The global container market is showing signs of stabilization as supply chain bottlenecks ease, driven by plateauing demand, increasing capacity, and reduced congestion. Freight rates have mirrored these changes, with carriers struggling to implement the rate increases planned for July. Despite this, there are indicators of potential rate adjustments in the near future.
According to Dimerco, a leading freight forwarder, the Purchase Managers’ Index (PMI) held steady at 50.9, signaling growth as any value over 50 points indicates expansion. However, S&P Global Market Intelligence noted that while June’s output slowed, it was still the second strongest month in the past year. Despite this, the Global PMI Composite Output Index fell from 53.7 in May to 52.9 in June.
Alvin Fuh, Vice President of Ocean Freight at Dimerco Express Group, emphasized that recent freight rate increases were influenced more by diversions in the Red Sea than by actual demand. He pointed out that Beneficial Cargo Owners (BCOs) and Non-Vessel Operating Common Carriers (NVOCCs) might have to wait up to two months or longer to see lower rates, as carriers need time to adjust schedules and redeploy vessels.
Hind Chitty, Principal Consultant at Drewry Shipping Consultants, noted that the decline in freight rates might be attributed to increased capacity on transpacific and Asia-Europe routes. This capacity expansion, driven by a surge in demand and spot rates over the last two months, suggests that peak rate pressures are easing. Chitty highlighted an expected 5% increase in deployed capacity by August, largely due to a 35% reduction in blank sailings—from 70 to 52.
Freight Rates and Capacity Adjustments Signal Stabilizing Container Market
Eleanor Hadland, Senior Ports and Terminals Analyst at Drewry, noted the strong relationship between hub port congestion and blank sailings. She explained that the reduction in blank sailings would alleviate pressure on terminal operations. Hadland described the recent congestion as fundamentally different from the COVID-19-related congestion of 2021/22, with transshipment ports being most affected. She cited Kaohsiung as an example, where carriers increased transshipment activities due to congestion in Southeast Asian ports.
Drewry’s reports indicate that most Asian container terminals are now free from congestion, with only Los Angeles and Long Beach in the U.S. still experiencing some delays. In contrast, major North European ports continue to face congestion issues. Singapore has emerged as a key port in alleviating congestion, with waiting times for berthing reduced from five days to two. Dimerco highlighted that if this trend continues through August, it could lead to fewer vessels omitting the port and more sailings from Singapore, potentially stabilizing or slightly reducing freight rates for the month.
Despite these improvements, Dimerco advises shippers to plan their import and export shipments in advance to avoid potential delays. The overall reduction in congestion and the strategic adjustments by carriers indicate a returning balance in the container market, suggesting a more stable environment for global shipping in the coming months.
This evolving situation reflects a broader trend toward market equilibrium, with strategic capacity adjustments and improved port operations playing critical roles. As the market continues to adapt, stakeholders remain vigilant, monitoring demand fluctuations and operational efficiencies to sustain this balance.
