Transport Update 12th May 2021
May 12, 2021
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Welcome to the Zencargo weekly freight market update – the latest news from our freight and procurement teams on the real experience of shippers.
This week: the new normal of rolled cargo and high rates.
The Ocean market remains severely disrupted, to the point that running behind schedule has now become another ‘new normal’. Container rollovers at major box ports have continued to climb, now affecting some 39% of all shipments accompanied by rate increases across the board.
In a scenario where delays are inevitable and costs rising, shipper strategy will need to take into account managing and mitigating increases in lead time. This starts with structural investments in visibility and data quality – delays may be inevitable, but catching them early, quantifying the business and keeping end customers and stakeholders informed can help balance the negative outcomes for your business.
Asia → North America
| Rates | Hapag has announced a new GRI from India Sub continent to USA of $480/20’ and $600/40’ from 15th of May followed by another GRI of the same amount from the 1st of June. |
| Capacity | Hapag has also introduced 3 extra loaders from India, Bangladesh and Sri Lanka to the East Coast of the US (New York, Norfolk, Savannah and Charleston) to help clear the backlog of cargo amid high demand. The first vessel left the 2nd of May, the second will leave on the 17th and the third on the 31st of May. The schedule reliability on this trade has been between 11% and 13%, a drop of over 40% compared to last year. |
| Ports | Demand is still high with US ports breaking records of import volumes. This time it was the port of New York which handled over 789k TEUS, an increase of 34k TEUS over the last broken record in October 2020. The port of Los Angeles has also broken records in March. Both ports saw an increase of over 40% volume over the same period last year. |
| May-21 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| TPEB | Nominal Capacity |
WK18 | WK19 | WK20 | WK21 | ||||
| TEU | % | TEU | % | TEU | % | TEU | % | ||
| USWC | 372000 | -7950 | -2% | -21300 | -6% | -24000 | -6% | -22300 | -6% |
| USEC | 201300 | -17200 | -9% | 0 | 0% | -7500 | -4% | 0 | 0% |
| Capacity changed: | -25150 | -4% | -21300 | -4% | -31500 | -5% | -22300 | -4% | |
| Total Capacity | 573300 | 548150 | 552000 | 541800 | 551000 | ||||
Asia → Europe (Far East Westbound)
| Rates | The prospect of rate increases for the second half of May is now certain with carriers releasing the new tariffs that show an increase of around $1000/40’. |
| Capacity | The amount of idle capacity has decreased putting extra pressure in the current assets. This means there are no free vessels left for carriers to charter to help cover for the current vessels or increase capacity. The blank sailings expected for week 20 are removing over 34k TEUS from the market, a reduction of about 7% of the market space. The schedule reliability for this trade has been 27% this year, a drop of over 32% compared to same period last year. |
| Equipment | Equipment in India is very short for 40HC, a trend we have witnessed from last week. In China, the shortage of equipment is also severe affecting carriers like CMA and EMC. The trends of equipment shortage have not improved from last week. |
| May-21 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| FEWB | Nominal Capacity |
WK18 | WK19 | WK20 | WK21 | ||||
| TEU | % | TEU | % | TEU | % | TEU | % | ||
| EUR | 303123 | -19000 | -6% | -49802 | -16% | -33016 | -11% | -13636 | -4% |
| MED | 153601 | -57440 | -37% | -14000 | -9% | -14000 | -9% | -14000 | -9% |
| Capacity changed: | -76440 | -17% | -63802 | -14% | -47016 | -10% | -27636 | -6% | |
| Total Capacity | 456724 | 380284 | 392922 | 409708 | 429088 | ||||
Europe → USA (Transatlantic Westbound)
| Rates | Rates for June have been announced with increases of $1000 per container from the Mediterranean ports to New York. |
| Ports | The port of New York has also broken a record by handling over 789k TEUS, an increase of 34k TEUS over the last broken record in October 2020. Overall this is an increase of over 40% compared to same period last year. |
Air
The state of the air market remains tightly linked to the return of passenger travel. While many countries are making progress on vaccinations – thanks to air-shipped doses – passenger volumes remain small. Recent comments from industry experts show optimism about the future, but for now expect capacity to remain restricted as new flare ups and lockdowns tighten borders and keep passengers grounded.
Asia
Air Freight rates continue increase due to the continued distribution of vaccine shipments, IT products and urgent shipments which are continuing to take up large chunks of the available capacity. There have been some origins that have seen some slight rate decreases however, such as TAO ,CAN & SHA. Spot rates for dense cargo are available, but very limited to really dense cargo. The current rates are expected to remain at a high level until demand starts to drop.
Americas
| US | Continued pressure on the air freight market caused by the issues with ocean freight capacity which means more and more shippers / importers are looking to use other modes of transport. Lack of truck availability which is causing some delays retrieving cargo from airports and rates are still at higher levels due to the continued reduced capacity and increased demand. |
Europe
| Outbound | Continued strong demand but limited capacity due to low passenger numbers. IATA is predicting a positive outlook for air cargo demand and believes it will continue to improve as the vaccine rollout progresses and bellyhold services pick up and rates slowly start to decrease. |
| Availability | While most routes are performing normally, Turkey has implemented a new lockdown, reducing availability and production, and inspiring caution from carriers as they wait to see what the border situation will be. |
| Rates | Prices are already increasing in anticipation of reduced capacity in Turkey, with Italy the only other destination in Europe that still has higher prices and low availability. |
| Customs | Customs clearances are still the main bottleneck in road transportation booking, with clearances taking multiple days. |
The route ahead
The information that is available in the Weekly Market Update comes from a variety of online sources. Click below to learn more about how Zencargo can help make your supply chain your competitive advantage.
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