Current Global Ocean Freight

The current issues that have affected ocean freight movements via the Red Sea are having significant knock on affects for global trade. There are changes ongoing that will affect availability and pricing for container imports from Asia. Rates have surged in the second half of May. Increase are likely to continue due to the following issues.

European routes have been significantly affected by the crisis in the Red Sea, forcing ships to detour around Africa. The African route originally had limited capacity, but this year has seen an influx of vessels. Longer voyages and increased transshipment ports have led to more vessels needing to operate. Extended journeys coupled with port congestion have resulted in many containers not returning. This is also the main reason for the recent container shortage in Asia.

Prices continue to increase in South America mainly due to Brazil's and Mexico's plans to impose additional tariffs on Chinese Electric Vehicles in July and beyond. Many automakers are shipping to these regions (some without actual orders). According to one source, BYD has already shipped more than 100,000 vehicles! They also plan to set up a factory in Brazil, which will require approx.. 400,000 TEUs to ship the building materials. Electric vehicle companies have consumed the majority of shipping resources.

Many shipping companies withdrew vessels from running to West Africa for these large orders, leading to a general increase in rates in West Africa! These EV makers not only compete for shipping resources but also reportedly fill up destination ports' yards quickly with automobiles. This has a knock-on effects to the European market.

The upcoming U.S. election may lead to future tariffs of 50-60% on Chinese goods. This has led some Chinese companies to increase their investment in South America! Additionally, many importers are stocking up in advance, causing the peak season to arrive early.

The shipping lines are taking advantage of the above reasons and actively and tactically raising pricing. In our experience, rates will be increased again for June for South America, Africa and Europe. Middle East and South Asia rates may remain the same or have a smaller increase.

We are likely to continue to experience booking issues, space/capacity problems, booked shipments being rolled to subsequent vessels due to overbooking. 

Here are Hawthorn Logistics we are working very closely with the shipping lines and you, our customers, to provide the best solutions and options available in the market. Please do not hesitate to contact us in advance of any needs you have so that we can assist in fulfilling your requirements now and into the future.