Dear Clients, MARKET UPDATE JUNE-26 North Asia - AU market overview We reported last month that that shipping lines were looking to test the market with a peak season surcharge in July. Rates for July are starting to be published, and we are seeing all shipping lines apply a Peak Season Surcharge (PSS). It's rare to see a PSS in JULY, but that is the confidence of the carriers (shipping lines) currently. As you have seen, rates in 2026 have increased month on month and in the past several weeks moved to a two-week cycle. Let's outline the main drivers behind this; Major global markets are running hot, not just Southbound into Australia. China to USA EC rates are in the USD 6000 - USD 7000 per 20' range. China to USA has a GRI planned at USD 1500 per 20' cntr from 1st JULY, given the surge of cargo into the USA. China to South America is another trade lane where rates have been climbing all year as is China to Europe and intra-Asian trade lanes are at record breaking levels. So, you might ask, why does this effect CN-AU rates? There are 2 basic mechanisms, the first is shipping line trade managers are less likely to release container equipment for a CN-AU booking at say USD1500 per 20' when they can release it for a North American booking for USD6000 - 7000. Given this, rates to AU are being "dragged along" by global shipping trends. We saw this happening during the pandemic. The 2nd reason and this is very prevalent to CN-AU is that shipping lines have stripped significant capacity (i.e vessels) from low yielding trade lanes to move them to higher grossing lanes. We have seen a reduction of services over the last 3 months which reduces the supply of container space into Australia. This has been achieved by the shipping lines operating a very strict blank sailing programme which is designed to remove capacity from the market. AU trade has less capacity than say 12 months ago. Furthermore, a lot of the larger importers foresaw climbing rates and brought their purchasing forward, so we have a market of increased demand against reducing capacity. The net effect is an early peak season. Where to from here? Already shipping lines are advertising another rate increase on the 15th July for USD500 per 20' and USD1000 per 40'. This will see space for 1st half of July fill up very fast. Given this, it's feasible that we'll see rates at levels not seen since the pandemic...without the pandemic. Ultimately supply and demand govern where ocean rates will settle and feedback from carriers and the market is the market may remain "HIGH" until the Lunar New Year in 2027, time will tell. The only small positive news for importers into the EAST COAST, is the announcement of two additional services that will start towards the end of July. This added capacity will help but if it drives rates down, then expect the services to be withdrawn as quick as they were announced. Furthermore, we could see more new services, as smaller shipping lines see the high yield achievable, they may try jump on the wave as they did during the pandemic. Should you wish to discuss any of these points, please don't hesitate to reach out to your key contact @ Transways Logistics International.

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