Transport Update 21st April 2021
Apr 21, 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: a data deep dive into ocean freight disruption
The disruption caused by the blockage of the Suez Canal is predicted to endure at least until the end of June. As equipment shortages and port congestion start to bite in earnest, carriers are modifying their schedules to avoid delays and maximising vessel utilisation.
As lines plan for the long haul, shippers will need to do the same. The Summer season will likely be shaped the Spring disruption, adding a new wrinkle into peak demand planning for many businesses. Advanced bookings, supplier management and forwarder collaboration will be essential to navigate the evolving situation. Shippers should be looking to build contingencies into demand planning and buffer stocks, while planning for variable lead times and more potential blanked sailings.
This week our procurement team digs into the numbers around upcoming blanked sailings and capacity on Asian routes.
Asia → North America
| Rates | Rates have increased to the West Coast and East Coast. Premiums are in place to guarantee of space for specific ETD requirements. |
| Capacity | Space is at a premium with capacity being affected by port congestion in the US. There are also reports of vessels with COVID-19 cases, causing an extra delay of two weeks, adding further pressure to the network. Blank sailings are removing 9-12% of capacity in this trade as per below. |
| Equipment | The situation continues to deteriorate. The CAx Container Index indicates a continuous trend of empties accumulating in the West Coast, with the index now sitting at 0.91 this week, an increasing trend for the past 9 weeks. |
| Ports | Low productivity in Los Angeles and Long Beach has created congestion in the terminal yards and a shortage of equipment and chassis, has now spread to the shortage of railcars contributing for further delays on customers using this mode for the last mile. |
| TPEB | Nominal | WK16 | WK17 | WK18 | WK19 | WK20 | WK21 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capacity | TEU | % | TEU | % | TEU | % | TEU | % | TEU | % | TEU | % | |
| USWC | 372000 | -53500 | -14% | -43100 | -12% | -4250 | -1% | -2300 | -1% | 0 | 0% | -2300 | -1% |
| USEC | 201300 | -14600 | -7% | -6100 | -3% | 0 | 0% | 0 | 0% | -7500 | -4% | 0 | 0% |
| Capacity changed: | -68100 | -12% | -49200 | -9% | -4250 | -1% | -2300 | 0% | -7500 | -1% | -2300 | 0% | |
| Total Capacity | 573300 | 505200 | 524100 | 569050 | 571000 | 565800 | 571000 | ||||||
Asia → Europe (Far East Westbound)
| Rates | Rates announced last week are holding until the end of April. Some carriers have already indicated a GRI for May. Long term deals will only be open for discussion from the carriers in June, depending on how the congestion and lack of equipment evolves. |
| Capacity | Capacity heavily affected by blank sailings. The latest mapping we obtained showed that we should witness problems in April and May as a consequence of the Suez Canal blockage. Carriers will skip ports where empty equipment has run out due to the bottleneck and we will see demand not being met with enough sailings. Vessels are reported full 4 weeks in advance and space is managed very cautiously by carriers. |
| Equipment | The buffer of empty equipment has disappeared and the shortage is common across Asia. |
| Ports | Data suggests that vessels that got affected in the canal have not yet arrived in full to the European ports. Latest ETA updates indicate a delay of about 5-7 days. COVID restrictions imposed in India might affect the normal operations of ports, with the latest reports received that there will be a complete lockdown on weekends, hence pushing activities to be done during the working week only. |
| FEWB | Nominal | WK16 | WK17 | WK18 | WK19 | WK20 | WK21 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Capacity | TEU | % | TEU | % | TEU | % | TEU | % | TEU | % | TEU | % | |
| EUR | 303123 | -60881 | -20% | -32946 | -11% | -19000 | -6% | -49802 | -16% | -19000 | -6% | -19000 | -6% |
| MED | 153601 | -14000 | -9% | -14000 | -9% | -41307 | -27% | -14000 | -9% | -14000 | -9% | -14000 | -9% |
| Capacity changed: | -74881 | -16% | -46946 | -10% | -60307 | -13% | -63802 | -14% | -33000 | -7% | -33000 | -7% | |
| Total Capacity | 456724 | 381843 | 409778 | 396417 | 392922 | 423724 | 423724 | ||||||
Europe → USA (Transatlantic Westbound)
| Rates | Rates remain high, same as last week, with increases of 50% compared to last month. |
| Capacity | All carriers are reported overbooked and vessels are full until mid May. |
| Ports | Inland moves from the East Coast ports are being affected by the increase in demand generated by the ASIA to US trade with shippers trying to bypass problematic ports and moving cargo inland from one side of the country to the other. |
Air
The air freight market remains in a state of limbo, waiting for the return of passenger travel while enduring consistent growth in demand from successive shocks in the ocean freight market. Rates already squeezed by high demand for IT goods and vaccinations now have to contend with a rush of shipments escaping ocean disruption. Current week on week trends indicate a 5% increase in prices out of Asia, with rates likely to remain extremely elevated throughout June.
Asia
| US | Air freight rates keep on increasing ex-SPRC due to a continued increase of project shipments i.e. vaccine and IT products shipments. PVG and NPRC are better. Space is extremely tight and there is no spot rate to JFK or LAX for dense cargo owing to some flight cancellations by Air China. |
| EU | Air freight rates have continued to increase the same as the US ex SPRC due to a continued increase of project shipments. PVG and NPRC are better. Space is extremely tight. Spot rate for either FRA or AMS is available for super dense cargo and some volumetric cargo. |
| UK | Rates keep on increasing for ex SRPC this week due to vaccine shipments to the EU increasing, as well as the high demand for IT products. PVG and NPRC are relatively stable. Transit service via AMS or FRA airport stays normal this week, but we still recommend air-air service flying into the UK directly rather than via mainland Europe. Spot rates for dense cargo are available in the market. |
Americas
| US | The market is still very tight, with little capacity and high rates. It is expected that the problems with the Ever Given in the Suez canal will have a ripple effect soon. One of the things that the US is seeing now is growing interest in Sea/Air solutions from Asia via Dubai into Europe and the US.The high rates on airfreight and huge delays on ocean freight is making this a viable alternative. |
Europe
| Outbound | Still the same problems with the UK / EU market with continued strong demand but limited capacity due to low passenger numbers, it may start to change towards Q4 as airlines start to bring their schedules back on line and we see capacity open up and rates slowly start to decrease. |
| Availability | Availability has levelled out and has remained the same for the past few weeks with generally good availability across all lanes. |
| Rates | Rates are elevated from Belgium and Spain due a shortage of trailers in the region driving prices, stemming from less demand from these regions. |
| Customs | Customs clearances are still the main bottleneck in road transportation booking, with clearances taking multiple days. |
The route ahead
As disruption becomes the new normal, at least for the upcoming peak season, shippers must move to a flexible model and be ready for change at every stage.
The only option for shippers is close cooperation with carriers and forwarders based on details supply chain visibility. Shippers must be able to track, prioritise and amend their plans in line with demand and the latest supply chain conditions.
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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