Dare to Improve Sea Freight - Week 38, 2024
Carlo D'Amico
Freight Operations Management | Logistics Management | Operational Excellence | Shipping | Transportation | Account Management | Customer Experience | #DareToImprove
Welcome to this week’s edition of Dare to Improve Sea Freight. I aim to keep you informed with updates, insights, and ideas for the logistics and shipping industries.
Table of Contents
Container Prices
Global Indices
The Freightos Baltic Global Container Index (FBX) dipped by 0.9%, dropping to 5,019 USD per 40ft container, down from 5,062 the previous week. Similarly, the Shanghai Containerized Freight Index (SCFI) fell by 5.8%, landing at 2,366 USD per 20ft container (or 40ft for the US), compared to 2,511 previously. The World Container Index (WCI) also saw a 4.8% decline, reaching 3,970 USD per 40ft container, down from 4,168.
* The unit of measure is USD/40ft, except for the SCFI index, which uses USD/20ft (USD/40ft for the US East and West coasts).
Far East to US West Coast
For shipments from the Far East to the US West Coast, the Freightos Baltic Index (FBX01) showed a slight 0.3% decrease to 6,819 USD per 40ft container, compared to 6,837 the previous week. The Xeneta index (XSICFEUW) recorded a sharper drop of 3%, falling to 6,137 USD per 40ft container from 6,325.
Far East to North Europe
On the Far East to Northern Europe route, the Freightos Baltic Index (FBX11) fell by 4.1%, dropping to 6,508 USD per 40ft container from 6,787, while the Xeneta index (XSICFENE) saw a significant 15% drop to 5,424 USD per 40ft container from 6,383.
Intra-Asia
The Intra-Asia Container Index (IACI) for the first half of September 2024 showed a steep decline of 25.28%, falling to 668 USD per 40ft container from 894 in the previous fortnight.
Market Update
Ocean Freight Rates
In the Trans-Pacific Eastbound market, floating rates have been extended through September with minor adjustments. A potential strike by the International Longshoremen’s Association (ILA) at U.S. East Coast and Gulf Coast ports in early October may prompt carriers to introduce surcharges, particularly in these regions. Fixed rates, including peak season surcharges, are expected to remain unchanged through Golden Week into October.
On the Far East Westbound route, rates are declining as demand softens. Carriers are proactively adjusting rates to optimise vessel utilisation in response to this weakening demand.
Demand, Volumes, Vessel Capacity, and Equipment Availability
Demand in the TPEB market remains steady, though some Beneficial Cargo Owners (BCOs) are shifting volumes to the U.S. West Coast as a contingency against potential East Coast and Gulf Coast port disruptions. This preemptive action is in response to the looming ILA strike. On the FEWB route, demand has softened, with a small volume increase expected at the end of September, though no significant space issues are anticipated.
Regarding equipment availability, the FEWB market is seeing gradual improvements, though some ports with fewer direct calls continue to face shortages of specific containers In the event of an ILA strike, equipment shortages could intensify at East Coast and Gulf Coast ports, particularly if disruptions are prolonged.
Schedule Reliability, Delays, Port Congestions, and Disruptions
If the ILA strike occurs, port operations on the U.S. East Coast and Gulf Coast could be severely disrupted, leading to surcharges, port congestion, and delays. U.S. Maritime Alliance (USMX) bylaws mandate that a limited strike could trigger lockouts across multiple ports, further compounding the disruption. Additionally, there is a risk that West Coast unions may engage in solidarity actions, which could cause further delays if shipments are rerouted to West Coast ports.
In Asia, Typhoon Bebinca has already caused significant delays, with ports in Shanghai and Ningbo temporarily closed earlier this week. Vessel delays, which were already between 24 and 60 hours, are expected to worsen as ports recover, putting additional pressure on global schedules and equipment availability.
Economic Indicators
Crude Oil: Brent
In week 38, Brent crude oil prices saw a rise of 3.7%, reaching 74.8 USD per barrel, up from 72.1 the previous week. However, when compared to the previous month’s value of 77.8, prices are still down by 3.8%. This follows a period of price volatility, including a sharp 7.8% drop in week 36 and a smaller decline of 0.8% in week 37.
Interest Rates
On September 18, the US Federal Reserve announced a cut in the interest rate, lowering it to 5.00%, down from 5.50%, and below the expected forecast of 5.25%.
Producer and Consumer Prices
In the Eurozone, the Consumer Price Index (CPI) for August 2024 came in at 2.2%, matching the forecast but showing a decrease from the previous month's value of 2.6%, reflecting a 0.4% drop.
Digitalisation
Every week, I provide AI-driven insights tailored for the sea freight industry, focusing on boosting profitability and client satisfaction—from improving customer service to automating documentation.
Let’s explore how this week’s prompt can help you achieve your strategic objectives and drive your business growth.
AI Prompt of the Week: Customer Onboarding Assistant
Purpose: To assist in onboarding new customers to shipping and logistics services by providing a structured process for introducing services, sharing tutorials, outlining support options, and celebrating milestones like completing their first shipment.
Prompt: "Act as my onboarding assistant to help me onboard a new customer to our shipping and logistics services. First, draft a welcome message introducing our key services. Then, guide me in sharing step-by-step tutorials for tasks such as scheduling shipments, tracking orders, and managing invoices. Guide how to inform the customer about support options like 24/7 service, dedicated account managers, or automated chatbots. Finally, help me plan milestone celebrations, particularly when the customer completes their first shipment."
How to Use:
Anonymise all personal, financial, or confidential company data before submission, including customer information, security credentials, legal details, or regulated data.
Start a Conversation on Growth
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Let's design a strategy that drives your business forward.
Meet in Person
Join me at my upcoming Shipping Committee event in Singapore on October 3rd:
References
Disclaimer
Freight Operations Management | Logistics Management | Operational Excellence | Shipping | Transportation | Account Management | Customer Experience | #DareToImprove
3moChart of the Week: interest rates comparison (China / US / Eurozone)