Ocean Freight:
Recent trends in ocean freight reflect a downturn in volumes from Asia. However, ongoing geopolitical tensions have temporarily spiked the demand for ships, including attacks in the Red Sea and the consequent rerouting of vessels around the Cape of Good Hope. These tensions are not indicative of cargo volume growth but rather a supply-demand imbalance causing an immediate hike in freight rates. We anticipate these rates will remain elevated until the situation stabilizes, allowing for safe passage through the Suez Canal or when the Panama Canal can accommodate more vessels. After a sharp rise in Q1, rates from Europe began stabilizing in Q2 as the market could not sustain further increases. To optimize capacity, carriers now offer spot quotes for specific sailings to fill empty slots.
Air Freight:
The air freight sector has seen a boost, particularly from Asia and the Indian Sub-Continent to North America, thanks to the ripple effects of ocean freight challenges. The Red Sea crisis has prompted a shift from ocean to air shipping, compounded by substantial e-commerce volumes from East Asia. The result has been a marked increase in demand and corresponding air cargo rates. Congestion and space shortages, especially in air exports from India, are significant concerns. However, the upcoming increase in belly capacity on passenger flights during the summer may alleviate some of these backlogs.
Port and Rail Issues in North America:
Vancouver
A surge in imports and a limited supply of rail cars has led to extended container dwell times, averaging over seven days at some terminals. CN and CP address these delays by increasing train lengths and supplying additional railcars.
Montreal
The Maritime Employers Association and the Port of Montreal Longshore Workers’ Union are continuing their contract negotiations without any current strike actions. Mediation is ongoing, and any potential work stoppage would require 72 hours’ notice following a strike vote.
Baltimore
Adverse weather conditions following the collapse of the Francis Scott Key Bridge have complicated recovery efforts at Baltimore port. The incident has blocked the shipping channel, delaying salvage operations necessary to reopen the port fully. A limited access channel is expected to open within four weeks to restore normal port access by the end of May.
CN and CPKC Rail
The Teamsters Canada Rail Conference has announced a strike vote among members, which could lead to a strike as early as May 22nd. This would impact CN and CPKC rail operations significantly, affecting the transportation of goods across the country. Canadian Pacific and Kansas City Southern’s merger last year created a vast network now at risk of disruption.
For more detailed updates on how these situations might affect your shipping strategies, or to discuss alternative solutions, please contact Debbie McGuire, Director – Freight Solutions or Cathy Fong, Director – Freight Pricing.
