Extreme Weather and Labor Unrest Put Logistics Firms to the Test, Making October a New Challenge
Global Turmoil and E-commerce Drive September Air Cargo Volumes Up
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Niall van de Wouw of Xeneta stated that extreme weather conditions and labor disputes are posing challenges to shippers and freight forwarders, making October a “whole new test.”
Published on October 16, 2024
### Brief Report:
* According to Xeneta’s report on October 2nd, air cargo demand in September grew by 9% year-over-year, driven by shifts in container shipping patterns, typhoons, ongoing e-commerce demands, and a pre-China National Day Golden Week freight surge.
* However, October may be “a whole new test,” with supply chains expected to take four to six weeks to recover from a short three-day strike at U.S. ports, which will carry into November—the busiest month for air cargo volumes, according to Niall van de Wouw of the air freight sector.
* In October, freight rates on certain trade lanes may surge quickly due to “FOMO (fear of missing out) effects,” as winter reduces aviation capacity. He added that escalating conflicts in the Middle East could further disrupt maritime cargo shipping through the Red Sea.
### In-Depth Analysis:
Global events are putting 2024’s air freight peak season preparations to the test, but van de Wouw noted that despite market volatility, companies this year are better prepared for peak season uncertainties.
“There are now more precise agreements on how to handle storms in the market,” he said. “There are agreements about rates, surcharges, and their applicable timeframes, but there will be a delicate balance between maintaining relationships and being tempted by short-term gains created by these market conditions.”
He added that the macroeconomic outlook for 2025 is not optimistic, which may prompt carriers to seize opportunities to raise freight rates. He noted signs that peak surcharges are already accepted by freight forwarders and shippers.
Xeneta pointed out that spot rates from Asia to North America in September were “top of the charts,” exceeding other global routes by more than $2 per kilogram. Meanwhile, transatlantic rates remained nearly flat month-over-month, but prices could spike if port strikes on the U.S. East Coast and Gulf regions as well as in Canada remain unresolved.
Van de Wouw noted that during the hot peak season, there is less temptation to significantly raise freight rates compared to what’s stipulated in signed contracts. “But we do see parts of the market where you have to ‘pay to play,’ which could become a potential ‘Wild West.’ Shippers or forwarders may find themselves caught up due to unexpected demand, and that can be an expensive game.”
_Editor’s Note: This article first appeared in our Logistics Weekly newsletter._
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Source Website: Supply Chain Dive
