Peak Season 2024
Current Peak Season Climate
The current ocean freight landscape is being driven by substantial increases in rates, which are occurring alongside the early onset of Peak Season for 2024. Traditionally, Peak season spans from August to October, however a combination of challenging situations has brought forward this period with the ending unpredictable. According to Drewry Index, average ocean freight rates have increased by 201% from the year prior and USD 1273.00 higher than the 10-year average for ocean rates. This increase in rates is largely attributed to the supply and demand imbalances which have been heightened through geographical tensions across the middle East.
The current Average Global Container Index is USD 5,319.00 per 40HC container according to Drewry Index.
Ocean carriers have begun introducing Peak Season Surcharges (PSS) from early August as an offset to the increase in operational costs associated with the required adjustments to routings. This is all in an attempt to balance the supply issue and rates are expected to continue in an upwards trend through to the end of the year.
Geographical Tension and Instability
Geographical instability, notably the Red Sea Conflict, has disrupted shipping schedules and increased transit times by 30%. To avoid attack, vessels are now re-routing around the Cape of Good Hope instead of the traditional Suez Canal route.
This extended transit time has led to significant schedule disruptions, causing delays and container backlogs at transshipment ports as vessels arrive off schedule. Additionally, operational costs such as fuel and wages have risen by 40%. Shipping lines are likely to address these challenges through further rate increases and surcharges to compensate for the heightened risks and costs.
The ongoing geopolitical conflict continues to affect shipping rates and schedule stability and will do so until the tensions through the red sea are resolved. It is important to consider the ongoing affects to transit times when planning and be aware disruptions are being felt at all major ports through Europe, Mediterranean, USA and Asia.
Supply & Demand
The variations in market rates and scheduling instability can be traced back to the geographical challenges previously discussed, specifically with the supply and demand issues they create. As schedules continue to extend and container movements are delayed, equipment availability declines from the slowed container turnover rate. At the same time, improved supply chain planning by shippers and increased preparedness from lessons learned during COVID-19 have led to a surge in demand for space and equipment. This heightened demand is currently outstripping supply, and shipping lines are being forced to adapt causing rates to rise until balance is restored.
These key points are why the 2024 freight environment is proving to be as challenging as ever with global factors having flow on affects to all aspects of freight. Rates are expected to rise continuously through to the end of the year, when the traditional peak season does end. Positively, the sharp increase in rates is expected to stabilise and transition into a more gradual rise as we move into October.
It is important to remain informed, adaptable and prepare as well as possible. Raitt will continue to work on providing the best available rates and services to suit your supply chain needs. Updates on the ever-changing challenges facing supply chains through 2024 will be provided directly and through our website raitt.com.au.
