Saham: KLSE-SYSCORP - PT. Shin Yang Shipping Corporation Berhad

$SYSCORP / 5173 (SHIN YANG SHIPPING CORPORATION BERHAD) explosion

DHL Ocean Freight Market Outlook, July '24.

DHL Regularly posts their market outlook presentation for their investors and interested parties. As one of the leaders in this space, I think it's important to pay attention to their words for a feel of the industry-- not just if you're investing in shipping and logistics companies (like $HARBOUR / 2062 (HARBOUR-LINK GROUP BERHAD) or $SYSCORP / 5173 (SHIN YANG SHIPPING CORPORATION BERHAD) shin yang group), but also if your company is involved in global trade either directly or indirectly. For example, if your company relies of sales to/from Europe/US from Malaysia/Asia, you would know that the upcoming quarters will see a huge impact from logistics costs (for example $HARTA / 5168 (HARTALEGA HOLDINGS BERHAD) 's previous quarter).

The situation has only gotten worse compared to earlier in the year, however it's unclear how bad things will continue to be, or whether there will be improvements or not in the coming months. Anyway, you can just google search for the DHL report, but here are some of the main highlights I think are worth paying attention to.

1. Port congestions are at an 18 month high, with further escalation expected from potential port strikes in Germany (and US). Other than that, there are increasing labor tensions in France too.

2. China spot rates had 11 consecutive weekly increases, and Shanghai-California route is around 5x higher than a year ago.

3. As with all other shippers, DHL has started to introduce PSS (peak season surcharge).

4. Secondary markets, like intra-Asia (hint), saw a steep increase in freight rates in June.

5. In spite of high freight rates, demand continues to be strong; with Peak Season typically in August but this year they are seeing a prolonged peak.

6. The concerns on tariffs (US-CN and EU-CN) are also pushing companies to ship out goods ASAP ahead of peak season.

7. It's worth noting that the Panama Canal is slowly increasing crossings, as we enter into the rainy season. Meanwhile, the Suez canal is trying to attract containerships by offering discounts.

8. Generally, all Asia outbound trades are in undersupply condition and DHL expects this strong demand on Asia outbound to remain for at least the next 3 months. Conversely, there's a big mismatch in trade balance on the return trip, causing many ships to have to ship back empty containers to Asia to catch the next shipment (so called blank sailings).

9. Meanwhile, Euro and Americas are in a balance situation. However, there's a potential rerouting of ships to service the more "lucrative" Asia- routes. I mentioned before that shipping doesn't exist in silo, and companies will often rebalance their capacity to get the most bang for their buck, and when that happens the route that was formerly in oversupply could suddenly change to undersupply, and the cycle repeats until a working balance can be formed.

10. DHL expects spot rates on major East-West lanes to continue to increase strongly, while other lanes will remain relatively stable. Eventually, things will even out and potentially maintain at a high level.

****

Personal additions:
From the above, we can see that companies from this part of the world selling to US and EU will have to grapple with high and highly volatile freight rates; while companies that import US and EU products to sell here would probably be not impacted as much.

1/3