South Africa’s consumer confidence slump, sticky inflation, political instability, and fears of a recession are all negative factors that impact businesses and trade. South Africa is one of many countries facing such challenges and it’s during these times that one needs to find the strength to continue seeking opportunities, adapt and work closely with trusted partners to come out stronger.
We will continue to work 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:
- Softer freight rates
- Improved schedule reliability
- Berthing delays
- Reduced airfreight rates
- Chinese Golden Week planning
Sea freight update
The current demand for sea freight reflects the global economy and factory activity in China declined for a third straight month. Shipping lines are hoping for demand to start picking up as we approach the traditional peak shipping period, but for now the outlook remains gloomy. Demand for capacity is likely to pick up throughout quarter three (Q3), but we don’t anticipate a very strong peak season.
Capacity:
There has been sufficient capacity available in the market even with the blank sailings that have been scheduled. This is because global demand is weak, limited disruptions to sailing schedules and congestion, and new build capacity continues to enter the market. Demand for capacity will pick up as we approach the pre-Chinese Golden Week and Black Friday shipping period.
With our expanded global network, we have access to additional capacity and alternative routings which strengthens our service offering to our clients.
Sailing schedules:
Global schedule reliability continues to improve month-on-month, but closer to home we have experienced some berthing delays and routing changes. The severe weather conditions have largely been responsible for the berthing delays. Cape Town imports have been impacted the most. These delays have forced shipping lines to omit certain ports on their voyages to make up for the berthing delays experienced.
According to the latest Sea Iintelligence schedule reliability report, global schedule reliability improved by 2.7% to 66.8%, but average delays for late vessels increased slightly to 4.39 days.
See graphs below.
Figure 1: Global Schedule Reliability
Figure 2: Global Average Delays for Late Vessel Arrivals
Freight rates:
Freight rates have either remained stable or declined slightly from June. This is because of the subdued demand and available capacity across most trades. CMA-CGM have given the notice to implement a port congestion surcharge (PCS) for Cape Town imports from the Far East. Time will tell if other shipping lines follow suit.
SCFI (Shanghai Container Freight Index):
The below graph demonstrates the freight rate movement per TEU ex-China to South Africa:
Due to our long-standing strategic relationships throughout our global network, we continue to secure competitive pricing relative to market.
Air freight update
Volumes remain low and with many businesses still sitting with high inventory levels, demand remains relatively weak. There has been a month-on-month increase and we anticipate this trend to continue for the coming months.
Capacity:
There is sufficient capacity in the market to meet current demand and no significant backlogs have been reported. We expect some carriers to increase flight frequencies with increase in demand for passenger travel. This will add additional belly capacity to the market.
Our airfreight network enables us to continue offering flexible solutions that meet our clients’ import requirements.
Transit times:
Service levels are being maintained and shipments for the most part are moving timeously.
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:
Rates have either remained stable with spot rates declining on some trade routes. Jet fuel prices could be increasing towards the latter part of 2023 as OPEC+ has decided to cut liquid fuel production. For now, the carriers are offering competitive rates to attract additional volumes.
With our expanded network we are well-positioned to offer a variety of options to meet our clients' airfreight requirements.
Chinese Golden Week
The Chinese Golden Week takes place from Sunday 1 – Saturday 7 October 2023. We anticipate demand for capacity to increase in the weeks leading up to the Golden Week. Carriers are likely to implement blank sailings in the first one to two weeks post-Golden Week which will reduce capacity on this trade for the month of October. Bookings need to be made in advance to ensure orders ship on time.
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