Asia Ocean Freight Market Update

January 03, 2024

Asia Ocean Freight Market Update

 

Ocean freight rates from Asia are moving upwards day by day since the attacks on container ships in the Red Sea area, with carriers also declaring ‘force majeure’ for shipments already enroute.

Rates that had already been subject to recent GRI’s and emergency surcharges are now spiralling further upwards, similar to the period that followed the pandemic, with most sailings now routed around the Cape Of Good Hope.

The Red Sea situation escalated further this past weekend when a Maersk vessel was attacked by Houthi boats who attempted to board it. The US military confirmed they sunk three boats in the attack, which reportedly resulted in the loss of at least 10 Houthi rebels.

Carriers are applying higher rates to shipments already on the water after declaring force majeure. Carriers and logistics providers have force majeure clauses in their trading conditions to protect them from liability for uncontrollable events (such as war, labor stoppages, or extreme weather) that are not the fault of any party and that make it difficult or impossible to carry out normal business.

A summary of our understanding of current market conditions:

  • Shipments already on the water that have been diverted but booked at a previously valid rate will very likely be subject to a higher rate following carriers declaring ‘force majeure’.
  • Higher rates are applicable for shipments booked subsequently and they are continuing to rise.
  • Vessels voyages are now taking longer, including the return leg to Asia with empty containers, which could lead to equipment shortages and will lead to a reduction in available space.
  • Many vessels had already been laid up prior to the upcoming Chinese New Year on February 10th, which adds to issues.
  • Existing contracted rates will likely become practically worthless as higher rates are prioritised.
  • With rates moving fast and less space available, importers will need to make fast decisions about bookings or risk losing space or rates moving.
  • Importers should be cautious of low rate offers that do not come with space guarantees.

There are still some vessels travelling through the Suez Canal, the risk reward options are as follows:

Via Suez Canal :

Plus If all goes to plan then a quicker transit time of 9-10 days.
Minus The risk that the vessel will get caught up in hostilities, and also the vessel rerouting during transit, which would likely mean a much longer journey than if it had originally set out to avoid Suez.

Via Cape Of Good Hope :

Plus Certainty of service by avoiding conflict area and knowing your cargo will only be 9-10 days longer in transit.
Minus 9-10 days longer in transit.

Atlantic Pacific are monitoring the situation closely, should you be concerned about urgent orders or require further information, then please do not hesitate to contact us.

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