Seatrade-Maritime: Container peak season still ongoing, port congestion hits new high

Published by Seatrade-Maritime

The container shipping market continues to be tight as demand for Asian exports remains strong and Chinese ports struggle with severe weather disruption, according to an Ocean Freight Market Update from DHL Global Forwarding.

The latest report identified three key themes – the peaks season is not over on the Asia – Americas trade, port congestion has hit new highs, and shipping lines are gradually returning to the Suez Canal.

The peak season on the Transpacific arrived early this year and DHL Global Forwarding said it had also continued unusually late in the summer. The continuation of the peak season is being driven by inventory building ahead of the upcoming holidays season and anticipation of the Chinese “Golden Week” in early October and no major changes to US tariffs.

The increasing transit and draught restrictions from the Panama Canal due to low water levels have also limited the ability for carriers to increase capacity to the US East Coast.

The report also highlights severe port congestion with some 3.9 million teu tied up in ports – the same level as in the Covid peak in 2022. “In China, multiple typhoons hit key ports in July and August causing port closures for multiple days, with only 21% of vessels into Shanghai arriving on time in July, creating massive backlogs and global cascade effect.”

Meanwhile in Northern Europe yard capacity remains high and there is reduced inland waterway connectivity due to low water levels. In the Middle East disruption remain due to geopolitical instability.

On the freight front there is some divergence being seen between the Asia – Americas trades and Asia – Europe, DHL Global Forwarding. The Shanghai Containerized Freight Index (SCFI) is up 143% year-on-year and 36% higher than when the peaks season started in June.

Looking at the Asia – US East Coast market rates were climbing due to worsening conditions in the Panama Canal and on the US West Coast rates were stabilising at high levels. On the Asia – Latin America trades levels are back to highs seen early in the peak.

By contrast looking at Asia – Europe the report said: “Rates continue to ease as demand is reducing as part of a regular late summer, post-peak pattern.”

With a combination of the gradual return by container carriers to the Suez Canal and the largest newbuilding orderbook low rates might have been expected by shippers by DHL Global Forwarding says this may not be the case.

The report notes the first meaningful return to the Suez Canal routing after two years of diversions with a re-adoption slated on 18% of East – West headhaul sailings. However, normalisation will take six to 12-month even with the absence of disruption.

“If Houthi ceasefire is upheld, it is realistic to expect that carriers continue to gradually scale up their return to the Suez Canal. As vessel arrival patterns overlap, temporary congestion and equipment imbalances may occur at transshipment and gateway ports,” the report said.

While new container ship capacity is expected to grow the fleet by 9.4% in 2027 and 15.2% in 2028 DHL Global Forwarding does not see this as immediately translating to lower rates. “New vessel capacity to alleviate capacity strain to a certain degree, but trade-specific peaks will prevail on the back of port congestion, trade demand divergence, and disruption from weather or geopolitics,” the report said.