Ocean Freight Market Snapshot for February 2024

February 12th, 2024 in Ocean Freight
Logistics Snapshot for Feb 2024

February is shaping up to be a challenging month for logistics. As we usher in the Chinese New Year (CNY), the logistics industry is bracing for the inevitable effects on ocean imports brought on by the holiday season and shifting global dynamics.

During the festive period, factories across China shut down, slowing production, and sending ripples through global supply chains. In anticipation of this disruption, shippers often move cargo before the holiday begins, leading to a temporary surge in demand for outbound shipments.

Beyond this surge of demand, a few global issues have emerged that will continue to impact the cost of ocean import rates moving forward. 

Steering Around the Red Sea Crisis

The ongoing conflict in the Red Sea has also affected ocean import costs significantly. Continued Houthi attacks on cargo ships have disrupted one of the world's most crucial maritime chokepoints, and the threat of attacks has forced shipping lines to reroute around the Cape of Good Hope. 

Bypassing the risky zones comes with a heavy price due to increased fuel consumption and extended voyage times, resulting in roughly an additional 15 days at sea.

Panama Canal's Dry Spell: A Further Challenge

Another on-going factor that is affecting current ocean import rates is the drought in the Panama Canal. Daily transit has been cut in half since the summer of 2023 to conserve water, going from the usual 35+ ocean carriers per day to as low as 20 in January 2024.

The drought has impacted global supply chains on numerous levels, and many carriers have momentarily transitioned to transloading services to move containers across Panama by truck.

The combined factors of Chinese New Year winding down productivity, conflict in the Red Sea, and an unyielding drought in Panama have created higher ocean import rates. While these factors will likely subside in the future, it is critical to understand the current market to ensure smooth operations for your business.

Overseas Container Logistics (OCL) is a 3PL commercial freight-forwarding company based in Richmond, British Columbia. 

If you have any questions about this article or would like to talk to us about your transportation and freight needs, give us a call at 604-295-8236.