Asia Ocean Freight – Current Market Conditions

January 03, 2024

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

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

Red Sea concerns were escalated further this past weekend when a Maersk ship was attacked by Houthi boats who attempted to board it. The US confirmed that they had sunk three boats in the attack, which reportedly resulted in the loss of 10 Houthi rebels.

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

Our understanding of current market conditions:

  • Shipments already enroute that have been diverted but booked at a previously valid rate will very likely be subject to a higher rates following lines declaring ‘force majeure’.
  • Higher rates will be applied to shipments booked subsequently and they are continuing to rise.
  • Voyages are now taking longer, including the return leg to Asia with empty containers, which could lead to equipment shortages and reductions in available space.
  • Many vessels had already been laid up prior to Chinese New Year on February 10th, which adds to issues.
  • Existing contracted rates will likely become unusable as higher rated cargo becomes prioritised.
  • With rates moving quickly and less space available, importers will need to make fast decisions or risk losing space and/or rates moving.
  • Importers should beware of low rate offers that do not come with guaranteed space.

Some vessels are still travelling through the Suez Canal, the alternatives and risks are as follows:

Shipping Via Suez Canal :

Plus If all goes well then it’s a quicker transit time by 9-10 days.
Minus The risk of vessels get caught up in hostilities, or rerouting during transit, which would mean a much longer journey than if it had originally set out for the Cape of Good Hope.

Shipping Via Cape Of Good Hope :

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

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

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