Weekly Roundup – June 6, 2024

Welcome back to the weekly roundup, where we provide concise summaries of the most important supply chain and logistics stories of the week. Covering breaking news, emerging threats, and changing market dynamics, it contains all the news you need to maintain a competitive advantage.

Maersk Lifts Guidance Again on Surging Freight Rates

A.P. Møller-Mærsk has raised its full-year guidance again, driven by strong shipping demand and disruptions in the Red Sea. The Danish shipping company expects freight rates to rise due to robust container market demand and ongoing issues in the Red Sea, enhancing its financial performance in the latter half of the year. This is the second revision in a month, with the company now projecting an Ebitda of $7 billion to $9 billion, up from $4 billion to $6 billion.

Attacks by Houthi rebels in the Red Sea have forced ships to reroute, extending travel distances and limiting capacity. Additionally, Mærsk now forecasts free cash flow of at least $1 billion, reversing a previous outlook of at least negative $2 billion, amid volatile trading conditions.

Port of NY/NJ hits record: 700K+ TEUs in April, 9.4% growth

In April, the Port of New York and New Jersey handled 709,469 TEUs, a 9.4% increase from last year. From January to April, the port processed 2,710,918 TEUs. Imports in April reached 349,792 TEUs, up 9% from April 2023, with year-to-date imports up 13%. Exports in April rose by 10.5%, totaling 121,847 TEUs, while year-to-date exports increased by 1.6%. Empty export containers in April grew by 9.6%, with a 13.4% year-to-date increase. Rail volume in April rose by 3.8%, and year-to-date rail volume increased by 6.8%. Auto movement in April surged by 23.4%, with a 12.3% year-to-date increase.

Ocean rates skyrocket, reflecting cautionary market

Shippers may face elevated rates and delays ahead of peak season due to higher demand and restricted capacity, Freightos reports. China to U.S. West Coast rates have risen to $4,312 per FEU, compared to $2,713 in January. Cargo is being moved to the West Coast ahead of labor negotiations at East and Gulf Coast ports. Red Sea disruptions and Asian port congestion, especially in Southeast Asia, Shanghai, and Qingdao, are further pressuring rates. U.S. ports are expected to handle over 2 million TEUs by October 2024.

While current disruptions are reminiscent of the pandemic, they may be less severe due to strategic improvements at ports. The year has shifted from anticipated stability to uncertainty and disruption.

More modal shift predicted as rising spot rates squeeze markets

Air and ocean capacity from Asia to major markets will remain tight, increasing rates due to high demand, according to Dimerco’s May Asia Pacific Freight report. Spot pricing is rising, and some traffic is shifting from ocean to airfreight. Global manufacturing PMI indicated moderate economic growth, boosting exports from Asia.

Disruptions such as potential work stoppages, new tariffs, and regulations are also driving shipping volumes. Significant capacity reductions in seafreight and increased demand for airfreight, especially for less-than-containerload shipments, are expected. Rates will rise across the board, with tight capacity and backlogs predicted for both air and seafreight routes to the US and Europe.

Canada border disruption? What shippers should know about possible strike

Canada’s border agents union announced a potential strike starting Friday at 4 p.m. EST if no new labor deal is reached this week. Operating without a contract for over two years, the union’s 9,500 members have authorized a strike, although essential workers mean the border will not close. Shippers could face lengthy delays, especially for truck freight, with potential wait times of four to five hours, impacting supply chains reliant on just-in-time deliveries.

Experts advise shippers to prepare by oversupplying, considering alternative shipping routes, using air freight for urgent cargo, and avoiding peak travel times. A prolonged strike could create backlogs affecting all transport modes.

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