A new year is upon us, filled with fresh opportunities and exciting possibilities. As we step into 2024, let's embrace the journey ahead with optimism and courage. May this year bring you happiness, success, and prosperity. Here's to making the most of 2024!
East coast Challenges are here , possible increase to all freights as both Panama & Suez Canals are threatened. Anticipate Challenges upcoming for Ocean freight slow down and raising rates.
The Suez and Panama canals are two of the most important waterways for global trade, as they allow ships to travel between different oceans and regions without having to go around continents. They reduce the distance, time, and cost of shipping goods and commodities, and facilitate the flow of energy, food, and raw materials.
The Suez Canal connects the Mediterranean Sea with the Red Sea, and provides the shortest route between Europe and Asia. It accounts for about 30% of the world’s container ship traffic.
The Panama Canal, on the other hand, connects the Atlantic Ocean with the Pacific Ocean, and provides the shortest route between North America and South America, as well as between the east and west coasts of the United States. It handles about 6% of the world’s maritime trade, and about 70% of its cargo originates from or is destined for the United States.
The economic impact of these canals is significant, as any disruption or delay in their operations can affect the supply and demand of various goods and markets, and cause losses for shipping companies and consumers.
Panama is currently hit with Severe Draught condition caused by El Nino with 160 vessels waiting to cross over.
Suez Canal is currently under attack by the militant group called Houthi due to the Israel War. This prompt many commercial line to divert their vessel s around Africa to protect the vessels /freight/and crews. Affecting all East Coast bound shipments.
Implications for Trade and Costs
Canal delays significantly impact the US-Asia container trade. These delays disrupt the smooth transportation of goods, leading to potential revenue losses and missed business opportunities. If products that are in high demand during specific seasons don't arrive on time due to canal delays, businesses may suffer from unsold inventory and financial setbacks.
Disruptions to Supply Chain
Aside from the direct effects of delays, waiting times for reservation slots also play a role in shipping schedules. When ships have to wait longer for their turn to pass through the canal, it disrupts their planned transit schedules, resulting in additional delays. This uncertainty creates a chain reaction throughout the entire supply chain, influencing aspects such as production timelines and product availability in the market.
Financial Impact on Shipping Companies and Customers
The financial consequences of these delays reach far and wide, affecting both shipping companies and their customers.
1. Higher Operational Costs: Increased waiting times and longer alternative routes force shipping companies to spend more on operational expenses. For instance, if a company needs to redirect its vessels because of canal delays, it incurs extra fuel costs.
2. Increased Charges per TEU: To compensate for these additional expenses, shipping companies often raise their charges per TEU (Twenty-foot Equivalent Unit), which is a standard measure for container shipments. Ultimately, it is the customers who bear these added costs when they ship their goods.
We are monitoring the above situation closely and will keep our clients posted the above developments. For our east coast client , please plan accordingly our longer transit time. We do anticipate increase in ocean transit cost coming up in 2024 year for both west and east coast due to the current situations developing so please plan accordingly.
Market pricing projection for upcoming quarter:
Polyester Pricing - PTA Chart
Polyester raw material price seeing rebound from its lows heading into Chinese New Year.
MEG - Nylon raw material price projecting higher trend. PVC raw material Rebounding from its lows
PVC price rebounding from its lows heading into CNY. Chemical cost for Vinyl have very little changes due to slower market demand. Suppliers are keeping cost up as their cost have risen due to inflation cost around the world.
Currency for both NTD ( New Taiwan Dollar ) & RMB ( China Dollar remains stable.
Oil price heads slightly higher for 2024 ahead of 2023 so far but remains to be seen.
In short, 2023 was a year to learn from. We have the fastest adoption of AI technology ever - Chat GPT. The adoption rate was faster than the internet when it first was introduced, 3 million user vs 300,000 users over same period of time. We have the fastest bullet /SV magnum technology train developed in Japan t technology over 361 mph top speed as fast as plans. We are seeing Starship being built by Space X and may see the first Mars mission within our lifetime. The future brings many wonderful & amazing possibilities .
We want to take this time to thank you, our valued business partners, for supporting us and each other for the past 20 years and looking forward to continuing the growth. We also want to send a special prayer to the people affected by the war conflicts across the world and pray for peace in hopes the leaders of the world can one day realize we are all people, and we stand a better chance to join and innovate and create a better world for the generations to come. Thank you from your team @ Synthetic Resources Inc.
Happy New Year!