Any hope that the rand would continue to gain against the US dollar has been short-lived. The rand has broken through the R19 to a US dollar barrier once again and along with the likelihood of further fuel price increases, we can expect landed costs to rise as well. Volatility across markets and currencies continues, but this is the world we have almost become accustomed to now. It’s amazing how South African businesses find solutions to deal with uncertain times, which is a true testament to just how resilient we are.
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:
- Sea freight increases
- Sailing delays
- Berthing delays
- Increasing fuel prices
- Volatile rand
Sea freight update
Demand for sea freight has started to increase, but not to the same levels that we would normally be accustomed to for this time of the year. Export volumes from China remain sluggish and South African consumers have been impacted by higher interest rates. The recent depreciation of the rand also creates further headaches for importers, even to the point where it’s not feasible to import certain product lines.
Inbound capacity on the Far East trade was impacted slightly because of blank sailings at the end of July and early August. This did impact capacity availability and some carriers had a temporary backlog of bookings that had to be deferred to later sailings. We anticipate demand to pick up over the next few weeks as we approach the pre-Chinese Golden Week shipping period.
With our expanded global network, we have access to additional capacity and alternative routings, which strengthens our service offering to our clients.
There have been numerous vessel sailing and port berthing delays over the past few weeks. These delays have been caused by a combination of severe weather conditions and operational challenges within our ports. Shipping lines have been forced into omitting ports or discharging cargo at alternative ports to restore their schedule reliability.
Global schedule reliability showed a decline for the first time in 2023. Reliability dropped by 2.5% month-on-month to 64.3%, according to the latest Sea Intelligence report. If this trend continues, then we can expect capacity pressure to build up in the coming weeks and more port omissions.
See graphs below.
Figure 1: Global Schedule Reliability
Figure 2: Global Average Delays for Late Vessel Arrivals
Freight rates increased slightly on the Far East trade compared to the July rates. We expect carriers to continue testing the market with additional increases over the coming weeks. Rising fuel prices will also add to freight rate increases. Some carriers will also push to implement peak season surcharges on the Far East trade as we approach the traditional peak shipping period before and after the Chinese Golden Week.
Rates have remained relatively stable across the rest of the trade routes over the past few weeks. We expect demand to increase in Europe post their summer holidays.
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
The airfreight market has remained stable and essentially returned to a normalized state. The only major disruption in recent weeks has been the closure of the Niger airspace forcing airlines to fly through alternative routes, adding to the transit time and the use of additional jet fuel. Some services to and from Cape Town were also impacted by the recent taxi strike.
There is currently a sound balance between capacity availability and demand. Demand is expected to increase as we approach the Chinese Golden Week.
Our airfreight network enables us to continue offering flexible solutions that meet our clients’ import requirements.
Service levels are being maintained and shipments for the most part are moving on time.
We encourage you to provide your required arrival dates in advance for us to offer you optimal routings and rates to meet your requirements.
Some carriers have been offering more aggressive spot rates, which has been most welcome. Jet fuel prices are expected to increase, which will put upward pressure on market rates going into the fourth quarter of the year.
With our expanded network we are well-positioned to offer a variety of options to meet our clients' airfreight requirements.
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