The Weekly Roar

In this week’s Roar: rising container fuel surcharges, the climate summit, a new LMI report, higher air freight rates, and a new cutting-edge cargo ship.

With container rates having fallen back to earth since the pandemic, it’s still important that importers not ignore a big cost that’s often overlooked. Experts are warning that shippers should be prepared for increased container fuel surcharges in 2024. Starting January 1, bunker adjustment factors (BAFs) are being revised, although the amounts will vary by carrier. Regardless, cargo owners should be prepared to absorb some of the cost. Reasons for the increase include trade disruptions and stricter decarbonization regulations.

The United Nations climate summit in Dubai has ended with a landmark deal. For the first time, all countries have agreed to step back from fossil fuels, although there is no agreement on a complete phase-out. According to the COP28 president, this is a “historic package,” and many diplomats agree that genuine strides forward have been made.

The Logistics Manager’s Index Report® LMI® is at 49.4, a significant drop over October. Inventory levels have the greatest impact on the decrease, with a drop from 53.4 in October to 44.3 in November. This is the largest single decrease since April 2022 and is mostly attributed to companies selling off inventory quickly. High inventory levels have been blamed for the sluggish ocean freight market of late, so this may be a harbinger of change.

There is a developing trend of trade growing between ‘friendly’ countries.

Air freight rates are on the rise, especially for goods coming from China. Strong demand, coupled with a decrease in available capacity, are key factors in the increase. However, issues like those in Gaza and Ukraine, earthquakes in Indonesia, and heavy snowfall in Anchorage have also disrupted air travel and driven up rates. Overall, the air freight market is currently facing a number of challenges, but the long-term outlook for the market seems positive, driven by the growth of e-commerce.

Finally, air cargo with a twist. Europe’s new Canopée isn’t your standard cargo ship. It’s powered by diesel engines and four sails that are called Oceanwings. And they’re not your standard sails either. When fully deployed, they look like aircraft wings with a combined surface of about 16,000 ft.². In optimal wind conditions, they can save up to 50 or 60% on fuel costs. And this ship’s primary objective? To transport Ariane 6, Europe’s latest and largest space rocket.

For the rest of the week’s top shipping news, check out the article highlights below.