How's the Freight Market in Oct - Nov 2023?

Extended Golden Week and Black Friday inventory build-up are causing tighter shipping capacity and higher rates from China to the U.S., affecting transit hubs like Taipei, Hong Kong, and Incheon.

Intra-Asian routes are generally stable, except for congestion in Taipei, Hong Kong, Incheon, and China due to high long-haul cargo volumes from China.

eCommerce drove most of China's air freight volume in 2023. Normalcy is expected to return after Black Friday, unless there are unforeseen events.

Ongoing conflicts like Israel-Palestine and Russia-Ukraine have led to longer flight routes between Asia and Europe to avoid turbulent airspace, increasing operational costs that could impact fuel surcharges and airfare rates soon.

China's manufacturing PMI rebounded to 50.2 in September after the Golden Week holidays, prompting ocean carriers to plan a general rate increase (GRI) on November 1st for most trade lanes.

Ocean carriers will continue blank sailings due to reduced demand; 35% of capacity was removed during Golden Week, with a 34% cut in transpacific eastbound and a 40% reduction in Europe westbound capacity.

Carriers will raise FAK floating rates in November to support service contract renewals with major BCOs, justifying a GRI of USD 400-500 per FEU for the Pacific Southwest, Pacific Northwest, and U.S. East Coast, and USD 500/20' and USD 1,000/40' for Europe westbound. Intra-Asia (I/A) GRI prospects are weaker due to lower demand.

Europe's decision not to extend Consortia Block Exemption Regulations (CBER) has mixed industry impact. Some assess the effect on ocean carriers' competition exemption, while others predict no operational impact on major alliances (2M, Ocean Alliance, THE Alliance). The CBER's abolition is expected to have little industry impact due to the limited number of benefiting shipping agreements.