Geopolitical risk remains extremely high across both the Strait of Hormuz and the Red Sea. Further attacks on shipping have been reported in the Strait of Hormuz, including an incident in which a vessel caught fire after being struck, forcing its crew to evacuate. In the Red Sea region, reported territorial gains by the Houthis around the port of Mokha, Mayyun (Perim) Island and the Hanish Islands have increased security concerns around the Bab el-Mandeb Strait and the southern Red Sea.
Ocean Freight
Despite the ongoing security concerns, carriers are continuing to increase services through the Red Sea and Suez Canal as they look to reduce transit times and improve schedule efficiency. Approximately 27% of Asia-Europe capacity is estimated to be moving via the Red Sea in September, although this is weighted towards backhaul Europe-Asia and Asia-Mediterranean services. Gemini, the Maersk and Hapag-Lloyd alliance, has announced that four additional services – AE5, AE11, AE12 and ME2 – will return to the Suez route, joining AE15 and AE19. COSCO is also increasing its Suez exposure, with OOCL Portugal reported to have completed the first southbound Suez transit by a COSCO-operated service since the Red Sea crisis began.
Asia-North Europe remains more cautious, with current estimates indicating that around 6% of headhaul capacity is scheduled to move via Suez. Spot rates into Europe are beginning to soften as demand eases following the peak season and effective capacity gradually improves through increased Suez transits. However, this is not consistent across all origins, carriers and services, with congestion, blank sailings and schedule disruption continuing to restrict capacity.
Far East port congestion remains a key concern ahead of Golden Week. Repeated typhoons have caused significant disruption across China, resulting in vessel bunching, port omissions and reduced schedule reliability. As a result, although underlying demand is easing, effective capacity remains constrained. Eight blank sailings have also been announced for November on the Asia-North Europe trade, although schedules are expected to remain subject to change as the autumn progresses.
The Indian Subcontinent market may be approaching the peak of recent upward rate pressure, although any easing is expected to be gradual while operational, equipment and scheduling challenges continue. Mundra is recovering following a 13-day empty-container-yard strike, which affected empty container releases and the return of import empties and resulted in missed cut-offs, rollovers and transport disruption. Some residual impact is expected as operations recover.
Air Freight
Air freight rates have increased significantly, driven primarily by strong electronics exports and particularly robust consumer electronics demand. Elevated rate levels are expected to continue through to mid-to-late October, with capacity tightening on the most heavily used routes from Asia and market conditions expected to remain firm over the coming weeks.
Looking ahead, airlines will transition from summer to winter schedules at the end of October, which may reduce capacity on markets that rely heavily on passenger belly capacity. In the UK, airlines are continuing to recover from last week’s UK NATS technical issue, which caused schedule irregularities, crew displacement and knock-on delays across multiple services, particularly cargo moving on passenger flights.
Destination Ports
Destination port operations across Europe and the UK remain broadly stable this week. However, ongoing disruption in Asia and network changes associated with the increase in Suez transits may continue to result in occasional delays and bunching of vessel arrivals.
For further information regarding specific shipments or trade lanes, please contact your usual company representative.
