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Updated on May 16, 2024
The following information is built on market data from public sources and C.H. Robinson’s information advantage—based on our experience, data, and scale. Use these insights to stay informed, assist with decision making to potentially mitigate risk, and hopefully help avoid disruptions to your supply chain.
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The global shipping industry faces a flurry of developments, challenges, and opportunities in May 2024. Some of these shifts could quickly reshape the immediate landscape of air, ocean, and inland transport. From Asia to the Americas, here’s a high-level overview of what’s been happening.
Efforts to enhance efficiency at the Panama Canal are bearing fruit, with an increase in slots per day facilitating smoother transit for vessels. Meanwhile, concerns over instability in the Middle East have many carriers still rerouting freight from the Red Sea and Suez Canal.
The exception to this was around Mother’s Day weekend, when there is a spike in charter air demand for fresh flowers. While this annual event exerts its own unique pressure on supply chains, it is temporary.
Capacity conditions have improved in India as backlogs shrink and rates trend down slightly. Expect continued improvement in the coming weeks, but the Red Sea challenges could bring volatility back to the market. Plan accordingly to capitalize on these shifts and meet the changes in demand.
It’s pretty evident that the currents of global logistics are ever-changing, shaped by a myriad of factors ranging from holidays and seasonal demand fluctuations to geopolitical tensions and unpredictable weather. Navigating these waters requires adaptability, resilience, and strategic foresight, as stakeholders across the supply chain work together to keep the world moving. For a more comprehensive assessment on these and other factors shaping the logistics industry's trajectory, read the full insights report below.
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In the Asia market, ecommerce demand is solidifying, contributing to ongoing activity levels. However, there was a slight deceleration in general cargo during China's recent May Day holidays. Despite this, expect a rapid return to regular operations. To mitigate congestion concerns and maintain operational efficiency, consider advanced notice on bookings.
The Labor Day holidays in early May dampened demand from Asia, especially from China. However, a rise in export demand from high-end computer chips and servers from other Asian countries relating to the booming artificial intelligence (AI) industry has mitigated that effect. The demand from the AI boom is expected to persist steadily throughout the year. Due to favorable weather conditions, the Panama Canal restrictions have eased, though the situation has not fully recovered to normal level.
The ongoing conflict in the Middle East has caused airlines to re-route. These re-routings take longer than usual, significantly impacting cargo payload between Asia and Europe. Throughout May, ecommerce demand is expected to decrease compared to April. The exception to this included the days leading to Mother’s Day, when charter demand for fresh flowers boosts traffic. With these factors in play, expect demand in May to remain similar to April. While capacity has not increased as fast as forecasted, rates will remain elevated.
Capacity remains widely available with stable pricing due to modest demand in the U.S.-LATAM trade lane. Delays in cargo release at GRU Terminal Operator in Sao Paulo have led to a backlog—consider alternatives like Viracopos Airport.
Increased demand for flower exports from Colombia and Ecuador this month have brought opportunities for competitive pricing in the Miami-Bogotá lane.
Mexico inbound lanes from Asia face challenges similar to the Trans-Pacific market, expect higher rates and reduced capacity to persist. Aggressive spot pricing is available for Mexico exports, while Brazil to North America remain in high demand with limited negotiation opportunities for small shipments.
The Trans-Atlantic westbound market is relatively balanced. The introduction of summer passenger aircraft has effectively aligned supply and demand for lower deck cargo. However, tight main deck capacity has propelled spot market rates upward. Despite these fluctuations, the market for U.S. exports remains open and stable, offering a degree of consistency amidst the shifting dynamics. Rates should remain stable with cargo moving freely through the summer months.
Capacity conditions have improved in India as backlogs shrink and rates trend down slightly. Expect continued improvement in the coming weeks, but the Red Sea challenges could bring volatility back to the market.
The Asia Pacific region continues to see robust demand for ecommerce, creating an elevated baseline for year-round demand. General cargo demand is also trending up, driven primarily by Red Sea challenges.
The increased peak pricing due to the Red Sea conflict is continuing for the Europe and Americas trade lanes. Though the demand out of South Asia has tapered, the demand for capacity from other Asian countries, like China, has kept rates at a higher level.
Airlines are not offering rates for extended validity. There is no major increase in capacity besides a few non-scheduled operations. Expect prices to remain at the same levels even though capacity is now relatively easier to find compared to the situation in April.
Set to expire in 2027, the Ocean Alliance, made up of OOCL, CMA, COSCO, and Evergreen, announced they will extend their agreement for an additional five years, through 2032. Some speculate this was an effort to reassure the market of the alliance’s stability after the upheaval in the other two major east-west alliances scheduled for early next year.
Maersk and Hapag-Lloyd announced the formation of the new Gemini Alliance, which will start in January 2025. Hapag-Lloyd will be leaving THE Alliance by the end of January 2025.
THE alliance members, Hapag-Lloyd, ONE, HMM, and Yang Ming, reassure the market that business will continue as usual for 2024. There will be significant changes and disruption to vessel services in early 2025.
Strong container freight continues to improve with carriers pushing for further rate hikes. With the mid-May general rate increase (GRI), demand on the Trans-Pacific trade lane, Asia-Europe, Asia-LATAM, and Asia-Oceania trade lane seems to hold steady.
The recent strong rate rally in freight rates to LATAM has drawn additional capacity to the route. Several steamship lines have launched new services to Mexico in May. Expect these new capacity injections to the LATAM trade lane to absorb some 300,000 TEU of incremental vessel capacity, which will relieve some of the capacity pressure from new ships entering the market.
Asia-North Europe freight is expected to increase further in the next two months, with the collapse of the Middle East peace talks and capacity utilization hitting a three-year high on this route.
The ongoing strike at the port of Coronel in Chile has caused significant congestion and equipment shortages for exports, particularly 40' containers. Negotiations with port entities have yet to resolve the conflict, exacerbating the situation.
Improved passage regularity through the Panama Canal is anticipated for the upcoming month due to favorable weather conditions, minimizing delays and cancellations.
In Brazil, intra-Americas shipping services continue to face space constraints. Bookings are required three to four weeks in advance to secure space. Carriers are seeking equipment repositioning in U.S. East Coast ports and are flexible in directing freight to these destinations. Meanwhile, European, Asian, and Oceania trade lanes remain stable with flat rates.
Southern ports are experiencing delays due to congestion, impacting schedules despite efforts to maintain reliability—this is most prevalent for 20' containers and special equipment for Port of Vitória, Navegantes, and Santos.
Recent heavy rains in the southern Brazil region are adding to the existing port delays and congestion. Many carriers are choosing to omit south Brazil ports with their main vessels, and instead transship into the region via Santos port.
Major destinations are sustaining 80–90% capacity availability. Despite a drop in bulky export commodities like wood and oats, rates remain stable overall. There have been no GRIs reported, only fuel adjustments. However, services to the Middle East from the West Coast are seeing declining quotes.
United States–Asia
The new AP1ONE joint service, operated by ONE and Wan Hai Lines between the U.S. West Coast (USWC) and Asia, has launched. The transit times from USWC to Vietnam ports of Haiphong and Cai Mep are expected to be some of the best in the market. The first call for exports from the USWC is June 5th.
With the shift in demand to the USWC and the rising volumes being shipped during Q1 2024, the number of blank sailings has been reduced. Demand has continued to show some strength on the Trans-Pacific eastbound (TPEB) lane after the Lunar New Year and leading up to the Labor Day holidays in Asia, therefore the number of blank sailings continues to be relatively low.
Severe weather events in the past several weeks have added to the port congestion at transshipment ports such as Busan and Singapore.
United States–Europe
Demand is improving on the Trans-Atlantic westbound (TAWB) trade lane as traditional peak season approaches. Nevertheless, there continues to be a significant overcapacity from the U.S. East Coast (USEC) to Europe.
Space (i.e., USWC) to Europe has improved but is still tight. Carriers have solid load factors due to limited service options and a strong resin export market.
There is an increasing congestion issue at key west Mediterranean ports such as Valencia, Algeciras, and Tanger Med due to rapidly rising volumes. The volume increases are largely due to carriers having to transship cargo via west Mediterranean ports, connecting with feeder vessels into the Middle East to continue to service that market.
United States–Oceania
Demand in Oceania has softened in many sectors since Q4 2023, and some economists state the economy is currently in recession.
Vessel space to Oceania is relatively open and rates are stable/softened slightly during the first quarter of 2024. Rates are expected to remain stable to slightly downward in the second quarter.
Based on the present and projected level of Gatun Lake in March, the Panama Canal Authority announced increases in the number of daily slots in the Panamax Locks:
Reservation slots per day |
Jul | Aug | Nov 3 | Nov 8 | Dec 1 | Jan 16 | Feb 1 | Mar 18 | Mar 25 | May 7* | May 16 | Jun 1 |
---|---|---|---|---|---|---|---|---|---|---|---|---|
Panamax Locks | 26 | 22 | 17 | 17 | 16 | 17 | 13 | 19 | 20 | 17 | 24 | 24 |
Neopanamax Locks | 10 | 10 | 8 | 7 | 6 | 7 | 5 | 7 | 7 | 7 | 7 | 8 |
TOTAL | 36 | 32 | 25 | 24 | 22 | 24 | 18 | 26 | 27 | 24 | 31 | 32 |
* Temporary slot reduction due to scheduled dry chamber maintenance on the West Lane of Gatun Locks
Thanks to the increased slots since January, steamship lines are trying to resume their usual service routings via the Canal, though some exceptions remain per proforma or on ad-hoc basis. The alternatives remain to route via the Cape of Good Hope or the Suez Canal, both increase transit time by about 14 days.
As ships are delayed, transit time and capacity are both impacted since more ships are needed to cover a longer route on a weekly basis. Therefore, space availability on services typically routed via the Panama Canal can remain a challenge—particularly for heavy freight.
The situation around the Suez Canal continues to be fluid. Since December, most maritime carriers have announced they are temporarily pausing or rerouting vessel traffic through the Red Sea and Suez Canal following a sequence of attacks on container vessels launched from a part of Yemen.
Most of the vessels will travel around the Cape of Good Hope, which adds, on average, 14 days to transit time. Rerouting or pausing even a portion of those vessels can have a significant impact, not just to trade that moves via the Red Sea, but across all global trade lanes. Blank sailings and service changes may continue. It is estimated that 6–9% of global capacity is absorbed by this alternative routing.
By early 2025, the Panama Canal authority expect to return to full capacity for daily transits, which would be 34–38 slots per day (if the expected rainy season starting in May unfolds as expected).
On Asian trade routes, particularly on the TPEB and Asia-Europe lanes, shipping companies are managing capacity to ensure continued service via the Cape of Good Hope, striving to balance supply with demand. Leveraging the momentum generated by the freight rush during Asia's recent holiday in early May, carriers have implemented rate increases, with further adjustments expected in the coming months.
Reports indicate overbooked vessels and equipment shortages at origin ports, suggesting ongoing challenges in the supply chain. Meanwhile, the Asia to Latin America (LATAM) route remains highly volatile, expect rate fluctuations to persist.
Across the TAWB market, demand shows a slight uptick, with sufficient capacity on most services.
The Indian Subcontinent (ISC)-North America trade lane continues to grapple with the aftermath of disruptions caused by the Suez Canal blockage, with capacity still in the process of adjustment. Rates may stabilize and potentially decrease as the market adapts. Anticipate the introduction of new services and collaborations among major carriers to inject additional capacity into the market in the coming months.
Looking ahead, the shipping industry faces ongoing challenges due to continuous blank sailings, service reshuffles, and equipment shortages stemming from disruptions at the Suez and Panama Canals. As a result, estimated time departures (ETDs) are expected to remain volatile in the coming months.
Cargo demand is likely to pick up beginning in June, after the general assembly election in India.
There is currently a shortage of 20′ dry containers at major inland container depots in India.
The export market to North America remains stable with minor fluctuations, while the intra-Asia market is seeing continued blank sailings.
Rates are expected to remain flat or drop further due to excess capacity and low cargo demand. Rates for the Asia to Europe/Mediterranean trade lane show slight increases amid weak demand. In June the market will likely go up due to peak season surcharges, especially for Europe/U.S. lane.
ONE/HMM/COSCO has launched a brand new service called WIN (e.g., India to North America) effective this month. This will be an additional ocean service from India to USEC.
For ISC to Oceania, there are some challenges at transshipment ports. Transit times and vessel schedules will remain volatile until the situation in the Red Sea improves.
In the Atlanta market, NS AUSTELL has introduced a limit on appointments for both inbound and outbound gates, with the exact allocation per hour undisclosed. Recent reports from truckers indicate the earliest available appointments now require a two to three hour wait, prompting them to return loads and empties to their yards to avoid rail detention charges. This has led to an increase in accessorial fees, attributed to factors such as chassis splits, extended driver wait times, and the introduction of pre-pull or stop-off charges.
Drivers are receiving more requests for lanes picking up from the Appalachian Regional Port (ARP) as an alternative to Atlanta rails. However, this necessitates a significant adjustment in base pricing due to the limited presence of Atlanta-based carriers in the ARP market.
The Federal Motor Carrier Safety Administration (FMCSA) has reported "significant impacts" on trucking operations in the Baltimore region, particularly due to redirected traffic through key transportation routes such as the Baltimore Harbor Tunnel, the Fort McHenry Tunnel (Interstate 95), and the western side of the Baltimore Beltway. According to FMCSA data, commercial vehicle traffic through these critical tunnels has experienced up to a 25% increase in drive time.
In response to these challenges, the Department of Transportation (DOT) has extended its emergency declaration, providing some relief for freight-hauling drivers. This extension includes an additional 2 hours to the 11-hour driving limit. This extension specifically applies to drivers transporting freight diverted to alternative ports. As traffic patterns adjust and demand fluctuates, proactive measures and contingency planning will be essential for maintaining efficient freight movement amidst these ongoing challenges.
In Minneapolis, there's notable movement in the local transportation sector as ONE expands its collaboration with Flexivan, introducing around 100–150 new chassis. This expansion has prompted TRAC Intermodal to transfer chassis out of the market, leading to a shortage of pool chassis.
MN BNSF is taking steps to address storage needs as volumes hold steady, albeit with a reduced availability of chassis. This adjustment reflects ongoing efforts by industry players to adapt to changing demand dynamics and optimize resource allocation in the Minneapolis area's logistics landscape.
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