June 2024 Market Update
The FMCG industry is currently navigating significant challenges in the shipping and supply chain sectors, exacerbated by recent developments in container shipping rates, airfreight demand, and global port congestion. Here’s a detailed market update to keep you informed.
Container Shipping and Supply Chain:
Container shipping lines have announced substantial rate hikes on all ex-Asia trade lanes. This is driven by sustained demand and increasing equipment challenges across multiple origins. Carriers are implementing spot rate increases, GRIs, and surcharges, with the trend expected to continue into the summer.
As of May 15th, carriers have implemented a general rate increase that has doubled average spot rates month-over-month from Asia to the US West Coast. With space being extremely tight and containers being rolled, these rate increases are likely to persist.
The Port of Singapore is experiencing severe congestion, with berthing delays of up to seven days and a backlog of nearly 450,000 TEUs. This congestion has forced carriers to skip less busy ports and reroute to Singapore, further straining its capacity.
Airfreight Market:
Massive increases in airfreight demand ex-China have prompted airlines to withdraw long-term schedule rates in favour of shorter-term rates for shipments from Asia to Europe and America. This shift reflects the volatility and high demand in the market.
Airfreight rates and volumes are rising, driven by strong demand from Asia to North America and Europe. This trend is expected to continue as high ocean rates and longer transit times push more ocean volumes to airfreight.
Global Supply Chain Situation:
The current global supply chain challenges are comparable to those experienced during the COVID-19 pandemic, necessitating proactive measures to mitigate impacts.
The conflict in the Red Sea region has disrupted global shipping routes, causing detours and increasing demand for ports in the western Mediterranean. This has further strained supply chains and contributed to port congestion.
Packaging and Industry News:
The severe congestion at major ports is affecting the availability of shipping containers and increasing transit times. This is likely to have downstream effects on packaging availability and costs, as well as overall product delivery timelines.
The US has announced tariff increases on Chinese EVs, batteries, and chips starting August 1, 2024, which could have ripple effects across the supply chain and impact related FMCG sectors.
As we navigate these complex and evolving challenges, staying informed and agile will be crucial for overcoming disruptions and maintaining supply chain resilience. For help managing and protecting your packaging supply chain, please get in touch.
