Peak Season Impact on Container Freight Rates - The Latest Update for August 2024
Key Highlights
- Peak Season Surcharges (PSS) & FAK Rate Increases: Last week of June saw significant gains in sea freight spot rates from Asia to Europe and North America.
- Double-Digit Rate Increases: New FAK levels from July 1st led to double-digit increases in spot freight rates.
- Analyst Predictions: Spot and FAK rates approaching five figures; potential for 40ft spot rates to hit $14,000-$15,000 if peak season extends into August/September, with prolonged impact into 2025.
Surcharges on Asia-North Europe Trade
- CMA CGM: Imposed $1,500 PSS on Oceania-North Europe shipments and $500 emergency space surcharge per box on India-North Europe shipments.
- Hapag-Lloyd: Implementing $1,000 per 40ft PSS on Far East-India trade.
Spot Rate Indices & Transpacific Route Increases
- Drewry’s World Container Index (WCI): Composite index grew by 12% last week.
- Shanghai-New York: Steepest growth at 17%.
- Shanghai-Rotterdam: Spot rate increased by 10%.
- CMA CGM: Set to implement $2,400 per 40ft PSS on all shipments from Asia to the US starting Monday.
Challenges and Impacts
- Space Shortages: Availability from Asia to Europe dropped by 30%-40%.
- Elevated Rates: Major importers paying above quoted rates; Asia-North Europe spot rates breaching five figures.
Container Equipment Shortages
- Average container prices in China at a two-year high.
- Leasing rates on China-Europe routes tripling.
Global Port Congestion
- Increased port blanking or sliding.
- Long waits outside ports and inability to discharge vessels impacting schedules.
Market Outlook
- Persistent High Rates: Elevated rates likely to persist until at least Golden Week in October.
- Strong Demand: Driven by importers avoiding Christmas stock shortages, with strong orders lasting until at least Golden Week.
- Extended Peak Season: If peak extends, market may not significantly decline until Q2 next year, even with additional capacity.
- Port Disruptions: Importers and shippers trading with China and Asia facing significant disruptions.
Conclusion
- Substantial Growth in Spot Rates: Space shortages and elevated rates persisting until at least Golden Week.
- Container Equipment Shortages: Rising costs and increased leasing rates.
- Continued High Rates and Strong Demand: Well into next year.
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