On the economic front, experts forecast a precarious 2024. The challenges faced by Germany in 2023, indicated by a 0.3% contraction in its economy, suggest weak prospects in Europe. The struggles attributed to more expensive energy, higher interest rates, a lack of skilled labor, and a budget crisis could constrain growth in freight demand. Across the ocean, the US seems set for another year of growth despite concerns about upcoming elections. Down south, inflation continues to rise in Nigeria, portending a drag effect on the continent’s growth potential for the year.

The shift in Chinese exports, with China exporting more to Southeast Asia than the US, highlights the growing economic rift between the two powerhouses, despite China’s admitted economic frailties. This tracks with declining freight rates on China-US trade routes. Additionally, disruptions in the Red Sea and Indian Ocean, as highlighted by the Red Sea crisis, are already affecting supply chains, leading to increased freight rates, rerouting of vessels, and a rise in air freight costs. The uncertainty surrounding geopolitical events and their impact on global trade routes poses challenges for logistics companies in terms of planning and cost management.

On the industry front, supply chain pressures hint at a potential return of issues that caused transitory inflation in 2022. The Red Sea crisis is already impacting freight rates, driving a shift towards air freight and alternative routes to avoid potential disruptions, with South Africa reaping the windfall.

Weekly Highlights

• Shippers turn to air freight to alleviate Red Sea crisis
• Despite Red Sea crisis inflation shock, ocean freight rates are headed down on key China-U.S. trade route
• Shifts in Chinese Exports Show Ties With US Economy Fraying
• Red Sea threat lays bare economic risks ahead of US and UK elections
• Europe’s biggest economy shrank last year as Germany struggles with multiple crises
• Nigeria’s inflation rises to more than 27-year high in December

Economic News

” Overall economic development faltered in Germany in 2023 in an environment that continues to be marked by multiple crises.” Ruth Brand, president of the federal statistical office

Shifts in Chinese Exports Show Ties With US Economy Fraying

For the first time, China exported more to Southeast Asia than the US last year, highlighting the realignment of global trade that’s happening as the economic relationship frays between Washington and Beijing… Read more

Europe’s biggest economy shrank last year as Germany struggles with multiple crises

Germany’s economy shrank 0.3% last year as Europe’s former powerhouse struggled with more expensive energy, higher interest rates, a lack of skilled labor and a homegrown budget crisis… Read more

Weaknesses in Nigeria and South Africa’s economy to limit Sub-Saharan Africa’s growth in 2024 – World Bank

The World Bank has stated that weaknesses in Sub-Saharan Africa’s biggest economies Nigeria, South Africa and Angola will limit the region’s growth in 2024… Read more

Nigeria’s inflation rises to more than 27-year high in December

Nigeria’s inflation rate rose to its highest in more than 27 years in December as food prices surged, exacerbating a cost-of-living crisis and piling more pressure on the central bank to raise interest rates…. Read more

Why the U.S. may extend its run as the world’s leading economy

The U.S., China and India may take turns leading the global economy this century, according to an analysis from the Centre for Economics and Business Research… Read more

Red Sea threat lays bare economic risks ahead of US and UK elections

the prospects for the world economy had been looking a little brighter. But with military intervention in the Red Sea and disruption to global trade, all bets are off… Read more

‘Precarious’ year ahead for world economy, Davos survey predicts

The global economy faces a year of subdued growth prospects and uncertainty stemming from geopolitical strife, tight financing conditions and the disruptive impact of artificial intelligence, a survey of top economists released on Monday found… Read more

“Excluding the three largest SSA economies, growth in the region is expected to accelerate from 3.9% in 2023 to 5% in 2024, and a further 5.3% in 2025.” World Bank, Global Economic Prospects for 2024

Industry News

” The supply chain pressures that caused the ‘transitory’ part of inflation in 2022 may be about to return if the problems in the Red Sea and Indian Ocean continue.” Benjamín Alemán, former director of Mexico’s Rail Transport Regulatory Agency

Despite Red Sea crisis inflation shock, ocean freight rates are headed down on key China-U.S. trade route

Container rates have soared as high as $10,000 amid the Houthi attacks in the Red Sea, but new data shows that ocean carriers are reducing freight rates from China to the U.S. West Coast, contrary to expectations for price increases planned to go into effect next week… Read more

Shippers turn to air freight to alleviate Red Sea crisis

The diversion of container vessels away from the risk of attacks in the Red Sea is pushing up air freight costs as shippers try to keep Asian-produced goods on shelves despite delays to sea traffic…. Read more

How does the train drivers’ strike affect freight transport?

Germany’s GDL train drivers’ union strike in passenger- as well as freight transport, set to last from Tuesday evening until Friday, will not only affect the state-owned rail operator Deutsche Bahn (DB). The standstill will also be felt by many companies in Germany which transport raw materials or goods via rail cargo… Read more

Maersk opts for rail freight to avoid Panama Canal delays

Maersk said it would ‘sidestep’ the Panama Canal and use freight rail to get cargo across Panama…. Read more

Spot freight rates down, but not as much as usual, to open 2024

Broker-posted rates in the Truckstop system fell during the week ended Jan. 5, as they always do during the first week of the year, though the fall was the smallest for the beginning of a year since 2018… Read more

Charting the global economy: Ocean freight rates from Asia to Europe more than double in weeks

The coming 12 months are shaping up as the year of the interest-rate cut, with the Federal Reserve poised to lead the charge for richer countries… Read more

South Africa’s port congestion gives airfreight volumes a lift

In a strategic move to strengthen its footprint and enhance its shipping solutions, SACO CFR is set to expand its export consolidation service in 2024. The neutral consolidator has just unveiled a service connecting Johannesburg and Heathrow, marking a significant milestone in its continuous efforts to streamline international trade… Read more

UK’s December road freight prices reach 2023 peak with highest rates since 2022

Haulage and courier rates surge as peak season ends, but prices remain lower than the levels observed in previous two December periods across the United Kingdom… Read more

US LTL trucking market still in flux as freight shifts among carriers

The terminals of bankrupt trucking company Yellow are still being fought over, but the victors in the battle for the defunct less-than-truckload (LTL) provider’s freight are becoming clear… Read more

“While air freight remains significantly more expensive than ocean freight . . . our clear view based on dialogue with our customers is that the consequence of empty shelves or a halt to production far exceeds the additional cost of utilising airfreight.” Mads Drejer, chief operating officer of Denmark-based logistics company Scan Global Logistics

Ranon Quote of the Week

“Ocean freight rate adjustments are made in the same each week nowadays. It could be seen as an adjustment to supply and demand. We expect this situation to remain fluid but generally see more chances for rates to remain elevated.” Goetz Alebrand, head of ocean freight for the Americas at DHL Global Forwarding

Technology, Policy and Sustainability Updates

Fr8Labs takes the lead in digitalising freight forwarding systems in Asia

In a recent seed funding round, Fr8Labs has successfully raised $1.9 million (US$1.5 million) from prominent investors such as East Ventures, FEBE Ventures, Kaya Founders, Mulia Sky Capital, Seedstars, Venturra, and various angel investors… Read more

Kodiak Robotics aims to launch driverless freight deliveries between Houston and Dallas in 2024

Kodiak Robotics, a California-based startup with a hub in the Dallas suburb of Lancaster, earlier this week unveiled what it calls the “world’s first driverless-ready semi-truck designed for scaled development” at a trade show in Las Vegas… Read more