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Sea freight market review

Oct 15, 2024 | , , , , , , , , , ,

The sea freight market in October 2024 is facing continued challenges from geopolitical tensions and industrial actions, with strikes on the US East and Gulf Coasts contributing to significant disruptions.

Although the three-day US East coast strike in early October has been resolved with a tentative agreement, the backlog of vessels could take weeks to clear. Montreal has also faced industrial action, adding to the strain on transatlantic trade.

Demand remains moderate, with global GDP growth projections modest due to ongoing geopolitical tensions and weak manufacturing performance. The ocean freight market has been challenging due to disruptions, including congestion caused by rerouting vessels around the Cape of Good Hope, following the Red Sea crisis.

Carrier alliances are reshaping trade routes. The 2M alliance between Maersk and MSC will dissolve in 2025, replaced by new alliances such as Gemini Cooperation and the Premier Alliance. The introduction of these new structures is expected to streamline services, particularly on Asia-Europe trades, but could cause shifts in port calls, with some major hubs benefitting and others losing direct connections.

Freight rates have fluctuated as a result of these disruptions. The muted Golden Week in Asia didn’t bring the anticipated rush, but rates on Asia-Europe routes saw some pressure, rising 1-2% in early October. Carriers have implemented cost-recovery surcharges in response to strikes and rerouting delays. The Shanghai Containerised Freight Index (SCFI) dropped from its July peak, but rates remain well above 2023 levels.

Capacity continues to tighten due to vessel bunching and delays, with 10% of the global fleet currently waiting at anchorages, the highest level recorded outside the pandemic period. Schedule reliability remains volatile – hovering just above 50% – especially on key routes from Asia to Europe and the Americas, with congestion at major Asian ports like Shanghai and Ningbo adding to delays.

In the near term, shippers should expect continued volatility, with upcoming industrial actions and new carrier alliances potentially altering trade patterns. While freight rates are stabilising in some regions, capacity remains limited, and schedule reliability a concern.

With ocean freight demand remaining high and capacity challenges on the horizon, the peak season could still be unpredictable. We encourage you to reach out now if you have urgent shipments and share your forecasts, so we can secure space on services that align with your deadlines and offer competitive rates.

To explore how we can strengthen and safeguard your ocean supply chain, please EMAIL our Chief Commercial Officer, Andy Smith.

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Road freight market sees failure and consolidation

Oct 14, 2024 | , , , , , , , , , , , , , , ,

The UK road freight market is facing severe pressures from rising operational expenses and ongoing labour shortages, with Q3 rates surging 10% year-on-year, reflecting widespread cost increases.

This tough economic climate has led to the failure of nearly half of all haulage companies launched between 2019 and 2023, with fierce competition and volatile costs proving too much for smaller operators. Over 50,000 firms have exited the market, particularly in the container freight sector, with many drivers moving to alternative industries.

The failures of these smaller firms have opened the door to consolidation within the market. One of the most significant moves is MSC’s acquisition of Maritime Transport, the UK’s largest haulier. Maritime Transport operates a fleet of 1,600 trucks and has a significant presence at major UK ports.

MSC’s acquisition is part of a wider strategy to consolidate control of overland logistics throughout Europe and is likely to raise concerns among other shipping lines, potentially reshaping customer relationships in the industry.

Simultaneously, hauliers are dealing with significant challenges at UK ports. While DP World’s £1bn development of new berths at London Gateway is progressing, there are continuing political tensions between the operator and UK government officials.

Construction of two new berths will go ahead as part of a long-term plan to make London Gateway the UK’s largest container port, potentially handling six ultra-large container vessels simultaneously by the end of the decade. This expansion will significantly increase capacity and create around 400 new jobs.

Elsewhere, other UK ports are facing infrastructure delays, which are putting essential development projects at risk. The British Ports Association (BPA) has raised concerns over the backlog of harbour orders that ports require to make infrastructure upgrades and expand capacity. These delays threaten billions of pounds in investment and the ability of ports to meet growing trade demands. The situation is particularly dire for ports like Southampton and Plymouth, which have been waiting years for regulatory approvals to begin critical development work.

As the road freight industry faces these mounting pressures, larger operators are increasingly consolidating power while smaller firms struggle to survive.

The efficiency of the haulage sector remains dependent on the performance and expansion of the UK’s key ports, where delays and congestion could have far-reaching implications for supply chain resilience.

Metro offers secure road transport solutions with dedicated vehicles running on fixed routes, ensuring timely deliveries and GPS tracking for full visibility across the UK and continental Europe.

Our road freight teams are strategically located near major manufacturing and transport hubs throughout the UK, enabling efficient logistics support.

To learn more about our domestic and European services, please EMAIL Richard Gibbs to start a discussion tailored to your specific needs.

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US East Coast dockworker strike: Temporary resolution but risks remain for January

Oct 4, 2024 | , , , , , , , , , , , , ,

While a tentative agreement between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) has paused the strike, a final resolution must be reached in January 2025, or further disruption could occur.

The recent US East and Gulf Coast dockworker strike, which began on 1st October 2024 and lasted three days, caused significant disruptions across 36 key ports, including New York, Savannah, and Houston.

During the strike, over 50 vessels were anchored offshore, impacting approximately 1.4% of the global container shipping fleet. Carriers including CMA CGM, ONE, and APL declared force majeure, leading to potential rerouting, delays, and added costs for shippers. This has highlighted the importance of securing comprehensive marine insurance to mitigate risks such as unexpected storage costs, rerouting, and delays.

Though some cargo was rerouted to alternative ports in Canada and Mexico, these measures provided limited relief due to limited capacity and congestion at those facilities.

With another 100 vessels en-route the length of time required to clear the backlog remains uncertain, and the resulting congestion could persist well into Q4. Additionally, carrier surcharges are expected to remain in place on all cargo to and from the US, further increasing costs for shippers.

If the ILA and USMX fail to reach a final agreement by January, the resumption of the strike could lead to significant global supply chain disruptions. Nearly 50 vessels were affected during the initial strike, and this number could rise, with an estimated 2.22 million TEU of cargo capacity tied up by the end of the month if no resolution is found

To discuss the current situation and how Metro can protect your supply chain, please EMAILAndrew Smith, Chief Commercial Officer.

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US East coast port strikes underway

Oct 2, 2024 | , , , , , , , , , ,

At 12:01 a.m. ET on Tuesday 1st October 2024, dockworkers along the US East and Gulf Coasts began a major strike, marking the first significant work stoppage in nearly 50 years, threatening major supply chain disruption across the US and beyond.

Nearly 50,000 members of the International Longshoremen’s Association (ILA) have walked out, grinding operations at 36 key ports, threatening to unleash significant supply chain disruption, severely delaying both imports and exports.

Affected ports on the East Coast and Gulf of the US include Boston, New York/New Jersey, Philadelphia, Wilmington, Baltimore, Norfolk, Charleston, Savannah, Jacksonville, Tampa, Miami, Port Everglades, New Orleans, Mobile and Houston.

The strike comes after negotiations between the ILA and the United States Maritime Alliance (USMX) broke down, with the union rejecting USMX’s latest offer of a nearly 50% wage increase over a six-year period. The ILA has remained firm in its demands, pushing for higher pay and stronger job security guarantees in response to the automation plans that threaten longshoremen jobs.

With goods sitting idle in containers as ships pile up offshore and the potential for shortages high, particularly for perishable goods. Industrial materials are also caught in the disruption, impacting businesses reliant on components and raw materials to keep production lines running.

Shippers who depend on steady supply flows in the lead-up to the critical holiday season, have implemented contingency plans, with some shipping orders ahead of the strike to avoid delays. Some shippers may opt to move goods through other ports, but such measures could come at an additional expense and many businesses may struggle to find alternatives, especially as other ports lack the capacity to absorb redirected cargo.

Shipping lines and port operators have responded by activating emergency plans, rerouting ships where possible, anchoring to wait out the strike and issuing surcharges to cover additional costs. Emergency Operations Surcharges for shipments to the affected ports have already been introduced, with fees ranging from $800 to $3,000 per container, depending on size and carrier.

Most carriers and terminals have stopped demurrage and detention accrual – but that relief does not extend to cargo already accumulating charges.

Despite calls from industry leaders for government intervention, the Biden administration has signalled it will not invoke the Taft-Hartley Act, which could enforce an 80-day cooling-off period.

Both sides of the dispute remain far apart and the union’s president, Harold Daggett, has made it clear that the ILA is prepared to strike for as long as necessary to secure an agreement that addresses their concerns.

Looking ahead
With Sea-Intelligence calculating that it would take six days to clear the backlog from one day of strike action, it could quickly lead to significant logistical challenges and the likelihood of severe backlogs is growing.

Container bottlenecks, equipment shortages, and soaring costs for trucking and rail services are becoming inevitable as the strike enters its second day, with no clear resolution in sight.

The longer the strike continues, the greater the risk of long-term disruptions to global supply chains reliant on US ports.

We have contingency plans in place to avoid the ports affected by strikes, as well as alternative routes and entry points.

To discuss the current situation and how Metro can protect your supply chain, please EMAIL Andrew Smith, Chief Commercial Officer.

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