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: China’s air capacity crunch, US congestion keeps rates high

In Focus: The brewing storm for Chinese air freight

A range of factors are coming together to create an ominous outlook for Chinese air freight, with high rates, limited capacity and changing conditions highly likely as we head into peak season.

The primary issue is manpower on the ground. Quarantines, anti-covid working practices (particularly 7-7-7 schedules) and workers quitting have sharply reduced the available staff to handle flights. With no one to load and unload their cargo, many airlines are cancelling schedules.

A clear example is Shanghai, which we discussed last week. Shanghai Pudong Airport has implemented an Epidemic Management policy that will see airlines cancel up to 40% of their flights to ensure there is enough ground handling manpower to load and unload the aircraft, meaning there will be a significant reduction in capacity out of China in the coming weeks. To add to this, there is at least a week’s worth of backlog on the tarmac to be cleared and with Golden week approaching we can expect more delays and more rate increases.

In the past two weeks, rates from China to the US west coast rose to more than $10 per kg, while forwarders reported $11.50 to Chicago. Price increases then incentivise carriers to shift capacity from other lanes, such as China-Europe, in order to capitalise on revenue potential.

With demand sure to far outstrip capacity, shippers should look to lengthen their booking windows while being ready for changes in schedules and rates.

 


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Ocean

Asia → North America

Capacity

  • CU Lines has announced a new transpacific service with two smaller vessels (1700-4000 teus) operating between Shanghai-LA, part of a new influx of non-alliance carriers entering the transpacific market.
  • Delays continue to climb in response to continuing disruption. For shipments exported out of China from August 9th -15th, delays increased by 32%, climbing 70.4% above the average delay in the last four months.

Equipment

  • See below

Ports

  • California port congestion is now at a record high, with the queue of container vessels waiting to dock at the Californian twin gateways now at 47 ships, including those anchored and those drifting offshore.
  • Disrupted arrival schedules continue to slow inland transport routes, with trucks, trailers, and domestic containers missing connections due to shipping delays.
  • Following Hurricane Ida, New Orleans Terminal and Ports America remain closed for containerised operations. Meanwhile Empire, Coastal Cargo, Gulf Stream Marine and Ports America are also closed for breakbulk.
Carriers POL 20GP 40GP 40HQ
HPL NINGBO Shortage Normal Shortage
SHANGHAI Shortage Normal Shortage
YANTIAN Shortage Normal Shortage
SHEKOU Shortage Normal Normal
MSK QINGDAO Shortage Shortage Shortage
SHANGHAI Normal Normal Shortage
NINGBO Shortage Normal Shortage
Nanjing Shortage Normal Shortage
Xiamen Shortage Normal Shortage
YANTIAN Shortage Normal Shortage
SHEKOU Shortage Shortage Shortage
NANSHA Shortage Normal Shortage
HONGKONG Normal Normal Normal
SHANTOU Shortage Shortage Shortage
ONE YANTIAN Normal Shortage Shortage
SHEKOU Normal Shortage Shortage
XINGANG Normal Shortage Normal
QINGDAO Normal Shortage Shortage
SHANGHAI Normal Shortage Normal
NINGBO Normal Shortage Shortage
ZIM XIANGANG Normal Shortage Shortage
NINGBO Normal Shortage Shortage
SHANGHAI Normal Shortage Shortage
YANTIAN Normal Normal Normal
SHEKOU Normal Shortage Shortage
HMM SHANGHAI Normal Normal Shortage
NINGBO Normal Shortage Shortage
YANTIAN Normal Shortage Normal
SHEKOU Normal Shortage Normal
MSC SHANGHAI Normal Normal Normal
NINGBO Normal Normal Normal
YANTIAN Normal Normal Normal
SHEKOU Normal Normal Normal
EMC YANTIAN Normal Shortage Shortage
SHEKOU Shortage Shortage Shortage
NINGBO Shortage Shortage Shortage
SHANGHAI Normal Shortage Shortage
QINGDAO Shortage Shortage Shortage
OOCL YANTIAN Normal Normal Shortage
SHANGHAI Normal Normal Normal
NINGBO Normal Normal Normal
CMA QINGDAO Normal Shortage Shortage
SHANGHAI Normal Shortage Shortage
NINGBO Normal Shortage Shortage
YANTIAN Normal Shortage Shortage
SHEKOU Normal Shortage Shortage
cosco YANTIAN Normal Normal Normal
SHEKOU Normal Normal Normal
SHANGHAI Normal Normal Normal
NINGBO Normal Normal Normal
QINGDAO Normal Normal Normal
DALIAN Normal Normal Normal
XINGANG Normal Normal Normal
YML YANTIAN Normal Shortage Normal
SHEKOU Normal Shortage Normal

Asia → Europe (Far East Westbound)

Rates

  • Rates from the Far East to Europe have remained stable for the first time in recent months, with only slight adjustments due to bunker price increases. Xeneta showed long-term contracted ocean freight rates rose just 2.2% during the month of August, however this is unlikely to signal a reversal.
  • Several carriers have announced rate increases from India to Europe, including:
    • Hapag-Lloyd: $500 – $800 increase per container from mid-September
    • Hamburg Sud: $800 per container from mid-September
    • CMA:
      • $300 per 20’ container
      • $400 per 40’ container
  • MSC will increase prices by $200 per dry and HC unit from South Africa to Europe and has also announced new FAK rates from Sri Lanka to Europe.

Capacity

  • Reports indicate that bookings must be made at least 4 weeks in advance in order to access prepaid spaces.
  • The majority of carriers are still only providing capacity if you have a space agreement or have provided historic volume support.
  • We have seen some bookings released by MSC on the standard tariff, rather than their Diamond Tier.
  • Ningbo port has now reopened and is working through a backlog, with current berthing delays around 5 days.
  • HMM have announced several blank sailings from Shanghai and Yantian, also applying across the Alliance.

Equipment

  • MSC, HMM and Cosco have shown an improvement in stocks of 40’ cubes, though Evergreen still reports shortages.

Europe → USA (Transatlantic Westbound)

Rates

Air

Asia

US market

  • Rates have increased and space is extremely tight
  • LAX is one of the worst affected destinations, as they have had the most flights cancelled
  • 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)

  • Rates have increased and space is extremely tight
  • AMS is one of the worst affected destinations, as they have had the most flights cancelled
  • 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

  • Rates have increased and space is extremely tight
  • 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 aren’t 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 ro-ro vessels where there would otherwise be a requirement for an EXS.

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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