String of typhoons batters supply chains

🌀 String of typhoons batters supply chains

Figure of the week

4.3M TEUs

A series of typhoons hitting major Asian ports has pushed the amount of stranded shipping capacity to 4.3 million TEUs - higher even than the previous peak of 4 million TEUs recorded during the pandemic. Asian port congestion was responsible for roughly half of the stranded capacity worldwide.

Quote of the week

With thinner cash reserves, they will have less ability to diversify. Some businesses will undoubtedly close, even with government support.

Tu Nguyen, an economist with tax consulting firm RSM Canada, believes the impending trade war between the US and Canada will take a heavy toll on the latter’s businesses.

String of typhoons batters supply chains

Typhoon-related delays in China, transit restrictions in the Panama Canal and stronger-than-expected demand are combining to create a challenging end of summer for US shippers. Ports in China were still reeling from Typhoon Dolphin and several others when a new storm, Saudel , started to create fresh delays. Major ports such as Shanghai and Ningbo are expecting to see congestion for the next few weeks as a result of the series of typhoons. Michael Britton, head of North American ocean products at Maersk, said the typhoons had delayed vessel departures by up to 10 days and pushed the arrival of those shipments at US ports well into September. “The typhoons in Asia are tragic and have added a lot of complexity to supply chains,” Britton said. “Based on experience, these types of disruptions are likely to take several more weeks to unwind.” At the same time, low water levels have already caused draft restrictions at the Panama Canal. A strengthening Super El Niño weather pattern has led meteorologists to predict even more disruption. New stricter restrictions are set to be introduced over the next month. All of this comes as something of a surprise to shippers who just months ago were expecting 2026 to be marked by slack demand and low rates. Many analysts, for example, initially predicted there would be no peak season at all this year. When peak season came early, many forecast that it would soon run out of steam. Instead, however, shippers are entering September with industry insiders predicting that Far East imports are likely to stay strong at least until China’s Golden Week holiday in the first week of October . “When demand started picking up in the course of the second quarter, lots of people thought that might be short-lived,” said Hapag-Lloyd CEO Rolf Habben Jansen. “But even up to today, I think we still see very robust volume, so a very decent peak season.” Container spot rates may be far below pandemic-era highs. Yet there are plenty of supply chain challenges facing shippers throughout fall.

Air freight spot rates shrug off falls in volumes

Global air freight volumes may be falling but tight capacity and rising fuel costs mean shippers are not seeing the falls reflected in spot rates. Trans-Pacific spot rates are remaining stable despite falls in global chargeable weight, according to WorldACD data. For example, between 10 and 16 August, chargeable weight fell 5% week on week . Yet average worldwide pricing remained virtually unchanged as falls in capacity of 1% helped sustain rates. At the same time, both Asia Pacific to the US and Asia Pacific to Europe volumes fell. However, the former remain 14% above last year’s level while the latter were 14% below their 2025 level. How to explain the contrast? Both the US and EU have scrapped their de minimis exemption for Chinese goods. However, while both have seen a drop in e-commerce traffic from China and Hong Kong, the US has enjoyed strong AI supply chain-related demand that has helped offset the fall in e-commerce volumes. Some industry insiders expect the US import market to soften. They think part of the resilience in volumes seen until now is due to shippers front-loading cargo to beat new tariffs. Amazon Prime Day moving a month earlier may also have had a significant effect. The theory now, however, among many analysts is that front-loading that has occurred over previous months has peaked. If that turns out to be the case, shippers can expect a subdued fall and winter, accompanied by lower prices.

Coastal spread creates savings opportunity for shippers

The widening spread between trans-Pacific rates to the US East Coast and US West Coast means it is increasingly worthwhile for shippers to route cargo to the latter. The growing differential between spot rates to the two coasts is now larger than the cost of shipping a container to either one before the Middle East crisis began. At that point, rates stood at $2,651 per FEU to the East Coast and $1,879 to the West Coast. Rates to the East Coast are currently more than $3,000 higher than those to the West Coast. This provides an opportunity for shippers to take advantage, said Xeneta Chief Analyst Peter Sand. “If a shipper has the flexibility of importing goods into the US West Coast instead of the US East Coast, then they must seriously consider it, because there is dramatic savings potential, even if it means a heavier reliance on truck and rail to reach the final destination. “This underlines the dynamic approach supply chain professionals must take in managing resilience and freight spend during major market shocks.” Spot rates from the Far East to the US East Coast are up almost 300% compared to pre-Middle East crisis levels. As a result, many ocean carriers are looking to introduce hefty GRIs in September for trans-Pacific shippers. These are also likely to be accompanied by peak season surcharges and rising rates. Some industry insiders have complained that there is insufficient demand to justify the new GRIs. Nevertheless, shippers should expect carriers to push the increases through with determination and may find West Coast routings offer a more economic alternative. ❓ Got a question about your flows? We answer it in an upcoming edition.

Ask your question Did you know?

CMA CGM has announced a $150 per TEU surcharge on cargo moving from South America’s West Coast through the Panama Canal due to draught restrictions - a move likely to be imitated by other ocean carriers. However, the French carrier pushed back the start date of the surcharge by one month for unspecified reasons.

💌 Enjoyed this newsletter? Subscribe to get it every week!

Sources

• The Journal of Commerce - Asia-Americas container shipping system on a knife edge
• The Loadstar - Air cargo demand dips as expected, but rates show more resilience
• The Journal of Commerce - Carriers attempt peak surcharges, rate increases on trans-Atlantic
• World Cargo News - Xeneta flags dramatic savings for shifting US imports to West Coast
• Daily Commercial News - Shippers forced to delay loads as 50% tariffs jack up export costs
• The Loadstar - Global port congestion at new high as more typhoons hit China
• The Loadstar - Capacity squeeze looms as Panama Canal restrictions tighten