As a logistics or freight manager, staying up to date with the sea freight market in Australia will help you economically manage your resources with current information on space availability and sea freight rates.
Read on for industry updates on the North East Asia, South East Asia, United States and Europe trade lanes, and the current market status of the shipping industry.
Sea Freight - North East Asia to Australia
In last month’s edition we reported on the global capacity surplus and how the sluggish demand has affected the market. Poor weather conditions have also impacted vessel schedules and port omissions have been inevitable while restoring schedule integrity.
Despite carriers’ efforts last month to remove excess capacity by 50% via the current Slack Sailing Program (SSP), we can advise that temporary measures to cut back on space have proven ineffective in a weak cargo demand climate.
A new GRI increase was announced effective from 15 May 2015. The GRI presents challenges for freight forwarders and shippers with carriers planning to cut space by 60% over weeks 21 and 22; including 5 blank sailings in support of this increase.
Sea Freight - South East Asia to Australia
The GRI that was announced to go into effect on 1 May 2015 has failed to take hold.
Weak global demand and a drop in European transhipment cargo has attributed to this. Spot rates have re-emerged on selected port pairs to fill void space with short term validities. Carriers continue to find it very difficult to implement any increases to rates on this trade.
Sea Freight - United States to Australia
In our previous edition we advised that ongoing efforts to clean up the backlog caused by the previous months of extreme terminal congestion continue to make positive traction. The new concern is the lack of availability of truck power across the United States of America (USA) to perform import store door deliveries and export door pickups. This continues to be a major concern in many parts of the USA, especially in the Midwest, Gulf, Northeast, and Southern California.
With confidence emerging in the market for sea freight to Australia, carriers that service the USA are gearing up for their next round of GRIs. All Vessel Sharing Agreement (VSA) carriers that operate direct services from the USA to Australia have announced their intention to raise rates.
Effective 15 June 2015, VSA member lines will implement a GRI in the direct Southbound Trade, covering Dry & Reefer cargo ex the United States via West Coast, East Coast and Gulf Coast gateways to Australia and New Zealand.
Further to the above announcements, effective 15 June 2015 the Bunker Adjustment Factor (BAF) from the United States and Canada, from both West and East Coasts to Australia and New Zealand, Fiji, Tahiti and Papua New Guinea destinations will be adjusted. The Low Sulphur Surcharge (LSS) will also be adjusted.
As a reminder, the new BAF and LSS levels are applicable from date of cargo receipt.
Sea Freight - Europe to Australia
There are no planned increases on this trade in the coming month.
BAF on this trade continues to be reviewed on a monthly basis and will fluctuate in accordance with any changes in oil price.
Shipping Market Review – May 2015
Danish Shipping Finance releases a report at least once a year on the state of the sea freight shipping market.
According to the May 2015 Review: “Supply increased twice as fast as demand between 2008 and 2014, leaving nominal supply approximately 30% ahead of demand by year-end 2014.” The oversupply of container space is set to continue for the next few years which will make the path to higher rates “long and bumpy.”
The review suggests that fleet utilisation levels will fall to approximately 79% in 2015 and 2016. The full review from Danish Shipping Finance can be viewed here.
Each month we publish a blog post that details the current sea freight market for importers, specifically for Australia based businesses. To get an email directly into your inbox with our blog updates subscribe by clicking the button below:
