Q3 2024 Trade Update: What Importers and Exporters Need to Know
Brought to you by Kuehne + Nagel and Business Canterbury
As we head into the last quarter of 2024, the global sea logistics market faces continued pressure, especially for importers and exporters. Understanding the latest trade updates is crucial to managing costs, ensuring efficient supply chains, and preparing for future challenges.
Demand Pressures and Seasonal Overflow
Demand remains robust across key trade lanes. Shipments of seasonal goods, especially in preparation for peak periods like Black Friday and Christmas, are putting additional strain on already limited shipping capacity.
This strong demand combined with the extended transit times due to the Cape of Good Hope routing around Africa have stretched the availability of capacity even further. To counter these delays, importers are now being advised to plan for advanced replenishment, 2-4 weeks ahead of their needs.
Congestion Across Ports and Vessel Availability
Port congestion remains a persistent issue affecting shipping routes in both Asia and Europe. Key hubs like Singapore, Port Kelang and Tanjung Pelepas are experiencing significant delays, while other major ports in East and South China are also facing delays. This congestion worsens due to limited equipment availability, as dry containers struggle to return to Asia in time for new shipments.
With vessel schedules becoming increasingly unreliable (trending below 40% on some trades), importers and exporters should prepare for frequent disruptions, including last-minute capacity shortfalls and the potential for booking cancellations.
Rate Hikes and Premium Service Push
Freight rates are rising, and short term rates continue to be significantly higher than fixed contract levels. Higher-paying freight can be seen to be prioritised with customers at times needing to shift standard contracts to premium services, often with added surcharges to ensure loading on overbooked services. These changes are particularly affecting trade routes from Asia to Europe, North America and Australia.
Supply Chain Strategy: Key Steps to Avoid Disruption
The ongoing challenges demand strategic adaptation. Here are a few essential steps:
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Plan Inventory Wisely: Review inventory levels, prioritise critical products, and map out essential trade lanes. Adjustments may be needed to ensure continuity in your supply chain.
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Monitor Port Conditions: With widespread congestion, it's crucial to track vessel positions, schedule updates, and port status in real-time to anticipate delays.
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Secure Capacity Early: To ensure space and equipment availability, long-term agreements or premium service options are becoming increasingly essential, particularly for time-sensitive or critical cargo.
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Consider Alternatives: In some cases, using LCL (Less-than-Container Load) services for partial shipments or smaller loads may be a practical option to avoid waiting for full container loads.
The Outlook: Instability Persists
Due to congestion, increasing demand, and limited vessel availability, disruptions are anticipated to persist in the near future. Kuehne + Nagel highly recommends that shippers remain flexible in their supple chain strategies and be prepared for ongoing rate fluctuations until after Chinese Lunar New Year.
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