“NNR anticipates a continued rise in freight rates due to an early peak season and growing consumer demand.”
Camille Gonzalez
Global Freight Rates Surge Amidst Capacity Shortages and Rising Demand
In the latest developments, rerouting ships from the Red Sea via the Cape of Good Hope has triggered a capacity shortage, escalating port congestion, and strong demand, resulting in a surge in container spot rates across crucial routes. Rates are spiking across all markets – Shanghai – Genoa surged 17%, Shanghai to Rotterdam 14%, and Shanghai to Los Angeles 11%. Looking forward, NNR anticipates a continued rise in freight rates due to an early peak season and growing consumer demand. Numerous general rate increases and peak season surcharge announcements are issued on several trade lanes into July.
Labor negotiations between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) hit a snag due to ILA’s concerns over automated technology at specific US gateways. The ILA suspended talks upon discovering an auto gate system at APM Terminals’ Port of Mobile, Alabama, suggesting its potential use elsewhere violates the existing Master Contract. ILA president Harold Daggett warned of a possible strike as early as October if violations persist. These developments mark another setback in negotiations that have been ongoing for over a year. Similarly, talks between the Teamsters Union (TCRC) and Canadian National Railway (CN) in Canada collapsed as CN refused to address the union’s demands, prompting the possibility of strikes, pending a decision by the Canada Industrial Relations Board (CIRB) on whether a strike could jeopardize public safety. Despite CN’s offer of binding arbitration, the TCRC rejected it, accusing CN of avoiding genuine negotiations. Diversifying routes and anticipating labor actions are crucial in keeping goods moving. It is essential to stay informed, agile, and proactive in response to emerging trends and developments with the ongoing labor talks. Even a brief strike would have significant consequences, disrupting the flow of goods on a massive scale.
Singapore Port Grapples with Severe Congestion, Triggering Global Shipping Disruptions
Singapore Port, the world’s second-largest container port, grapples with significant congestion, resulting in berthing delays of up to seven days. Over 450,000 TEUs await docking as of May’s end, causing disruptions in vessel schedules, equipment shortages, and increased freight rates. PSA Singapore is reactivating old berths at Keppel Terminal to address the issue. The congestion, spurred by diversions from the Red Sea crisis and tariff hikes, is expected to worsen in June, impacting global shipping and driving rate hikes. Singapore is a key transshipment hub for India-related cargo. Based on data there was 350,000 TEUs transshipped over Singapore from India during 2022-2023.
NNR will closely monitor unfolding events to ensure uninterrupted service to our clients. We deeply appreciate your ongoing support and remain committed to keeping you updated on any new developments.
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