More containers are shipped on intra-Asia ocean corridors than any other region on earth – how can a shipper make sense of freight rate volatility and shifting trade patterns when it is happening in such a vast and complex market?
It requires an understanding of the unique characteristics of intra-Asia shipping and its labyrinth-like network of lanes and port pairings. You must then also consider how global trade and geopolitical factors influence this highly-sensitive eco-system of container shipping.
To fully grasp the scale of this market, since the beginning of 2023, a monthly average of 3.95 million TEU (20ft equivalent container) was shipped between ports in the Far East. This is more than the volume shipped from the Far East to North America and Europe combined (3.48m TEU).
For every 7 boxes that leave the Far East bound for the US and Europe, another 8 are shipped within Far East.
The only way to effectively navigate this market is through Xeneta data and intelligence, as you will discover.
Intra-Asia spot rate volatility
To demonstrate the importance of data, we will use the Xeneta platform to compare developments on two key intra-Asia trades - Shanghai to Singapore and Shanghai to Tanjung Pelepas, Malaysia.
We start our journey on 17 June last year when average spot rates on these two trades were exactly the same at USD 1471 per FEU (40ft container). Given these are neighboring ports, rates have historically tracked closely.
From that point on there has been significant volatility – not only in terms of freight rate spikes but also the relationship between these two trades.
By 1 July, the spread in average spot rates on these trades had increased from zero to USD 707 per FEU.
On the trade from Shanghai to Tanjung Pelepas, average spot rates increased 76% in just 14 days to stand at 2 585 per FEU. On the trade from Shanghai to Singapore spot rates increased by a lesser 28% in the same timeframe to reach USD 1878 per FEU.
Something highly-significant had occurred to not only cause a spike in freight rates, but also distort the relationship between these two trades…
Port congestion causes intra-Asia supply chain shifts
The Red Sea crisis saw the majority of container ships on trades between the Far East and Europe/US divert around the Cape of Good Hope in Africa instead of taking the shorter route through the Suez Canal.
One of the tactics carriers used to mitigate the impact of the longer sailing distance was increasing use of intra-regional transshipment services in Europe and Asia.
These good intentions had unintended consequences by causing massive port congestion, with Singapore – arguably the world’s most important transshipment hub – at the epicenter of this ocean supply chain storm.
The chart below shows port congestion in Singapore peaked on 20 June – at the same time freight rates from Shanghai were accelerating upwards.
Port congestion can easily explain the spike in rates from Shanghai to Singapore – but what about Tanjung Pelepas?
Intra-Asia chain reaction
This is where having data and market intelligence across intra-Asia trades is so important.
Carriers were urgently looking for ways to ease the congestion in Singapore, with the neighboring port of Tanjung Pelepas an obvious alternative.
The close proximity of Tanjung Pelepas made sense for shippers too because they would avoid Singapore and still be able to maintain cargo flow.
However, if shippers wanted to take advantage of the carrier strategy of increasing use of Tanjung Pelepas, they would have to pay a premium for the privilege, so rates increased.
Volatility is not going anywhere
Managing supply chain risk and freight spend is an ongoing process. You must continuously assess your intra-Asia trades, identify opportunities on alternative routes and have contingency plans in place to move quickly if markets turn suddenly as a result of regional or global factors.
In the case of the two trades from Shanghai to Singapore and Shanghai to Tanjung Pelepas, these have swapped places three times since 1 July in terms of which is the more expensive – with wideranging deltas between these rates.
With port congestion in Singapore heading upwards again at the start of 2025, the volatile relationship between these trades is likely to continue.
This is just one example. When you multiply the complexity of the volatile relationship between the trades into Singapore and Tanjung Pelepas by the many hundreds of ports across Asia, you begin to see how navigating this situation without deep and reliable market intelligence is next to impossible.
Without the type of data-driven insights shared in this blog, how can you confidently benchmark your performance in a rising or falling market? How do you ensure you are working with the right suppliers and you are paying the right money for that service across different trade lanes? The simple answer is, you can’t.
