Market Update Q2 2024: No.6
Greetings All,
More of the same with the main events being even more service disruption from more ports and large increases for July. The only question on anyone's mind seems to be "when will this end?"
The main two market theories are as follows, bulls and bears basically and lines up with economic market perspectives:
- This is a demand bubble created by frontloading shipments to beat the August 1 tariff and potential service disruptions/issues in the Fall. The consumer is not as strong as forecasted and we are heading into a deflationary period that will start Q3-Q4 and whose end is a mystery.
- The consumer is robust, and spending will continue - the demand is real and will last through the traditional peak season of September/October.
No doubt the Red Sea service adjustments are a large part of the equation and many of the equipment shortages and excessive/inconsistent transit times can be linked directly back to it.
Carriers have also maintained a fairly robust blank sailing schedule that varies by week and coast but is usually 15-25% - week 25 for example on East Asia-USA only is 21% cut to WC and 28% cut to EC (see attached for details).
I have attached some GRI announcements and a table summary below (not all but most so far) so you can get an idea of what's coming.
CMA is targeting a rate for July 1 at $8100/40' to USWC and $9200/40' to USEC.
Additionally, service from India to the East Coast and inland destinations are set to become the next challenge. What was the one part of the supply chain with any kind of consistency is facing imminent disruption which means less service and much higher pricing moving forward. Hopefully, the India to WC route gets back on track a little bit after so many blank sailings in June.
Author
Matthew Crocker / CCO