Navigate Trade Shifts. Introducing SONAR's new Trade War Command Center
In May 2024, the carriers calling on the Port of Singapore, which serves as a major regional hub, experienced severe congestion. It persisted the following month and had significant impacts on several sectors of the freight markets.
In last year’s second quarter, spot rates to move 40-foot containers soared to levels that far exceeded the surge at the beginning of the Red Sea attacks at the end of 2023 (first chart below). Stateside, rail intermodal volume of domestic 53-foot containers started to grow more significantly, taking share in last year’s second quarter from 40-foot international containers. That shift took place because the congestion was significant enough for ocean carriers to become concerned over the scarcity of 40-foot oceangoing containers, discouraging them from sending containers to inland U.S. locations, and instead opt for transloading imports from ocean containers into domestic containers. It even caused some shippers to choose ocean-to-air alternatives where they used ocean shipping to move cargo to an airport hub before using the faster, but more costly, airfreight option for the long-haul portion of the move.
In the past week, ocean carriers and forwarders have reported that severe congestion at the Port of Singapore has arisen again. The congestion appears to be more driven by a surge in volume following the 90-day delay on the most onerous U.S. tariffs on Chinese goods. Again, ocean spot rates spiked, this time rising by about $3,000 per FEU from China to around $6,000 and $7,000 to the U.S. West Coast and East Coast, respectively.
Ocean rejection rates on inbound Singapore volume is one way for shippers and interested carriers to gauge congestion. The SONAR chart below, which comes from the Container Atlas app, shows a rise in the percentage of containers that were rejected in May 2024 from 10% to 25%. As congestion worsened again this year, carriers became more likely to reject containers headed to congested locations. Last month, rejection rates hit 25% again, after rising steadily from normalized levels in the first quarter.
Monitoring ocean rejection rates is one way for shippers to gauge congestion from afar before carriers or forwarders send out bad news in service alerts. It also gives domestic intermodal carriers and chassis providers a heads-up that more of their containers and chassis may be needed near port locations as there may soon be more demand for transloading.
For a demonstration of SONAR intermodal volume and pricing data, and for how the data compares to truckload and ocean data, request a demo here.
