General Market Update

Global consumer demand including New Zealand remains strong, very strong in fact. Consequently, we are already seeing booking numbers increase as we start to enter traditional busy season. Continued demand for space is not allowing reprieve or relief for back logs of cargo in transit to be cleared.

In regard consumer demand of note is the US domestic market – absolutely booming since the arrival of COVID. I noted recently that the West Coast ports (Seattle, Long Beach, San Francisco) have seen an increase of container thru put of 41.8%.

The imbalance of supply and demand since the pandemic has been exacerbated by continued high consumer demand, an unprecedented number of companies building safety stock and transport delays.

In some instances, ship lines are resorting to closing their systems and ceasing to accept bookings on various trade lanes for undisclosed periods of time. If there is a declared time it is usually extended. This week for example in the Mediterranean MSC, Hamburg Sud and Cosco all stopped taking bookings. No pre-advice was given. These type decisions are not helpful in particular with no notice period.

Please take note – Ocean Freight costs are only going to increase. On some trade lanes (South Bound Asia to N.Z and Australia) we are seeing fortnightly increases in some instances. This phenomenon is making it very difficult to accurately quote as by the time the quote is presented, cargo becomes available, and space secured on a ship the quoted ocean freight price has expired.

Oceanfreight has increased significantly – in some instances by over 300%. In particular the big trade lanes Asia into Europe, Asia into USA where the rates are getting up to USD 20,000 per 40’ container! This is important to note because this will have direct impact on NZ and Australia rates. If NZ rates do not increase, ship lines will simply not serve our waters. I believe it inevitable our rates will rise further – not as high as Europe / USA markets but I think USD 10,000 is a figure to expect.  

In regard Global factory production statistics, we are seeing significant capacity issues – factories around the world are at full capacity, manufacturing back logs are at record levels, consequently, lead times are getting longer and longer. Supply delays are most common in the USA and Eurozone. It is very important that when planning procurement orders that where possible you factor extended time from production to delivery.  We encourage you to reassess historical ordering patterns and lead times – the market is very different modern day. In may instances it may take anywhere from 1 week to 4 weeks from cargo ready date to on-water date – USA possibly longer.                 

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