2-minute rundown on what’s happening with Asia-Pac freight this month

Global PMI loses steam in both manufacturing and services: The global PMI, a key indicator of economic health, continues to weaken, falling from 50.5 in September to 50 in October. This decline reflects a slowdown in both manufacturing and services activity. Manufacturing output has contracted for the fifth consecutive month, while the expansion in services has also slowed for five months in a row.

Inflation easing but growth outlook remains subdued: While inflation in both the US and Europe has eased up recently, the growth outlook for these two major economies remains subdued. The forecasts for US and China's GDPs have been revised down from 2.4% and 5.2%, respectively, for FY2023 to 1.4% and 4.7%, respectively, for FY2024.

Passenger Flights to Boost Belly Cargo Capacity Between China and US: Starting from November 9th, the resumption of passenger flights between China and the US will provide a significant increase in belly cargo capacity in the coming months. This is expected to ease the current capacity crunch and stabilize freight rates.

Volcanic Eruption and Snowstorm Disrupt Freighter Operations: The ongoing volcanic eruption in Anchorage, coupled with heavy snowstorms, has forced airlines to cancel freighter flights between Asia and the US, exacerbating the capacity shortage. This has led to tighter space availability and higher freight rates out of Asia.

Intra-Asia Air Capacity Tightens Amid Long-Haul Cargo Shift: As more airplanes are being diverted to carry long-haul cargoes, Intra-Asia air capacity is starting to tighten. This has resulted in reduced space allocation for Intra-Asia shipments, despite overall demand remaining relatively flat compared to last year.

China's manufacturing PMI slips back into contraction territory: After a brief rebound from 49.7 in August to 50.2 in September, China's manufacturing PMI contracted to 49.5 in October, falling even lower than the August reading. This decline may explain the short-lived nature of the GRIs implemented by carriers in November for TPEB and NCWB.

Sharp decline in rates prompts renewed GRI announcements: Rates for TPEB and NCWB have plunged by more than 23% and 40%, respectively, from their early November highs to their current lows. To prevent further deterioration, some carriers have announced plans to impose GRIs again starting December 1st. The exact amounts of the GRIs are yet to be determined.

The impact of Protected Industrial Action at DP World Terminals intensifies: The ongoing industrial action initiated by the labour union at DP World Terminals in Brisbane, Sydney, Melbourne, and Fremantle is escalating. The current two-hour work stoppages three times a day will be extended to 24-hour stoppages on November 24th, 27th, and December 2nd, respectively. The combined impact of the peak season and industrial actions has significantly driven up southbound (SB) rate hikes for Brisbane, Melbourne, and Sydney. Since August, all carriers have successfully implemented GRIs (General Rate Increases) on a bi-weekly basis.