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: When more capacity doesn’t improve reliability

When more capacity doesn’t improve reliability

According to new data from Alphaliner,  carriers have increased capacity between Asia and North America by 30.6%, and on Asia-Europe trade lanes by 19.7% in the past 12 months. At the same time capacity on Africa-related services has dropped by 6.5%, with similar reductions on Latin America routes.

This contrasts sharply with the latest data from Sea Intelligence who report reliability is down more than 38 percentage points from nearly 80 percent a year ago. In addition, the average delay for late vessel arrivals increased by nearly a third of a day in June 2021 to an average of 6.41 days. So why isn’t extra capacity helping?

This is partly due to the fact that ongoing congestion, staff shortages and new disruption has kept capacity off the market with such consistency and regularity that new vessels don’t make an impact in reliability, or in rates. In effect, delays are swallowing up capacity.

There is also the question of demand – the market has been in a perpetual peak season for much of the year, with reports that the US is still operating a 3-6 month inventory deficit, meaning that even once the capacity situation improves there will still be a lot of space to fill.

In effect, the market is being squeezed from both sides, with shippers caught in the middle.

 


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Ocean

Asia → North America

Rates

  • Rate pressure remains extremely high, with rates around $20,000-$25,000 to the East Coast and nearly $30,000 to get to the Midwest, exacerbated by rail shortages.

Capacity

  • According to Alphaliner data, in the past 12 months carriers have ramped up capacity between Asia and North America by 30.6%, though congestion limits the impact of new vessels.
  • Recent reports indicate that due to low inventory levels in the US, retailers are operating at a deficit of 3-6 months. This means that even if COVID restrictions were eliminated, it would still take months for demand to return to lower levels.

Equipment:

  • Release of equipment is still limited, with equipment running out within hours of depots opening, though some carriers have experienced an increase in containers, particularly for 40’ high cubes (see below).

Ports

  • US port congestion is worsening in the face of high volumes, inland disruption and the ripples of Yantian disruption.
  • The number of vessels now waiting outside Los Angeles and Long Beach is approaching the record levels experienced earlier in the pandemic, with anchorage times broaching the five-day mark.

Asia → Europe (Far East Westbound)

Rates

  • Hapag Lloyd have announced a $1000/container price increase from India to Northern Europe, following the example
  • MSC announced a new, unspecified ‘Service Disruption Surcharge’ on all shipments from Asia to Northern Europe from the 15th August.
  • Rates are showing smaller increases for the first half of august, compared to previous months, indicating a possible peak, though carriers are still prioritising FAK rates.
  • Rates currently sit in the range of $14,000-$16,500 to the UK and $14,000 – $15,500 to North Europe for contracted capacity. Pre-booked rates are between $16,500 – $17,500 to the UK and $15,500 – 16,500 to Northern Europe.

Capacity

  • Chittagong is still experiencing severe berthing delays, with the average wait time now at five days and some vessels waiting up to 10.
  • Capacity is filling up four weeks in advance, making last minute bookings challenging.

Equipment

  • Release of equipment is still limited, with equipment running out within hours of depots opening, though some carriers have experienced an increase in containers, particularly for 40’ high cubes (see below).

Ports

  • Backlogs following typhoons at Shanghai and Ningbo are delaying the reintroduction of equipment, causing cascading delays.
Carriers POL 20GP 40GP 40HQ
HPL NINGBO Shortage Normal Shortage
SHANGHAI Shortage Normal Shortage
YANTIAN Shortage Shortage Shortage
SHEKOU Shortage Shortage Shortage
MSK QINGDAO Normal Normal Shortage
SHANGHAI Normal Shortage Shortage
NINGBO Shortage Shortage 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 Normal Shortage
ONE YANTIAN Normal Normal Shortage
SHEKOU Normal Normal Shortage
XINGANG Normal Normal Shortage
QINGDAO Normal Normal Shortage
SHANGHAI Normal Normal Shortage
NINGBO Shortage Shortage Shortage
ZIM XIANGANG Normal Shortage Shortage
NINGBO Shortage Shortage Shortage
SHANGHAI Shortage Shortage Shortage
YANTIAN Normal Shortage Shortage
SHEKOU Normal Shortage Shortage
HMM SHANGHAI Normal Normal Normal
NINGBO Normal Shortage Normal
YANTIAN Normal Shortage Normal
SHEKOU Normal Shortage Shortage
MSC SHANGHAI Normal Normal Normal
NINGBO Normal Normal Normal
YANTIAN Normal Normal Normal
SHEKOU Normal Normal Normal
EMC YANTIAN Shortage Shortage Shortage
SHEKOU Shortage Shortage Shortage
NINGBO Shortage Shortage Shortage
SHANGHAI Shortage Shortage Shortage
QINGDAO Shortage Shortage Shortage
OOCL YANTIAN Normal Normal Normal
SHANGHAI Normal Normal Shortage
NINGBO Normal Normal Shortage
CMA QINGDAO Shortage Shortage Shortage
SHANGHAI Shortage Shortage Shortage
NINGBO Shortage Shortage Shortage
YANTIAN Shortage Shortage Shortage
SHEKOU Shortage 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 Normal Normal
SHEKOU Normal Normal Normal

Europe → USA (Transatlantic Westbound)

Rates

  • Since March, spot rates for a 40ft from North Europe to the US east coast have soared from $2,000 to $6,000, as carriers move capacity to other lanes.

Capacity:

  • ONE and Yang Ming are reported to not have space until mid-August.
  • A streak of blank sailings due to vessel maintenance will be implemented by THE Alliance and Ocean Alliance in week 29 and 31 on the USWC service.

Ports:

  • Hapag-Lloyd have confirmed a Congestion Surcharge of USD 350 per container for all intermodal moves in the US effective upon carrier receipt of cargo on or after August 1, 2021 until further notice.


Air

Asia

US market

  • Airfreight rates ex-China are soaring after Covid cases prompted the closure of Nanjing Airport.
  • A new 14-day isolation requirement on overseas crew would likely cause a pilot shortage for many airlines, with some already cutting flight numbers by half.
  • Spot rates available for heavy/dense cargo as well as volume cargo.
  • For all airports – rates and space must be checked on a case by case basis.

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

  • Airfreight rates ex-China are soaring after Covid cases prompted the closure of Nanjing Airport.
  • A new 14-day isolation requirement on overseas crew would likely cause a pilot shortage for many airlines, with some already cutting flight numbers by half.
  • Airlines are switching European airports as severe staff shortages keep freighters on the ground for hours,
  • No real change on the Asia-Europe trade lane, with rates reducing very slightly
  • Rates and space must be checked on a case by case basis.
  • Spot rates available for heavy/dense cargo as well as volume cargo.

UK market

  • Airfreight rates ex-China are soaring after Covid cases prompted the closure of Nanjing Airport.
  • A new 14-day isolation requirement on overseas crew would likely cause a pilot shortage for many airlines, with some already cutting flight numbers by half.
  • There are good spot rates out there if other, regional airports can be used – but there are restrictions on commodities, so it is always best to check.
  • There are direct flights with CA/BA, AIR-AIR by SQ and normal air-truck service.
  • Rates and space must be checked on a case by case basis.
  • Spot rates available for heavy/dense cargo as well as volume cargo.

Americas

  • Rates remain mostly the same this week, into UK, Europe and Asia
  • Space remains constricted due to reduced capacity and staff shortages.
  • US hauliers are still over capacity. We are facing delays and storage charges due to long turn around times with breaking down freight and then long queues at the airports to collect freight. Main hubs such as ORD and LAX are the worst affected.
  • Certain ground handling agents in LAX and ORD are still severely behind with breaking down freight. In some cases this is taking up to 3 weeks. It is important to ask advice from a US agent when choosing your carriers into these airports as the ground handling agent is determined by the carrier.

Europe

  • Rates into North America and Asia remain stable this week.
  • Capacity to most regions remains severely restricted

Road

Availability

Availability generally reliable across all routes and regions, though there are signs of a general UK strike on August 23rd from drivers which will cause significant disruption.

Rates

Rates remain stable across consolidated, groupage and dedicated trailers on other routes.

Customs

Border situations have improved considerably with clearances running smoothly.

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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