Transport Update 5th May 2021
May 05, 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: the big ocean squeeze hits.
The long mounting pressure on ocean freight is coming to head as equipment shortages, port congestion, trucking delays and disrupted schedules combine to create an especially challenging environment for shippers. While some equipment is still available (see below), May is looking extremely tight, with much of the available space already accounted for.
This is putting extra pressure on the relationship between shippers and carriers, especially as shipping lines eye a new range of GRIs after the example of Hapag.
Asia → North America
| Rates | Rates announced for May represent an increase of between $800 to $1500 per 40’, with access to space only possible if an extra $1000 is considered. We are therefore dealing with an effective increase in the range of $2500 to be able to load in May. On top, there are GRIs being announced by Hapag from June of $1200 per 40’, which we believe might be followed by other carriers doing the same, given the sustained demand and logistics bottlenecks. |
| Capacity | Space for May is already sold and the focus now is trying to find any available pockets of space even at premium rates. Despite the blank sailings in place that carriers use to try to bring the vessels back to their original schedules (called proformas), the average weekly capacity has actually been increasing over the past year but it has not been enough to compensate for the increase in demand and the lost capacity waiting in congested ports. |
| Ports | The congestion in the West coast has disrupted the availability of truck and rail, leading to premium rates for trucking. This congestion has caused container dwell times both at the terminal and beyond to double. Despite the situation improving over the last six weeks, with dwell times decreasing by 20%, it is reported that trucking rates are at an all time high and there is no expectation they will decrease in the short term. |
Asia → Europe (Far East Westbound)
| Rates | According to Xeneta, the increases for May have been higher in the north continent ports than in the UK main ports. Rates have gone up by 10% to Hamburg, Antwerp and Rotterdam, compared to 4% to the UK main ports. The indication is that there might be some extra increases in the second half of May as carriers are dealing with the overflow of volume. Certain carriers such as MSC are now only accepting cargo on premium rates, which adds an extra $1000 per 40’ to the standard FAK tariff. |
| Capacity | Space is very limited with OOCL announcing a booking stop for the next 2-3 weeks to help manage the excess volume. Vessels in general are full 3-4 weeks in advance from Asia and Indian subcontinent. |
| Ports | For India, the availability of 40’ is sufficient in Mundra but not in the other ports of India. As for China the shortage of 40’ equipment is acute with HMM, Hapag, Evergreen, CMA and Yang Ming, with some pockets of equipment availability in some China ports with carriers COSCO, OOCL, MSC, ONE and Maersk as per below information |
| Carriers | POL | 40HQ |
|---|---|---|
| MSK | Shanghai | Normal |
| Yantian | Normal | |
| Hong Kong | Normal | |
| Shantou | Normal | |
| ONE | Shanghai | Normal |
| MSC | Shanghai | Normal |
| OOCL | Yantian | Normal |
| Shanghai | Normal | |
| Ningbo | Normal | |
| COSCO | Shanghai | Normal |
| Ningbo | Normal |
| Carriers | POL | 40GP |
|---|---|---|
| HPL | Yantian | Normal |
| MSK | Nanjing | Normal |
| Xiamen | Normal | |
| Nansha | Normal | |
| Hong Kong | Normal | |
| Shantou | Normal | |
| OOCL | Yantian | Sufficient |
| Shanghai | Sufficient | |
| Ningbo | Sufficient |
Europe → USA (Transatlantic Westbound)
| Rates | Rates for May have suffered an increase of 10% from North Europe and the Mediterranean with a further announcement from ONE of a new Peak Season Surcharge (PSS) of $1000 per container. |
| Capacity | All carriers are reported overbooked and vessels are full until mid May. |
| Ports | The strike announced for the Port of Montreal which kicked off on the 26th of April, has been forced to stop by the federal government. Operations have now resumed and the port has reported no major congestion. |
Air
Air freight continues to struggle under the weight of reduced capacity, urgent shipments on vaccines and high demand for e-commerce goods. After seeing record growth in March 2021, CTKs are estimated to rise by 13.1% in 2021. Existing pressure has also now been exacerbated by urgent shipments to India, further reducing capacity.
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 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, though Italty and Spain are experiencing a shortage across FTL and groupage services. |
| Rates | Rates are elevated from Italy 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
In the face of rising rates and long term capacity issues, a long term view of your supply chain is more essential than ever. Supply chain success requires a high degree of collaboration both internally, within your business, and externally, with suppliers, manufacturers and partners. For shippers, planning cycles will need to be extended, with buying and logistics teams collaborating on lead times while also looking for exceptions. Externally, forwards, shippers and manufacturers will need to work from reliable data sources on lead time, fulfilment and ordering cycles to enable a smoother journey from order to collection that minimises extra cost and enables booking as early as possible.
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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