Executive Summary
Weekly International Logistics Report
Over the past week, the global logistics market was marked by soaring freight rates, tight vessel space, worsening port congestion and ongoing geopolitical disruptions. The Shanghai Containerized Freight Index (SCFI) has risen for five consecutive weeks, with an overall increase of over 70% from the February low. Space shortages and cargo roll-offs are widespread across Far East-Europe, Mediterranean, Red Sea & Middle East trade lanes.
Persistent disruptions in the Strait of Hormuz and Red Sea, coupled with upcoming Panama Canal lock maintenance in June, have created bottlenecks at major global shipping corridors, pushing up transportation costs and extending transit times. Air freight markets saw mixed performance: rates on Europe and North America routes edged up steadily, while demand for cross-border e-commerce shipments remained robust.
Ocean Freight Market: Early Peak Season Drives Continuous Rate Hikes
Freight Indices Hit New Highs
- SCFI: Reached 2,218.15 points on May 22 (up 3.62% week-on-week), and surpassed 2,712 points in late May. It has climbed for five straight weeks, surging more than 70% compared with the February trough.
- Drewry World Container Index (WCI): Rose 6% week-on-week to USD 2,712 per FEU, led by strong gains on Asia-Europe lanes.
Latest Freight Rates (as of May 29)
| Trade Lane | Rate per Container | Week-on-Week Increase | Market Status |
|---|---|---|---|
| Far East – US West Coast | USD 3,154 / FEU | 10% | Fully booked, frequent cargo roll-offs |
| Far East – US East Coast | USD 4,224 / FEU | 11% | Tight space, advanced cargo booking |
| Far East – Europe (Rotterdam) | USD 2,773 / TEU | 15% | Severe space shortage, further rate hikes expected in June |
| Far East – Mediterranean (Genoa) | USD 4,082 / TEU | 10% | Rates approaching USD 5,000, extreme space scarcity |
| Red Sea & Middle East | Over USD 7,000 / 40ft Container | 40%–50% | Extremely limited space |
Carrier Updates: General Rate Increases & Surcharges
- June General Rate Increase (GRI): Major carriers including Maersk, MSC, CMA CGM and COSCO SHIPPING announced new rate hikes effective June 1. Asia-Europe rates will peak at USD 4,700 per FEU, while Mediterranean lanes will range from USD 5,500 to 5,700 per FEU.
- Peak Season Surcharge (PSS): Maersk imposed a peak surcharge of up to USD 2,000 per FEU for US-bound cargo, followed by ONE and MSC. Total surcharges for US routes have jumped by 70%.
- Capacity Control: Fewer blank sailings on Asia-Europe services for the coming week (only 3 blank voyages), as carriers keep space tight to sustain high freight levels.
Port Congestion
- Middle East Ports: Jebel Ali and Dammam suffered severe congestion with vessel delays exceeding 5 days, rated as Red Alert by DHL, slowing down container turnover.
- European & US Ports: Volume surges reduced operational efficiency at Los Angeles, Long Beach, Rotterdam and Hamburg. Container dwell time extended by 2 to 3 days.
- Chinese Ports: Space remains tight at Shanghai and Ningbo Zhoushan. Bookings for US and Europe bound cargo need to be placed 7–10 days in advance, with fierce competition for available slots.
Key Shipping Corridors: Disruptions Continue
Strait of Hormuz
Vessel movements dropped sharply, with only 7 vessels transiting on average per day; almost no container or crude oil vessels passed through. A total of 109 merchant ships were forced to re-route, lifting sailing costs by 30%–50% and extending transit time by 7–10 days.
Escalating geopolitical tensions pushed marine insurance premiums and security fees higher. Although diplomatic easing signals emerged over the weekend, traffic conditions showed no visible improvement.
Red Sea & Suez Canal
Attacks on merchant vessels persist. Maersk, Hapag-Lloyd and other carriers continue to suspend Suez Canal transits and divert via the Cape of Good Hope. The alternative route adds around 7 days to voyages and increases costs by 15%–20%. Several carriers that planned to resume Suez services have cancelled their plans, further tightening Mediterranean market supply.
Panama Canal
The Panama Canal Authority (ACP) will launch lock maintenance in June, cutting overall capacity by 30% and pushing waiting time up by roughly 60%. Asia-US East Coast shipments will face longer delays.
Air Freight Market: Divergent Demand & Moderate Rate Rises
Rate Trends
The global air freight index climbed slightly week-on-week. Rates for Asia-Europe and Asia-North America routes rose 2%–4%, while Middle East lanes saw an 8% increase due to limited capacity.
From January to April, 68 new international cargo routes were launched across China (30 to Europe, 9 to North America). Strong demand from cross-border e-commerce kept airports in Shanghai and Shenzhen fully booked. US-bound air freight rates rose 15% year-on-year.
Market Dynamics
Pre-peak inventory stocking for European and US markets accelerated. Electronics and home goods drove robust air cargo demand, with charter flights operating at over 95% load factor. Many shippers diverted cargo from troubled Middle East sea lanes to air freight, which in turn intensified ocean freight space shortages.
Key Market Drivers
- Advanced Peak Season: Traditional summer stocking for Europe and the US started early, alongside pre-shipments for upcoming events and holidays, leading to concentrated cargo volume.
- Geopolitical Risks: Ongoing disruptions in the Red Sea and Strait of Hormuz forced route diversions and raised overall logistics costs.
- Capacity Management: Carriers implemented blank sailings and space controls to balance supply and maintain freight levels.
- Trade Policy Concerns: The launch of new Section 301 investigations prompted forward shipments by US-bound shippers.
Outlook & Recommendations (May 30 – June 5)
Market Outlook
- Ocean Freight: SCFI is expected to keep rising. After June rate hikes take effect, US West Coast rates may reach USD 4,800 per FEU, and Mediterranean rates will approach USD 6,000 per FEU. Space shortages and roll-off risks will persist.
- Shipping Corridors: Situations in the Red Sea and Strait of Hormuz are unlikely to improve soon. Panama Canal maintenance will bring extra delays.
- Air Freight: European and US stocking demand will remain firm, with rates staying on an upward trend, especially for Middle East routes.
Shipping Advice
- Booking: Secure vessel space 10–14 days in advance. Prioritize direct sailings to avoid transit delays. Avoid weekend bookings to reduce roll-off risks.
- Cost Control: Compare quotations and verify all surcharge items. For Red Sea & Middle East cargo, adopt partial shipments to mitigate cost risks.
- Time Assurance: Use air freight or express ocean services for time-sensitive goods. Build a 7–10 day buffer for sea shipments to cope with port congestion and route disruptions.
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