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DGX - Breaking Alert






Dear Valued Customer,


Shipping costs have surged again even in the traditional off-season. A myriad of factors contributes to the pricing volatility including:


  1. European routes have been significantly affected by the crisis in the Red Sea forcing ships to detour around Africa. The African route originally had limited capacity but this year has seen an influx of vessels. Longer voyages and increased trans-shipment ports have led to more vessels needing to operate extended journeys. Coupled with port congestion, this has resulted in many containers not returning, mainly causing the recent container shortage.
  2. The price increase in South America is primarily due to Brazil's and Mexico's plans to impose additional tariffs on Chinese electric vehicles starting in July 2024. Many automakers are desperately shipping to these regions without having actual orders. According to some sources, BYD has already shipped more than 100,000 vehicles. Electric vehicle companies have seized the majority of shipping resources, leading many shipping companies to withdraw vessels from running to West Africa to handle these large orders instead. The end result is a general increase also in West Africa rates. These EV makers not only compete for shipping resources but reportedly fill up destination ports' yards quickly with automobiles as well.
  3. The nearing US elections have been claiming future tariffs of 50 to 60% on Chinese goods, leading some Chinese exporters to increase their investment in South America. Additionally, many importers are stocking up in advance causing the peak season to arrive early this year.
  4. Shipping lines are cutting capacity by increasing the volume of blank sailings. The majority of the canceled sailings affect the Trans-Pacific Eastbound route. These global blank sailings translate into inflated container spot rates.

Ocean liners are taking advantage of the circumstances outlined actively raising rates. Unfortunately, shippers already have low profits and must endure the pain of being squeezed even more. We urge you to plan your shipping schedules with as much lead time as possible, as everyone is scrambling for containers. Keep in mind that estimated times of arrival are also unstable. Further, shippers that wait until the next quarter to move their orders face a potential risk of a substantial vessel space shortage coupled with increased freight rates.

For additional information, please reach out to your local DGX office or representative or call us at 888-488-4888 or at 310-669-8888.


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