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OCEANFREIGHT MARKET CONDITIONS

 

Consistent demand for ocean freight space from Asia to the USA continues to apply pressure to major US port operations. Carriers have vessels waiting outside major West Coast ports and the slow availability of cargo arrival has led to a further surge in demand for air cargo space as the only alternative for company supply chains operating JIT commodity replenishment. Congestion continues in the Ports of Los Angeles and Long Beach. Vessels continue to be unloaded at the terminals while arriving vessels go directly to anchorage and wait in anchorage from 4-8 days for an available terminal. There likely won’t be any significant easing of demand from Asia to the US before peak season starts in July as retailers rally to re-stock inventory to fulfil strong sales.

Adding to the fracas, the Suez Canal in Egypt was blocked in both directions from Tuesday, March 23, 2021. One of the world’s largest container ships, the Ever Given, on its way from Asia to Europe, was presumably pushed off course by strong wind at the Southern end of the canal, thereupon became grounded and turned sideways, effectively blocking all vessel traffic in the canal. As of 29th March, the container ship was freed, though approximately 370 vessels were queuing on both sides of the canal.

 

The event has resulted in major disruption to both the Asia-Europe schedules and US bound routes via the Suez Canal. Port congestion in Europe has worsened off the back of this event, with vessel schedules severely disrupted.  As a result, the empty equipment situation will further worsen globally with vessels failing to rotate timely. Most carriers have reduced booking availabilities and published a blank sailing program with the hopes of getting the schedules back under control. Therefore, capacity and allocations are being cut drastically. This in turn will result in rate increase until supply and demand return to balance. The market expectation is for negative impacts to be felt for up to 3 months until such resolutions can return a semblance of normality to the schedules.  Of course, this has occurred when our global container shipping industry is already under severe pressure from port congestions, empty container shortage and a schedule reliability at an all-time low.

 

Australian ports have been under pressure from industrial action, adding to congestion and disrupted carrier schedules. One of the major challenges remains the de-hire of empty containers in a timely fashion and without incurring carrier detention fees.

 

Stakeholders will have to continue to work together to overcome these industry challenges initially caused by the pandemic and now aggravated by the Suez Canal incident.

 

Our staff have employed additional processes to assist our clients with the challenges thrown up. We shall continue to utilise all resources available to minimise the negative impacts on our clients where possible.

 

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