Why Are Asia Rates So High When The Suez Cleared Weeks Ago?

The delays at the Suez Canal last month have effectively sent the Asia ocean freight market into crisis, impacting equipment availability, space and notably driving rates up once more.

We are frequently asked why the Suez blockage continues to impact the market, when it was cleared over four weeks ago. Therefore, we hope this article will provide a greater understanding.   

Both the Asia/Europe and Transpacific markets have been struggling to cope with demand ever since the outbreak of Covid, when China first went into shut down after last Chinese New Year.

The issues of space and equipment had already been hindering supply chains, and while there had been slight respite, the Suez delays have effectively been the straw that broke the camel’s back - at least temporarily. 

 

VESSEL ROTATIONS:

For the week the Suez was closed, many vessels were delayed. In fact, this probably equated to around half of the vessels on each service/loop being affected, including:

  • Vessels on their way to Europe from Asia
  • Vessels on their way back to Asia after discharging in Europe.
  • Vessels that were stopped from leaving Asia as a congestion precaution during the blockage.
  • Vessels that were rerouted around Africa to avoid the blockage. 

With so many vessels out of position, gaps in schedules (or blanked sailings) have started to appear, meaning less booking availability and amended port rotations.

 

PORT CONGESTION:

It is no secret that ports in the UK and Europe have been struggling with congestion during the pandemic. Asian ports have also struggled, while ports and terminals on the US West Coast have been in crisis for months, which has now spread to be a US-wide situation. When ports are running slowly, vessels take longer to get back to Asia, as do empty containers.

When the Suez blockage cleared, vessels held up during the process headed for Europe and Asia, meaning that an armada of vessels arrived at already congested ports at the same time. This added to the congestion issues and delayed vessels and containers further.

  

CONTAINER EQUIPMENT:

The biggest issue now impacting the market. Container equipment shortages had been commonplace in Asia for some time before Suez, the ongoing high demand and worldwide port congestion had already made sure of that. However, Suez impacted this further, as literally hundreds of thousands of containers were delayed on ships that will arrive back in Asia 2-3 weeks late.

  • Containers enroute to UK and Europe, held up by Suez blockage and delayed further by port congestion. 
  • Containers enroute to Asia, held up by Suez Blockage.  
  • Containers that had to be offloaded at other ports along the way and delayed further.
  • During the blockage many containers were used for other trades when vessels were put on hold awaiting the outcome.

This has all contributed to the fact that empty containers are not readily available in China and other parts of Asia, and it’s going to take a few more weeks for them to work their way back.

Generally speaking, container restitution is a complicated process and in normal conditions a container will be full of freight that pays for the load for each journey it makes. At the moment there are masses of 'empty' containers travelling back to Asia to help resolve the shortage, but this will take time.

We also understand that carriers will be introducing 180,000 brand new containers to the market in the next few weeks.

 

But right now, every container that becomes available is being fought over, every booking slot on a vessel could be filled many times over, and with such limited availability - demand is forcing the prices upwards.  We expect prices to be extremely high during May and hope and expect them to ease again by June/July.

 

At Westbound Logistics we pride ourselves in offering personalised and tailored logistics solutions. To find out more please call 01375 800800 oemail info@westboundglobal.com.