Transport Update 3rd June 2021

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: Yantian congestion brings Peak Season early

• Ocean

• Air

• Road

Ocean

Asia → North America

Rates

• Rates have increased by $1000/40’ to US East Coast and $1300/40’ to US West Coast.

Capacity

• Port congestion at Yantian is affecting the services to the US.
• There have been four port omissions announced by COSCO where either the cargo is being rolled to different vessels calling at Yantian later or moved to Nansha where the cargo had not yet gated-in the port of Yantian. Other carriers have also announced similar plans, with ONE omitting three vessels on this trade lane and Maersk announcing one.

Equipment:

• We are still facing chassis shortages. A good indicator is the operational update received from Hapag Lloyd which summarises the trend observed in the market.
  • Minneapolis, Indianapolis – Constrained on 40’ chassis..
  • Chicago, Detroit, Memphis, Seattle, Tacoma – Deficit on 40’ chassis.
  • Denver – Constrained on 40’ chassis. Units going direct to ground.
  • Los Angeles / Long Beach – Deficit on 20’/40’ chassis.

Ports

• No improvement with 1-2 weeks average waiting time to berth in Los Angeles/Long Beach and 3 weeks in Oakland. The current shortage of port workers is limiting the productivity of the port operations.

Asia → Europe (Far East Westbound)

Rates

• Rates have increased $1000/40’ from end of May, with extra of $1000/40’ PSS announced already for the second half of June from Evergreen. We expect the rest of the carriers to follow and the rates to increase still in the second half of June.

Capacity

• The Yantian port congestion is causing a number of port omissions and port diversions for services in this trade.
• Across different carriers we have already been informed of 20 port omissions where cargo is being rerouted to later vessels or to Nansha port where some vessels are now calling instead. This puts extra pressure in the amount of limited space available in the market.

Equipment

• Severe shortage of 40’HC equipment with very limited pockets of stock in Shanghai (ONE, HMM, MSC, OOCL) and Ningbo (OOCL). The 40’GP stock is more available with options in:
  • Shanghai (Hapag, ONE, MSC, OOCL, COSCO)
  • Nanjing (Maersk), Xiamen (Maersk)
  • Nansha (Maersk), Hong Kong (Maersk)
  • Shantou (Maersk)
  • Ningbo (MSC, Evergreen, OOCL, COSCO)
  • Shekou (Evergreen, COSCO)
  • Xingang (COSCO).

Ports

• Current delays are already in the range of eight days in Yantian. In Europe, the 2M alliance is diverting vessels from Hamburg to Bremerhaven due to heavy congestion.

Europe → USA (Transatlantic Westbound)

Rates

• Rates released for June indicate an increase of $500/40’ of Equipment imbalance and another $500/40’ of Peak Surcharge. No further increases have been announced.

Capacity:

• Space is fully booked from now until the end of June.

Equipment:

• There has been no improvement in the shortage of chassis available last week.

Ports

• No improvement in the inland operations from the ports. Vessel operations however remain with congestion.

Air

Asia

US market

• No significant changes since last week. HP expected to have high volumes, therefore rates expected to increase from this weekend.
• CA cancelled JFK flights and there is no sign of recovery.
• K4 cancelled two flights to ORD.
• Spot rates are currently available for heavy/dense cargo as well as volume cargo. Volume cut is not allowed at all.

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

• HP/Dell expected to have high volumes, therefore rates expected to increase from this weekend.
• CZ might cancel its WED flight, if this happens the space to AMS will be tight.
• Spot rates available for heavy/dense cargo as well as volume cargo. Volume cut is not allowed at all.

UK market

• There are direct flights with CA/BA, AIR-AIR by SQ and normal air-truck service. Space using deferred carriers is fully booked.
• Spot rates available for heavy/dense cargo as well as volume cargo. Volume cut is not allowed at all.

Americas

• Airlines are beginning to reinstate flights slowly  but space constraints remain across the board as the demand continues to outstrip capacity.
• Forwarders are shifting greater volumes of US inbound shipments to secondary, smaller airports to avoid ground handling bottlenecks at main air cargo gateways.
  • Airports such as LAX and ORD are being overwhelmed by surging demand caused by large import volumes and increased freighter traffic from Asia and Europe. Delays expected are anything between 2 – 7 days.

Europe

• Global freighter capacity is “maxed out” for 2021 and 2022 and with continued COVID-19 outbreaks and travel restrictions likely to remain in place, it is unclear how much passenger orientated belly capacity can be added through 2021 as countries struggle to curb the impact of the pandemic.
• The freighters that are flying, are operating to maximum block hours and every available freighter aircraft has been put into service, which has enabled maindeck capacity to increase by 30% when compared to pre-COVID levels. But belly capacity, which prior to the health crisis represented 55% of all air cargo capacity, is still down by slightly over 50%, with an overall capacity shortfall of around 25%.
• With demand outstripping capacity, flights are full across the board, on pretty much all trade lanes and current market conditions are likely to continue through June, based on large amounts of cargo in the pipeline.
• European export demand stays strong to the Americas and Asia and space to USWC remains constrained.
  Space to India and Bangladesh is very constrained, due to aid and relief shipments into the COVID-struck region.
  Major airport hubs, as well as secondary gateways in Europe are reporting normal throughput for air imports and air exports, despite the significant reduction in passenger flights arriving and departing from the region.

Road

Availability

Lockdowns in Turkey are still limiting availability, while Italy and Spain have seen fluctuating capacity for several weeks.

Rates

Rates from Turkey, Spain and Italy remain slightly elevated.

Customers

Clearing is moving quickly through the Netherlands.

The route ahead

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