Dear Valued Client,
The Far East route has never been more volatile than the last two weeks, so we feel it prudent to update you on the matter following our two earlier newsflashes’.
Space constraints are critical, and in some cases, lines are dealing with backlogs of up to three to four weeks. The primary reasons for the space constraints and backlogs are as follows:
- Reduced total shipping line capacity – Driven primarily by some lines swopping to smaller vessels on the SA route: Because of the red sea war risk, all lines are no longer sailing through the Suez Canal and Red Sea and rather diverting vessels around the southern tip of Africa – especially effected are the Far East / Europe and Far East/ East American trade lanes. The effect of this routing is a longer transit time of between 14 and 21 days on these trade lanes. To move the same volume on these significant global trades, shipping lines must add vessels to the services to accommodate the longer transit time. Several lines have therefore taken larger vessels from our services and placed these on the Europe and USA trade lanes and replaced smaller vessels on the South African services – obviously effecting capacity.
- Port Congestion: Not exclusively a South African problem, but the very poor performance of South African ports and the long delays in berthing (still up to 15 -20 days in some cases) means that vessels are sitting in SA waters longer than scheduled. The role on effect of this is that vessels are not returning to Far East ports as scheduled and this results in blank sailings / cancellations in planned services. Obviously, every blank sailing adds to the current back log sitting in Far East ports. MSC have advised our team that on their service we can expect blank sailings every two to three weeks for the foreseeable future.
The congestion and backlogs have led to ramping freight rates similar to those seen during the peak of covid. In the last week we have seen 20ft rates rising to levels around US$ 4000 and 40ft rates higher than US$ 6000. Volatility and variances in rates are extreme and nothing is considered firm until booked. SCT and our partners are progressively searching all lines for every single movement in order to secure the best possible space and rate options for your cargo. Despite lines publishing warnings of 3 to 4 weeks delay in securing space, our team have been successful in many cases this week securing space within the next two-week window.
There are some lines offering “space protection fees” to get space preference and these can be as much as US$ 4000 per container. SCT will always provide these options for consideration when offered by the lines. In addition, SCT have negotiated a two-tiered rates structure with a major carrier (and approaching others) offering us access on a permanent basis to “preferential space” rates. These preferential space rates are extremely expensive and as a result often prohibitive, but where cargo can not afford to be delayed in any manner perhaps some clients would want to consider this. Our team will communicate with you where these options could be considered. If you have orders that will be subject to penalty for late arrival, and you can consider substantially higher freight costs, please ask our team who will provide details where these options are available and compare them both on rates and possible sailing dates to standard rate options.
Please feel free to reach out to your local SCT representative to discuss this further.