Global goods trade struggles; boost in cargo rates
PORTS & SHIPPING

Global goods trade struggles; boost in cargo rates

Global trade activity is picking up momentum following a downturn last year, resulting in increased shipping rates and evoking memories of previous disruptions for supply chain managers. Emily Stausb?ll, Senior Shipping Analyst, Xeneta, likened the current situation to the chaos and soaring ocean freight rates experienced during the Covid-19 pandemic. She noted that some shippers are accelerating their imports to avoid potential capacity constraints and peak season demand.

Several factors are driving the month-long surge in maritime freight rates, driven by concerns rather than optimism. These include worries about port congestion in Asia, labour disputes in North America that could disrupt port and rail services, and escalating trade tensions between the US and China. Additionally, the maritime industry started the year under strain due to Red Sea attacks, forcing vessels to take longer routes. A.P. Moller-Maersk A/S estimated a 15%-20% capacity loss this quarter on routes from Asia to northern Europe.

Traditionally, importers and exporters witness a surge in shipments from July to September to replenish stocks before back-to-school, Halloween, and year-end holiday seasons. Analysts observe a similar trend unfolding currently, coinciding with limited spare container capacity. Spot rates for containers on key routes have surged significantly, reflecting the tight market conditions. Notably, container imports through the top 10 ports in the US have increased steadily for seven consecutive months.

China is identified as a source of congestion, with ships facing delays at ports due to vessel bunching and adverse weather conditions. These delays are exacerbating supply chain pressures across the Pacific. Furthermore, concerns about potential tariffs on Chinese imports are prompting companies to expedite their imports, reminiscent of the rush seen during previous tariff announcements.

In addition to trade tensions, fears of labour strikes and contract negotiations are adding to uncertainties in the shipping industry. Companies are wary of potential disruptions that could impact their operations, particularly as the expiry date for a labour contract covering US East and Gulf coast dockworkers approaches. Overall, the current surge in shipping rates underscores the complexities and challenges facing global supply chains in a rapidly changing geopolitical landscape. (ET Infra)

Global trade activity is picking up momentum following a downturn last year, resulting in increased shipping rates and evoking memories of previous disruptions for supply chain managers. Emily Stausb?ll, Senior Shipping Analyst, Xeneta, likened the current situation to the chaos and soaring ocean freight rates experienced during the Covid-19 pandemic. She noted that some shippers are accelerating their imports to avoid potential capacity constraints and peak season demand. Several factors are driving the month-long surge in maritime freight rates, driven by concerns rather than optimism. These include worries about port congestion in Asia, labour disputes in North America that could disrupt port and rail services, and escalating trade tensions between the US and China. Additionally, the maritime industry started the year under strain due to Red Sea attacks, forcing vessels to take longer routes. A.P. Moller-Maersk A/S estimated a 15%-20% capacity loss this quarter on routes from Asia to northern Europe. Traditionally, importers and exporters witness a surge in shipments from July to September to replenish stocks before back-to-school, Halloween, and year-end holiday seasons. Analysts observe a similar trend unfolding currently, coinciding with limited spare container capacity. Spot rates for containers on key routes have surged significantly, reflecting the tight market conditions. Notably, container imports through the top 10 ports in the US have increased steadily for seven consecutive months. China is identified as a source of congestion, with ships facing delays at ports due to vessel bunching and adverse weather conditions. These delays are exacerbating supply chain pressures across the Pacific. Furthermore, concerns about potential tariffs on Chinese imports are prompting companies to expedite their imports, reminiscent of the rush seen during previous tariff announcements. In addition to trade tensions, fears of labour strikes and contract negotiations are adding to uncertainties in the shipping industry. Companies are wary of potential disruptions that could impact their operations, particularly as the expiry date for a labour contract covering US East and Gulf coast dockworkers approaches. Overall, the current surge in shipping rates underscores the complexities and challenges facing global supply chains in a rapidly changing geopolitical landscape. (ET Infra)

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