Supply chain logjam ease as market balance returns

Freight forwarder Dimerco reports that the Purchase Managers’ Index (PMI) held steady at 50.9, indicating growth. However, S&P Global Market Intelligence noted a slowdown in June output, though it still marked the second strongest month over the past year. Despite this, Alvin Fuh, VP of Ocean Freight at Dimerco Express Group, stated that recent freight rate increases are not demand-driven but are due to Red Sea diversions.

Fuh also warned that while freight rates could drop as quickly as they have risen, BCOs and NVOs may need to wait two months or more to see lower rates, as carriers require time to adjust schedules and redeploy vessels.
Hind Chitty, Principal Consultant at Drewry Shipping Consultants, suggests that the recent decline in freight rates is likely due to increased capacity on transpacific and Asia-Europe services, which may indicate that peak rate pressure is easing. Capacity is expected to rise by 5% in August, largely due to a 35% reduction in blank sailings.
Eleanor Hadland, Senior Ports and Terminals Analyst at Drewry, pointed out that while congestion at transhipment ports has been severe, the reduction in blank sailings is easing pressure on terminal operations. Most Asian container terminals are now congestion-free, with only Los Angeles and Long Beach in the U.S. and some major North European ports still facing issues.

Dimerco highlighted that port congestion in Singapore has significantly improved, with waiting times for berthing reduced from five days to two. If this trend continues, it could help maintain or slightly reduce freight rates in August. Despite these improvements, Dimerco advises shippers to plan their shipments.