26 June 2024Article
Freight Rates Rise as Disruption on Asia-Europe Movements Continues

Supply chain disruptions, including port congestion in Asia and rising container freight rates due to the Red Sea crisis, will continue into Q3 2024, affecting Asia-Mediterranean trade lanes.

Container freight rates have been on the rise since late 2023, when Houthi attacks in the Red Sea prompted carriers to divert ships around the longer Cape of Good Hope route between Asia and Europe, soaking up capacity with longer voyage distances and transit times. The market situation is precarious with several factors contributing to the continued disruption and rising freight costs.

It is expected that freight rates from China will continue to rise as we move into Q3 due to congestion issues at ports in Asia. Disruption has been seen at both ends of Asia-Europe trade lanes as longer transit times for diverted vessels have caused congestion and further delays with Europe's ports struggling to process a spike in throughput. Those delays have caused a ripple effect along the routes more notably in Singapore where currently severe delays are being experienced.

In addition to the above-mentioned, blank sailing programs by carriers along with container equipment issues have exacerbated the problem, coupled with a strong growth in demand with customers ordering goods earlier than usual and in some instances in larger quantities to secure inventory.

There is currently not enough capacity on the seas to compensate for the longer transit time via Africa and with little sign of this changing anytime soon, Q3 will see continued disruption and a need for revised supply chain management strategies. Learn more about our ocean freight services and how we can help to minimise supply chain disruptions.

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