Suez Canal Blockage
To understand the current situation, it is important to reflect on events from earlier this year. The disruption caused by the Suez Canal blockage began to take effect at the start of the year. Container ships were forced to take a lengthy detour from China and the Far East on their way to Europe, adding approximately 10 to 14 days to their transit time. In addition, this detour resulted in significantly higher costs, with ships burning through hundreds of thousands of additional dollars.
Freight Ship Capacity Problem
What is often overlooked is that the number of ships required to complete a round trip to Europe and back increased by around 30%. This shift led the market to move from a surplus of ship capacity to a severe shortage. At one point in early summer, nearly every suitable container ship available for hire worldwide was chartered for services to and from Europe, China, and the Far East.
Herd Mentality
Over time, it became clear that the rate spike caused by the Suez Canal blockage triggered a panic among European importers, many of whom brought forward their purchasing plans by several weeks. This “herd mentality” may have been influenced by memories of rising freight prices in 2021.
Autumn 2024 Situation
Fast forward to autumn 2024, and we now see ocean freight rates from China stabilising. The surge in bookings that passed through the system over the summer has eased, and container shipping lines have optimised their schedules, having adapted to the Cape of Good Hope route.
This is good news for those purchasing full container loads from China. Compared to the recent peak, freight rates are now approximately half of their highest level. The same applies to part container loads (LCL), where prices have also halved.
If you suspect you’re not receiving the current reductions in freight prices from China or anywhere else in the Far East, now is the perfect time to contact the team at K&L Freight. They can provide you with access to the latest market rates.
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