freight-forwarding-australiaChinese New Year 2017 is coming to a close and the international freight forwarding market is again in flux. For imports, blank sailings have been announced as the demand for sea freight space declines, and for exports, a lack of 20’ food quality (FQ) containers is frustrating exporters.  Read on to quickly learn about the international sea freight import market and export equipment.

North East Asia to Australia

A slight peak was experienced in the weeks leading up to Chinese New Year. Sea freight space for international freight forwarders and shippers was very challenging with shipping lines anticipating that cargo would be rolled. This is usual and expected at this time of year as shipping lines intentionally create roll pools to fill the void leaving cargo to roll onto their subsequent sailings. This ensures that their vessels sail from origin at maximum capacity.

Despite carriers boasting over 100% utilisation, rates effective 1 February have started to decline. This predictable slide in international freight forwarding rates marks the start of the “slack season”.  The anticipated softening of rates became evident with the 1 January GRI.  Less than 50% of this GRI was implemented and this only lasted for one week. Since that time, this increase has been fully mitigated.

Blank sailings are now having adverse effects on the international freight forwarding market to Australia as Chinese factories return to work and try to clear the orders that were delayed prior to Chinese New Year. Suppliers will be pushing for first available sailings for fear of getting caught up in the delays and face disappointing consignees as shipping lines cut back supply to stabilise the declining rates.

4 blank sailings have been announced which equate to approximately a 40% capacity reduction of sea freight space.

  • 2 on the A3S service in early and mid-February
  • 2 on the CAT / North East Asia X services

The above sea freight capacity cuts were made to show confidence to the international freight forwarding market and shippers, and to try to continue raising rates. Based on this confidence, we have been advised of an additional GRI effective 1 March.

It is clear shipping lines will be taking stronger measures to try and keep rate levels up via their capacity controlled blank sailing programs. However, with sluggish demand predicted, we do not believe this will be enough to keep rates moving upward. The overcapacity in the trade still exists and shipping lines will continue to bleed if rates are not restored to sustainable levels, especially since bunker prices are now increasing.

We can expect continued consolidation and mergers to be the main focus as the larger shipping lines get bigger and the smaller shipping lines fight for survival.

Exports

Shipping lines are facing a huge deficit of 20’ food grade quality (FQ) containers due to a lack of 20’ sea freight container imports into Australia. This shortage has been exacerbated by Chinese New Year blank sailing programs and a record high grain season.

This is an issue for international freight forwarding companies and shippers. This shortage is Australia wide, however, the main ports affected are Melbourne and Brisbane. One shipping line recently advised they had no choice but to cancel 100 x 20’ FQ containers for a VIP customer after conceding that they could not offer the equipment to fulfill the order. Other shipping lines have reported they too have disappointed export shippers of the same magnitude.

This shortage is forecast till at least the end of April. If you will be exporting, please speak with your BCR Customer Service Team member with a minimum of 3 weeks advance notice so we can source equipment.

The best way to keep your supply chain moving and avoid disappointments based on blank sailings and a shortage of sea freight equipment is to be in regular communication with BCR or your freight forwarding provider. If you would like more specific information relating to your supply chain contact BCR today to speak with one of our helpful team members.

For more than a century, 3PL and Freight forwarding service provider, BCR has continued to help small, medium and large businesses achieve an optimum logistics solution with warehousing and transportation, including air freight and sea freight services to and from the major ports including BrisbaneSydneyMelbourne, Adelaide and Fremantle (Perth).

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