Dare to Improve Sea Freight - Week 39, 2024

Welcome to this week’s edition of Dare to Improve Sea Freight. I aim to keep you informed with updates, insights, and ideas for the logistics and shipping industries.

Table of Contents

1. Container Prices
2. Market Update
3. Economic Indicators
4. Digitalisation
5. Start a Conversation on Growth
6. Meet in Person

Container Prices

Global Indices

In week 39 of 2024, global container prices declined across several major indices. The Freightos Baltic Global Container Index (FBX) dropped by 6.3% to USD 4,701, down from 5,019 the previous week. Similarly, the Shanghai Containerized Freight Index (SCFI) fell by 9.8%, reaching USD 2,135 per 20ft container, compared to 2,366 the previous week. The World Container Index (WCI) also decreased, falling 7.0% to USD 3,691.

* The unit of measure is USD/40ft, except for the SCFI index, which uses USD/20ft (USD/40ft for the US East and West coasts).

Far East to US West Coast

Shipping prices saw mixed results on the Far East to US West Coast route. The Freightos Baltic Index (FBX01) edged up slightly by 0.8%, reaching USD 6,875, while the Xeneta XSICFEUW index dropped by 1.6% to USD 6,040.

Far East to North Europe

Container prices on the Far East to North Europe route experienced sharper declines. The Freightos Baltic Index (FBX11) fell significantly by 16.8% to USD 5,412, while the Xeneta XSICFENE index dropped 11.3% to USD 4,812.

Market Update

Ocean Freight Rates

In the Trans-Pacific Eastbound lane, rates are extended until mid-October, with reductions noted for U.S. Southwest, East Coast, and Gulf Coast routes. Peak season surcharges will remain in effect, covering the Golden Week period. In the Far East Westbound lane, floating rates continue to decline, with significant reductions in September, although they remain higher than early 2024 levels. The anticipated International Longshoremen's Association (ILA) strike on the U.S. East and Gulf Coasts has led carriers to implement surcharges ranging from $400 to $3,000/FEU starting in October. A prolonged strike could increase rates even further as demand shifts to the West Coast of the United States, creating congestion.

Demand, Volumes, Vessel Capacity, and Equipment Availability

Demand is weakening in the TPEB and FEWB markets, with lower volumes expected during Golden Week. The TPEB market remains flat, while carriers on the FEWB lane are reporting excess vessel capacity, with space available for bookings. Despite easing demand, rates remain high as carriers strive to maintain vessel utilisation. Equipment shortages are improving, but some ports of loading (POLs) with fewer direct calls still face occasional shortages due to rerouting via the Cape of Good Hope.

The impending ILA strike threatens to disrupt U.S. port operations significantly. With East and Gulf Coast ports handling half of the country's container traffic, a strike could force shippers to reroute cargo to West Coast ports, potentially straining capacity. Vessel and container availability at origin ports in Europe and Asia could also be impacted if the strike persists.

Schedule Reliability, Delays, Port Congestions, and Disruptions

The potential ILA strike is expected to disrupt U.S. East and Gulf Coast ports, with many key terminals likely to shut down. Some carriers have already stopped accepting new bookings to these regions, and shippers are shifting volumes to the West Coast. While West Coast ports have handled increased volumes smoothly, aided by improved warehouse capacity and chassis management, a prolonged strike could lead to congestion and delays.

The East and Gulf Coast ports have extended terminal hours and set deadlines for final pick-ups and reefer shipments to clear as much cargo as possible before the strike. The Federal Maritime Commission (FMC) has issued advisories against excessive detention and demurrage fees during the strike, and some carriers have agreed to halt these charges. However, operational disruptions, equipment shortages, and delays will likely worsen if negotiations remain stalled.

Economic Indicators

Crude Oil: Brent

In week 39 of 2024, Brent crude oil futures dropped by 5.4%, landing at USD 70.8 per barrel, down from 74.8 the previous week. Over the past month, Brent oil prices saw a sharper decline of 11.7%, compared to 80.1 from the previous month.

Manufacturing PMI

Meanwhile, manufacturing activity continued to weaken. The Eurozone’s Manufacturing PMI for September came in at 44.8, a 2.18% drop from August’s 45.8. In the US, the Manufacturing PMI also fell, reaching 47.0, down 1.88% from 47.9 in August, as communicated by S&P Global.

GDP

On the economic growth front, the US GDP for Q2 2024 showed solid performance, growing by 3.0% quarter-on-quarter, which is in line with forecasts and up from 1.6% in Q1.

Interest Rates

Over in China, the Loan Prime Rate (CLPR) remained unchanged at 3.35%.

Consumer Confidence

Consumer confidence showed mixed signals. The Eurozone’s Consumer Confidence Index (CCI) in September improved slightly to -12.9, up from -13.4 in August. In contrast, US consumer confidence took a hit, with the CCI dropping by 6.53% to 98.7, down from 105.6 the previous month.

Digitalisation

Every week, I provide AI-driven insights tailored for the sea freight industry, focusing on boosting profitability and client satisfaction—from improving customer service to automating documentation.

Let’s explore how this week’s prompt can help you achieve your strategic objectives and drive your business growth.

Prompt of the Week: Strategic Brainstorming to Innovate Logistics and Shipping Operations

Purpose:

To support logistics, freight forwarding, and shipping executives in strategically brainstorming and refining innovative ideas that drive operational efficiency, enhance customer experience, and strengthen market leadership. The AI will act as a critical advisor, helping to identify key considerations, potential risks, and execution strategies.

Prompt:

"I am exploring an initiative to innovate within our [logistics/freight forwarding/shipping] operations. Here's the concept: [Insert Your Idea]. I need you to critically evaluate the feasibility and impact of this idea, asking strategic questions to clarify its potential effects on operational efficiency, customer satisfaction, and market competitiveness. Highlight any risks, regulatory hurdles, and operational challenges we might face. What factors should we explore further to ensure successful execution and maximise business impact?"

How to Use:

1. COPY AND PASTE the prompt into your AI tool.
2. REPLACE "[Insert Your Idea]" with a high-level description of the initiative (e.g., digital transformation of logistics operations, automation in supply chain management, customer experience improvements).
3. SEND the prompt and review the AI's critical evaluation, focusing on strategic questions and key areas such as return on investment (ROI), market positioning, and potential risks.
4. PROVIDE more detailed context on your business objectives, operational capabilities, and competitive landscape to guide the AI in delivering tailored insights.
5. USE the AI's analysis to refine the initiative, identifying any gaps, risks, or opportunities to ensure effective execution and long-term scalability.
6. EXPLORE further insights into regulatory challenges, global trends, and emerging technologies that may affect the initiative's success.

Ensure that all personal, financial, and confidential company data is anonymised before submission, including customer information, security credentials, and legal details.

Start a Conversation on Growth

Unlock efficiency and excellence in your logistics operations by leveraging my 16 years of expertise in supply chain optimisation. Connect with me directly:

• Email: [email protected]
• Phone / WhatsApp: +65 87832090
• LinkedIn: ?https://www.dhirubhai.net/in/carlo-damico/

Let's design a strategy that drives your business forward.

Meet in Person

Join me at my upcoming Shipping Committee event in Singapore on October 3rd:

References

• Shanghai Shipping Exchange | https://en.sse.net.cn/
• Drewry Shipping Consultants Ltd | https://www.drewry.co.uk/?
• Freightos | https://terminal.freightos.com/
• The Baltic Exchange | https://www.balticexchange.com/
• Xeneta | https://xsi.xeneta.com/
• Compass Financial Technologies | https://www.compassft.com/indices/
• Flexport | https://www.flexport.com/
• National Bureau of Statistics of China | https://www.stats.gov.cn/english/
• Caixin Global https://www.caixinglobal.com/
• Ministry of Statistics and Programme Implementation | https://www.mospi.gov.in/
• Cabinet Office, Government of Japan | https://www.esri.cao.go.jp/en/sna/menu.html
• Australian Bureau of Statistics | https://www.abs.gov.au/
• Statistics Korea: Statistics Research Institute | https://kostat.go.kr/anse/
• Bureau of Economic Analysis | https://www.bea.gov/
• Bureau of Labor Statistics | https://www.bls.gov/
• The Conference Board | https://www.conference-board.org/
• S&P Global | https://www.spglobal.com/en
• Institute for Supply Management | https://www.ismworld.org/
• European Commission | https://commission.europa.eu/
• Eurostat | https://ec.europa.eu/eurostat

Disclaimer

1. The opinions expressed here belong solely to the author and do not reflect the views of any organisation.
2. The information presented is valid only at the time of publication.
3. The author is not responsible for any actions based on this information; readers decide at their own risk.
4. Including links to other websites does not imply a recommendation or endorsement of their views and information.
5. Readers should not share personal, financial, or confidential company data, including customer information, security credentials, legal details, or regulated data, with any AI tools or platforms.