Welcome to the Zencargo weekly freight market update – the latest news from the ground from our freight and procurement teams on the real experience of shippers.
This week: fluctuating rates, port congestion and the rush for air capacity.

Ocean

In the Ocean market, carriers continue to effectively manage rates with a combination of blanked sailings and tactical capacity introduction. The chief issue hampering performance remains equipment, with surpluses building at destinations worldwide.

Given the decline in exports from destination countries, this trend could take some time to reverse, given the broad range of contributing factors. Shippers looking to secure capacity in the coming months should be prioritising demand planning to reserve space, as well as reviewing consolidation strategies to maximise equipment use.

Asia → North America

Rates West Coast rates unchanged, while East Coast are up $120/40’
Capacity Blank sailings for February settled at about 9.8%. HMM has reported that during the month of February it arranged for four extra loaders for the East and west Coast of the US, Europe and Russia.
Equipment Surplus issues remain, reaching 0.76 in Los Angeles according to CAx Container Index (values below 0.5 show container deficit and above surplus)
Ports No major improvement in the US West Coast ports, still over 30 vessels waiting at Los Angeles/Long BeachAsia → Europe (Far East Westbound)

Asia → Europe

Rates New rates released by the carriers show a decrease across the board, though most carriers are only offering 2 week rate validity.
Capacity February has finished with an average of 12.1% of blank sailings according to eeSea.
Equipment After an initial improvement in North European ports such as Rotterdam and Antwerp, the stocks have now been building up in excess. UK situation has not improved.

Air

Air remains volatile, as planes remain the default means of transport for essential goods such as PPE and vaccinations, often out of China and South East Asia. In addition, robust rises in e-commerce demand is expected to help keep demand strong over the coming year.

As reported by Lloyds Loading, capacity remains tight, running behind volumes, with worldwide volume decreasing by just 3% compared with the previous week and worldwide capacity decreasing by 5%. On a regional level, origins Europe and Middle East & South Asia did best with a volume increase of 2% week-over-week, while business from Central & South America showed the largest decrease (-9%).

As demand returns to the market, volumes are likely to lag behind for some time as passenger travel finds a new equilibrium. SKU prioritisation will be essential in order to manage costs on in-demand items, with a hybrid air-ocean strategy as a potential method to spread risk and cost across modes and manage inventories.

Asia

US Air Freight rates are expected to remain elevated in 2021 as the demand outlook remains uncertain and belly capacity is slowly re-introduced into the market.
EU Rates down this week, slightly more than US rates.

Spot rates are available especially for dense cargo and space is more available in the market from most origins.

Better to send via AMS airport compared to FRA who are experiencing some serious congestion issues, also for cargo into EU.

UK Rates seeing small reduction this week.

Space is available in the market, but it is still a better option to use airlines that offer a service with a more direct routing into the UK rather than going via mainland Europe.

Americas

US Rates are expected to remain elevated in 2021 as the demand outlook remains uncertain and belly capacity is slowly re-introduced into the market

Europe

Intra-Europe Rates are expected to remain elevated in 2021 as the demand outlook remains uncertain and belly capacity is slowly re-introduced into the market.
Outbound Rates down this week, slightly more than US rates.

Spot rates are available especially for dense cargo and space is more available in the market from most origins.

Rates remain at elevated levels as capacity to Asia and North-and South America is constrained. Carriers reporting high load factors from all major outbound hubs in Europe, mainly driven by high demand from the automotive and manufacturing and pharmaceutical industry verticals.

Road

Availability Availability improved from last week with more trailers and drivers available.
Capacity Rates down this week, slightly more than US rates.

Spot rates are available especially for dense cargo and space is more available in the market from most origins.

Rates increased going to and from Belgium at the moment, though the reasons for this are currently unclear.

Customs Customs clearances are still the main bottleneck in road transportation booking. It is still taking a day or two to complete the clearances.

The route ahead

As positive signs around vaccinations and transmission numbers drive optimism in Western consumer markets, demand is picking up, alongside pressure on supply chains to keep the e-commerce tap flowing. However, the global freight market is still dealing with a range of challenges including equipment shortages, variable demand and congestion.

As we move into Spring and Summer, we anticipate increased competition for space, especially in the air market.

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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