The China–Australia freight market continues to tighten, with freight rates increasing well beyond expectations and now sitting above the highest peak levels experienced throughout last year.
Effective from 1 July, carriers have successfully implemented a General Rate Increase (GRI) of USD500 per TEU, with further fortnightly increases expected for the foreseeable future. In addition, the market is indicating that port congestion surcharges of between USD500 and USD1,000 per container may soon be introduced, placing further upward pressure on landed costs.
Capacity Remains the Key Driver
The primary factor behind the escalating rates is the ongoing shortage of vessel capacity.
The withdrawal of Sealead from the CA2 service has significantly reduced available space, making it impossible to maintain weekly sailings on several services. Although some improvement in capacity is anticipated later in July, the backlog of cargo created by weeks of constrained capacity will take time to clear.
Further compounding the issue, YML, PIL and TSL services continue to operate on a fortnightly rotation rather than weekly. Unless these carriers redeploy additional vessels back into the Australia trade, we do not expect any meaningful easing in market conditions during Q3.
The announced resumption of the COSCO/OOCL/ANL A3X service at the end of July is positive news and will provide some additional capacity into Sydney and Melbourne. However, it is unlikely to be sufficient to rebalance the market in the short term.
Strong Demand Continues
Demand remains exceptionally strong across multiple sectors, driven by:
- Importers increasing safety stock due to ongoing geopolitical uncertainty in the Middle East.
- Continued demand for construction materials supporting Brisbane Olympic infrastructure projects.
- Growing imports of new energy vehicles.
- Healthy retail and manufacturing replenishment activity.
As a result, vessel space remains extremely tight and cargo rolling continues across most services.
Securing Space is Now More Important Than Securing the Lowest Rate
While freight rates will always be an important consideration, the current market has shifted significantly.
Today, a competitive freight rate has little value if it cannot be secured on a vessel.
Our focus remains on securing confirmed bookings with reliable carriers, minimising shipment delays and ensuring continuity of your supply chain. We recommend placing bookings as early as possible, as space availability has become the most valuable commodity in the market.
Our Outlook
Only a few weeks ago many in the industry expected rates to soften. Instead, they have continued to climb and are now approaching levels not seen since the COVID shipping disruption.
While predicting freight movements has become increasingly difficult in the post-COVID environment, our current expectation is that rates will remain elevated throughout the coming months unless meaningful additional vessel capacity is introduced into the Australia trade.
Our team continues to monitor the market daily and remains committed to providing the most reliable service, proactive communication and the strongest carrier relationships available.
If you have upcoming shipments from China, we strongly encourage discussing your forward shipping schedule with our team as early as possible to maximise the opportunity of securing vessel space.
Thank you for your continued support. As always, we appreciate the opportunity to support your international supply chain.