.
- These impacts are being felt differently across service providers, with many smaller providers being forced to use spot market booking platforms. (This means that their allotted space has been removed from the vessel plan in the short term.) These freight providers will now have to pay the market rate of over $10,000 per 40-foot container to obtain space.
- New India America Express (INDAMEX) services are expected to bring relief. Both HPL and CMA are launching their own standalone services to support Northwest India and Pakistan. These services will also temporarily support Colombo loadings on the first few sailings to clear accumulated backlogs in Sri Lanka. We can expect space to open up as these carriers, including their co-loaders OOCL and COSCO, will now have greater capacity than in 2023.
- India port issues: Two top ports, Nhava Sheva and Mundra, are facing terminal congestion issues due to heavy rainfall in Mundra, increased volume, and sliding/bunched sailing schedules. Carriers have resorted to early vessel gate closures to properly manage yard utilization and vessel loadings.
- Bangladesh backlog: Due to political protests in Bangladesh, there is a substantial backlog accumulating in the country. Vessels continue to work through this backlog, which is expected to further exacerbate ongoing congestion issues in Colombo, Sri Lanka. This is because over 50% of all cargo coming out of Bangladesh requires a transhipment in Colombo.
Ports struggle with congestion as Red Sea crisis and front-loading boost volume
The latest port congestion data reveals that shippers are grappling with extensive dwell times as the Red Sea crisis continues to take its toll.
Today 1 Aug, Danish carrier Maersk warned customers it had to “implement recovery measures in the US to ensure schedule integrity” on its AMEX service that connects South Africa to the US. Delays to this service had been caused by “adverse weather in South Africa and extended waiting time in Freeport”, it said. Freeport is on the US Gulf coast.
“With these contingencies, due to the Jones’ Act rule, we’ve had to tranship cargo out of Freeport, which has created a backlog of containers awaiting on-carriage to final destination,” explained Maersk.
The Jones Act is a federal statute that requires shipping between US ports to be done by ships constructed in the US, carry an American crew, and are US-flagged. “These on carriers also have limited capacity, causing extended dwell time in Freeport. Along with this, there has been an influx of imports into Freeport via other services causing further congestion and backlog, which we are working tirelessly to clear,” added Maersk.
Continue Reading: https://theloadstar.com/ports-struggle-with-congestion-as-red-sea-crisis-and-front-loading-boost-volume/
Spot rate volatility spreads amid disruption, bumping up long-term prices
‘A World Bank study published at the beginning of July purports to be able to quantify and predict how disruption affects freight rates, finding that for each million TEU of container trade on stalled or waylaid ships, the Shanghai Containerised Freight Index (SCFI) goes up by $2,300 per TEU. Well, now we know.’
Continue Reading: https://theloadstar.com/spot-rate-volatility-spreads-amid-disruption-bumping-up-long-term-prices/
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.
Old problems at Port of Durban infuriate harbour carriers
https://www.freightnews.co.za/article/old-problems-port-durban-infuriate-harbour-carriers
Shippers ‘at a loss’ as Red Sea ripples spread across container trades
https://theloadstar.com/shippers-at-a-loss-as-red-sea-ripples-spread-across-container-trade
Transnet increases free import storage days
https://www.freightnews.co.za/article/transnet-increases-free-import-storage-days?utm_source=newsletter&utm_medium=email&utm_campaign=daily-news-2024-08-04&utm_content=transnet-increases-free-import-storage-days-
Newbuilding orders at Chinese shipyards up 43% in H1
https://www.seatrade-maritime.com/shipyards/newbuilding-orders-chinese-shipyards-43-h1
Port of Colombo: there’s good news – and there’s bad news
https://theloadstar.com/port-of-colombo-theres-good-news-and-theres-bad-news/
Supply chain bottlenecks ease as market balance returns
https://www.seatrade-maritime.com/containers/supply-chain-bottlenecks-ease-market-balance-returns
Sources & References
Seatrade Maritime / Loadstar / Freight News / GoComet / Maersk / MSC / Transnet / WeFreight / Beacon / Joc / MSC / Maersk / Container Statistics / Flexport / SACO