shipping containers

12 Dec 2023

Carrying the lessons of 2023 into 2024

As we approach the final stretch of 2023, there is a sense of exhaustion and acknowledgment that it’s been a year filled with challenges. 

Eskom left us in the dark far too often and Transnet kept us waiting and wondering. We are hopefully all stronger and wiser now and we continue to seek means and ways to move forward with resilience. Lessons have been learnt that we can carry into 2024 and no doubt we will face new challenges that we can overcome together. Opportunities should be a plenty, especially for public-private partnerships (PPP). If changes and strategies that’s been announced relating to Eskom and Transnet are implemented, then 2024 should end brighter. 

We will continue to work very closely with all our partners and service providers, to ensure that all your shipments are delivered as efficiently as possible.

The impact of the following key factors needs to be continually assessed and considered:

  • Festive season closures and warehousing
  • Routing changes
  • Airfreight demand increasing
  • EU ETS surcharge
  • Chinese New Year
  • Rate increases

Sea freight update

The final quarter of 2023 has been anything, but plain sailing. Transnet has made the headlines for all the wrong reasons and ramifications of the port congestion continue to be widespread. Unfortunately, nothing can be done to change the past, but we are seeing a few green shoots of positive progress and willingness from Transnet to work closer with the private sector to improve their overall performance. Like the crisis at Eskom, it will take time for Transnet to get their house in order and we can go into 2024 feeling more hopeful that things will gradually improve. The turn-around will be a journey and hopefully many meaningful milestones will be celebrated along the way.

Capacity:

The global market currently has excess capacity, and this is expected to remain the status quo for 2024. There will be periods in the year where available capacity will be constrained such as the pre-Chinese New Year shipping window. We can expect a few more changes to routings on the main trade routes to South Africa meaning that lead times, capacity, carrier routings and options will need to be scrutinized, and importers will need to adjust their supply chains accordingly. 

Sailing schedules:

Longer transit times into South Africa continue to frustrate importers and delays continue to have a negative impact on many businesses. Durban port operations remain severely impeded with a high number of vessels anchored for extended periods. Berthing delays similarly are common and this continues to have an impact on shipments being delivered timeously. Cape Town and Coega port congestion and backlogs have reduced significantly over the past few weeks which is encouraging.

Some shipping lines have been forced to adjust their routings and sailing schedules because of the impacts of port congestion experienced across South Africa’s ports.  The most significant change communicated to the market relates to the direct Far East to Cape Town service operated by the Maersk/CMA-CGM/Cosco alliance. They have implemented a weekly transshipment routing via Port Louis which effectively increases the lead time to Cape Town from main ports China and a direct service is no longer available. Coega remains a sound alternative to Durban and Cape Town for shipments moving from the USA and EU region as Coega is the first port of call for majority of shipping lines operating on these trade routes.

Global schedule reliability remained at 64.4% according to the latest Sea-Intelligence report. The average delays for late vessel arrivals increased slightly to 4.90 days. 

See graphs below.

Fleet graph

Figure 1: Global Schedule Reliability

Fleet graph

Figure 2: Global Average Delays for Late Vessel Arrivals

Freight rates:

Rate levels have increased and mainly due to the port congestion surcharges implemented by various shipping lines over November and December. Additional freight increases are likely to be implemented on the Far East trade as we approach the pre-Chinese New Year shipping window. Thereafter we expect rates to soften towards the end of Q1. The European Union will be implementing an emission trading system fee (ETS) effective 1 January 2024. This fee will be levied against all containers being imported/exported to or from all European Union countries. The context for this fee is part of the EU’s sustainability drive to reduce greenhouse gas emission. The EU will enforce this non-negotiable fee to all carriers calling EU ports. The tariff will vary between carriers, but we can expect an average of around Euro 29-36 per TEU.

SCFI (Shanghai Container Freight Index):

The below graph demonstrates the freight rate movement per TEU ex-China to South Africa:

SCFI (Shanghai Container Freight Index)
Due to our long-standing strategic relationships throughout our global network, we continue to secure competitive pricing relative to market.

Air freight update

The market has been stable for majority of this year, but as predicted, demand on the South Africa trade increased over the past few weeks. Various sectors have been impacted by the delays caused by port congestion and therefore high volumes of cargo had to be airfreighted in desperation to meet critical deadlines. We expect the market to normalize again as port congestion starts to ease over the coming weeks.

Our airfreight network enables us to continue offering flexible solutions that meet our clients’ import requirements.

Transit times:

Total lead times increased with the increased demand and many airlines were fully booked in advance. Unfavorable weather conditions in parts of the world such as Germany impacted airline operations and flights were cancelled or shipments were diverted to alternative hubs.

We encourage you to provide your required arrival dates in advance for us to offer you optimal routings and rates to meet your requirements.

Freight rates:

Rate levels have increased, most notably on the Far East trade because of the increase in demand. Large volumes of cargo that should have moved as sea freight had to be moved via airfreight. Spot rates are expected to soften again once demand softens.

With our expanded network we are well positioned to offer a variety of options to meet our clients airfreight requirements.

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Delivery and storage requirements over the festive period:

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We have various options at our disposal for the festive period should you require assistance with storage and deliveries.Please discuss special delivery and/or storage requirements with your controller.

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