Transport Update 15th September

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: Do rate freezes mean the worst is behind us?

• Ocean

• Air

• Road

In focus: Rate freezes

“We believe spot rates have peaked, and we do not pursue further increases – we hope that the market will slowly start to calm down,” says HAPAG-Lloyd in a recent advisory, joining CMA CGM in placing a cap on spot freight rates for containerised cargo.

CMA CGM said in a customer advisory on September 9 that any further increases in spot rates would be halted with immediate effect until February 1. In their words, ” The Group is prioritizing its long-term relationship with customers in the face of an unprecedented situation in the shipping industry.”

While these freezes are being frames as a means to put clients first, the view from most shippers is that this is a prelude to contract negotiations. More importantly, it indicates that carriers are taking the long term view after months of prioritising short term revenues with new services, containers and rate increases.

This is far from a sign that things are about to head back to normal – most experts predict that any ‘new normal’ will be far from the abundant, over-capacity market of earlier this decade. But it could be a sign that rates have reached a peak, though we have also all seen how easily predictions can fall apart in the face of disruption.

Update – Super Typhoon Chanthu

This week we received reports that Super Typhoon Chanthu was heading towards China’s East Coast and that it would cause the cancellation of all flights into and out of Shanghai Pudong.

While flights were cancelled as of 11am yesterday, the typhoon has been downgraded from ‘Super’ to ‘Strong’ and isn’t now expected to land in Shanghai. Flights are expected to resume from 10am on the 14/09 but there will be some backlog as a result of yesterday’s flights cancellations. We would ask that you be prepared for delays in the coming days.

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Ocean

Asia

US market

• A large number of flights have been cancelled due to the typhoon. Backlog is expected to be cleared from Wednesday and into the weekend. This will cause delays for any new shipments being delivered in. 
• Uplifts are expected to be delayed and transit times will be longer.
• Rates and space must be checked on a case by case basis.

EU market (base airport like FRA/AMS/LUX, etc)

• A large number of flights have been cancelled due to the typhoon. Backlog is expected to be cleared from Wednesday and into the weekend. This will cause delays for any new shipments being delivered in. 
• Uplifts are expected to be delayed and transit times will be longer.
• Rates and space must be checked on a case by case basis.

UK market

• A large number of flights have been cancelled due to the typhoon. Backlog is expected to be cleared from Wednesday and into the weekend. This will cause delays for any new shipments being delivered in.
• Uplifts are expected to be delayed and transit times will be longer.
• Rates and space must be checked on a case by case basis. 

Americas

• Rates to PVG will increase in the coming weeks as a result of the terminal closure.
• Rates into UK and Europe remain mostly the same this week.
• Space remains constricted due to reduced capacity and staff shortages.
• ORD is still over capacity and there are issues over release updates. Forwarders are having to send in trucks to collect without knowing if freight is ready and the ground handling agents are not answering their phones.
• Forwarders are choosing to use smaller airports as much as possible as there is less congestion. Freight rates will be higher but there is less chance of incurring additional costs for attempted pickups, waiting time and storage. 
• LAX is still a challenge, there are usually waiting time charges applied to most shipments due to the long queues to collect/deliver into the ground handling agents warehouse.

Europe

• Rates from PVG will increase in the coming weeks as a result of the terminal closures.
• Rates to the US remain the same with no real increase.
• Capacity to most regions is still restricted.

Road

Availability

Availability generally reliable across all routes and regions.

Rates

Rates remain stable across consolidated, groupage and dedicated trailers on other routes.

Customs

• • From 1 October, there will be new safety and security requirements surrounding exports with an expanded list of movements requiring exit summary declarations (EXS), raising complexity in GB-EU supply chains.

• From the end of next month, shippers will be required to supply an EXS for further movements, like empties being moved under a transport contract to the EU and goods moving by vessels where there would otherwise be a requirement for an EXS.

UK Haulage

• Availability of trucks continues to be an issue out of the ports
  • Southampton specifically is proving more difficult to get haulage cover
  • Last minute deliveries are extremely difficult to book
• It’s essential that customers provide accurate information in advance to avoid costs when changing information last minute.
  • The majority of preferred hauliers do not have capacity until the need of October – the earlier they are booked in the better.
• Off dock storage a problem at Felixstowe.
• Rail is also an issue due to partners have declined to take on further business and rail provider is struggling with the shunting at destinations so not an option at the moment

The route ahead

The information that is available in the Weekly Market Update comes from a variety of online sources, partners and our own teams. Click below to learn more about how Zencargo can help make your supply chain your competitive advantage.

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