Dear Customer,
We would like to provide an update on the current Full Container Load (FCL) ocean freight market from China to Australia, which continues to experience significant rate increases despite traditionally being a softer period of the year.
While these market conditions are unusual for this time of year, several factors are contributing to ongoing capacity constraints and upward pressure on pricing, and we expect these conditions to continue through the coming months.
Key Market Drivers
Strong Export Demand from China
A substantial increase in exports of solar and new energy products has resulted in shipping capacity being heavily utilised across all major trade lanes departing China, including Australia-bound services. As a result, vessel space is increasingly difficult to secure and carriers have very limited ability to offer fixed or long-term rate agreements to new customers.
Rising Bunker Surcharges
Ongoing geopolitical instability and conflict-related disruptions continue to impact global shipping networks. Carriers are facing increased operating costs, with bunker surcharges being adjusted upward on a monthly basis by many shipping lines.
Capacity Reductions into Australia
Further tightening of capacity is expected due to changes in carrier service allocations across the China–Australia trade.
The CA2 service operated by PIL, TSL and YML has withdrawn vessels during June to support stronger demand in the Red Sea and Middle East markets. As a result, only one sailing to Australia is scheduled on this service for June, creating a shortfall of more than 13,500 TEU of available capacity from China to the East Coast of Australia for the month.
To partially offset tightening conditions, Maersk (MSK) and COSCO are introducing new East Coast Australia services from late July. Maersk’s new Qiling service will provide approximately 2,000 TEU per vessel, while the COSCO / OOCL / ANL service will contribute around 3,500 TEU per sailing.
While these additional services will provide some relief, they are not expected to fully compensate for the current and near-term capacity shortfall.
Outlook
If the CA2 service providers are unable to redeploy vessels back into the Australia trade by August, further rate increases are likely, even with the introduction of the new Maersk and COSCO services.
Given the current market environment, we recommend customers:
- Forecast shipments as far in advance as possible.
- Place bookings earlier than normal to secure vessel space.
- Allow flexibility in sailing schedules where possible.
- Engage with our team early regarding upcoming shipments and budget forecasts.
We will continue to monitor market developments closely and provide updates as conditions evolve.
For further information regarding your specific shipping requirements, please contact your SCC representative.
Regards,
Greg McKillop