Ocean Freight:
2024 looks to be another year where supply will exceed demand. Ocean rates are at a historic low, and analysts have advised that they we will continue to see downward pressure on freight rates in Q1. There are mixed predictions on where the market rate will land for 2024. Some analysts advise that with the losses the carriers are facing, they will do everything in their ability not to allow the rates to drop further, while others predict rates to further drop by 1/3 of the 2023 level.
Many carriers will be taking receipt of new vessels in 2024, which will bring approximately 2.8 million TEUs of space into a marketplace that is already swimming in overcapacity. We may also see carriers trying to cut costs by cutting labour, as we have seen with Maersk laying off 10,000 employees this past November.
We will see carriers attempt to control overcapacity by introducing more blank sailings, however, there is too much supply to be able to reduce it enough to have a balanced market.
The current political situation is also making the world more unpredictable and increases the likelihood for disruptive events to change the course of the market.
Air Freight:
The air freight market goes hand in hand with the global economy. According to IATA (International Air Transport Association), rising US dollar strength was cited as one of the main factors that could lead to an increase in demand for 2024.
November was the first month where demand was higher than supply, with e-commerce being the main driver. The increase in e-commerce volumes from Hong Kong and China to Europe and the USA inflated global cargo demand by 5%. The feeling in most industry circles is that the worst of the freight recession in air freight is over, with 2024 bringing stability, however, recovery could take until late summer.
The Chinese New Year holiday which begins on February 10th, will result in the usual increase in shipping, however, paired with the winter’s volatile weather patterns, could result in cancellations, payload restrictions and backlogs. Proper planning will be key to avoiding storage charges.
For more information, contact Debbie McGuire, Director – Freight Solutions or Cathy Fong, Director – Freight Pricing.
