Far East Market Update

Please read for the latest update regarding the current situation we are facing with the Far East market.

After a short dip at the end of Q1/21 and triggered by the implications of the Suez crisis back in March, freight rates on all major volume trades show a constant upwards trend and we are being advised to expect rate levels to peak to around $17,000. The chairman from the FMC has clarified in May 21 that as long as the freight rates are driven by market forces, there is nothing the FMC can do about it. For those who had hoped for some intervention by key governmental bodies to stop this continuous freight rate surge, will look at this as a pushback. The strategy of the shipping lines is unchanged and they like to operate as much as possible of the cargo in the short-term segment. This will allow them to benefit from the high spot rates and to deploy further adjustments if the market stays strong.
 
While the effects from the Suez Canal crisis are phasing out and operational stability returns, the new increase of Covid detections in the port of Yantian are adding new stress to the global supply chains. While only certain parts of the port are impacted for a longer period, the dependency of the single activities inside the port is creating a huge backlog. The market is already speculating about a magnitude in a similar size to the Suez Canal accident. Vessel congestion is similar and the market again faces vessels sitting on anchorage and waiting for berthing windows to get containers unloaded and loaded from / on board.
 
Please see below image showing the current backlog situation they are facing:

Below are a few useful industry and market updates:
 
https://www.lloydsloadinglist.com/freight-directory/news/Yantian-%E2%80%98contagion%E2%80%99-will-spread-around-the-world/79257.htm?cl=article_2&elqTrack=true&mc_cid=647b44b5b3&mc_eid=c3a556f423#.YMHMc7vtw2w
 
https://www.lloydsloadinglist.com/freight-directory/news/Yantian-situation-continues-to-worsen/79259.htm?cl=article_3&elqTrack=true&mc_cid=647b44b5b3&mc_eid=c3a556f423#.YMHMgLvtw2w
 
https://www.lloydsloadinglist.com/freight-directory/adviceandinsight/Long-term-ocean-freight-rates-rise-again-in-May/79188.htm#.YMHMkbvtw2x
 
https://theloadstar.com/container-shortage-worsens-as-box-ships-avoid-chinese-ports-that-need-empties/