Zencargo Market Update: 21st February

Welcome to the Zencargo weekly freight market update – the latest news from our freight and procurement teams on the real experience of shippers.

• Asia
• North America
• Europe

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In focus: Despite Chinese New Year, the situation at Chinese ports remains difficult

Lower factory output due to the Chinese New Year holiday season has helped to ease port congestion however, cargo backlogs and container shortages are contributing to higher rates. 

Services have returned to normal at Yantian, Shekou and Guangzhou in South China and in North China, Qingdao and Tianjin are also operating normally. 

Shanghai remains the exception; the port is still suffering with congestion as most vessels are delayed by a week. Despite this, the capacity situation at Shanghai has improved post Chinese New Year, although space remains tight and vessels have blank sailings and omitted services. High volumes of cargo before the holiday are still taking up space for departures. 

Shenzhen and Hong Kong are performing better but they are currently battling local Covid waves. On 8th February, several warehouses in Shenzhen stopped receiving cargo due to Covid restrictions. Shenzhen still has some restrictions in place, causing delays for factories and transport. 

Businesses need to work with their freight forwarding partner to get the latest updates on relevant ports in the event of any local port disruptions that may affect their exports. 

Asia

China 

Sea

• • Rates from China to the US West Coast range from $10,000 to $12,500 per 40ft. 
    • On this trade lane, although congestion at US West Coast ports has decreased, transit times have increased by 28 days in late 2021 to a current average of 38 days. 
  • Rates from China to the US East Coast range from $12,000 to $15,500 per 40ft.
  • Rates from China to North Europe range from $13,500 to $16,000 per 40ft until the end of February. 
    • The 14,000 to 24,000 TEU ships on this route require an average 17 days more than their pro forma schedules to reach China for their next Westbound trip.
    • In the Far East to North Europe trade, skipping port calls appears to help mitigate delays and vessels that stick to pro forma schedules are experiencing the biggest delays. 
  • Factories have shut due to the Lantern Festival so there are low bookings in the market. 
  • Equipment:

Air

Central China to USA and Europe

• The market rate to the US and Europe has decreased compared to last week. 
• The epidemic controls at PVG airport are still in place. However, there are no rules that are specific to Omicron due to the day-to-day control on COVID-19.
  • Over 40% of cargo flights are cancelled
  • Terminals are at 50% in terms of labour resources.
• Rates have decreased from NGB to the USA and Europe. 
• Rates and space will need to be checked with carriers on a case-by-case basis.

North China to USA and Europe

• Rates remain the same between TSN Airport to the USA. 
• Rates have decreased to some major airlines such as Singapore Airlines, KLM and Air China. 
• Space is tight between TSN to USA and Europe.
  • Please book 3-4 days in advance and check with carriers on a case-by-case basis. 
• Rates have decreased from PEK airport to the USA and Europe. 
  • Space is tight due to the Beijing 2022 Winter Olympics finishing this week.
  • Please book cargo 3-4 days in advance. 
  • Heavy and dense cargo can apply for special rates but check with carriers on a case-by case basis. 

South China to USA and Europe

• From CAN Airport to the USA and Europe, the market remains stable. 
  • All shipments need to be checked with carriers on a case-by-case basis. 
  • Carriers can offer spot rates for dense cargo. 
• From SZX Airport and XMN Airport to the USA and Europe, rates are decreasing.
  • Freight will need to be checked on a case-by-case basis. 

Road/Rail

• The Paralympic Winter Olympic Games will start on 4th March in Beijing which may cause more congestion. Therefore, normal trucking service will have more lead times in Beijing. 

India

Sea

• The Indian subcontinent to Europe trade lane, has very poor schedule reliability, falling to 13% in December. This is compared to the average global schedule reliability of 32%.
• Rates currently range from $7,000 to $8,100 per 40ft on this route. 

North America

USA

Sea

• On the US West Coast, vessels queueing to get into the port decreased to 76 vessels. This is down from a peak in January of 109 vessels waiting outside ports.
• Dwell times at West Coast ports have decreased from a peak of 11 days to 5 days. 
  • This is because LA and Long Beach have been able to reduce the number of empties on terminals.
  • This has decreased from 90,000 TEUs to 60,000 TEUs.
• A report by Sea-Intelligence had predicted that the number of vessels scheduled to deliver cargo from Asia to North America will add to port congestion at US ports.
  • In March and April, the number of vessels scheduled to depart in Asia to the US West Coast will increase sharply. 
  • As more ships are deployed, the number of smaller ships increases, therefore it will be less efficient to handle two 5,000 TEU vessels than it is to handle one 10,000 TEU vessel when factoring the time it takes to get to and from berth.
• On the Transatlantic Westbound route, rates range from $7,000 to $9,000 TEU. Space remains at a premium and businesses are advised to place bookings at 5-6 weeks in advance. 

Air

• Chennault International Airport in Louisiana, USA is nearing completion of a $4million facility to enter into the air cargo sector. 
  • The 10,000 square ft building is expected to be completed this summer and is anticipated to be certified for international cargo by the US Customs and Border Protection. 
• Worldwide Flight Services (WFS) has extended its partnership with Turkish Airlines at Dallas/Fort Worth International and Houston George Bush Intercontinental. 
  • WFS expects to handle 31,000 tonnes of cargo per annum for Turkish Airlines at the two US gateways. 
  • In Dallas, WFS has started handling four B777 passenger flights to the carrier’s Istanbul hub.
  • In March, WFS will handle 3-4 freighter flights per week plus daily B777 services to Istanbul at Houston Airport. 

Europe

Air

• Brussels Airport handled 4% more airfreight in January 2022 compared to January 2021 and 10% more than January 2019.
  • The airport saw throughput of 60,645 tons in January.
  • Compared to January 2021, growth in freight transport in 2022 increased belly cargo by 51%. This is because travel restrictions resulted in a decline in passenger flights a year ago.
  • More than 800,000 passengers flew through Brussels this January, an increase of 183% compared to January 2021. However this was still down by 52% compared to January 2019.

Road/Rail

European Parliament approved reform of road haulage charging

Under the new rules adopted on Thursday, road charges for trucks will move from time-based to distance-based charging, making ‘polluter pays’ principles work better.

The aim of the new rules is to move road charging from a time-based model to an actual kilometres-driven system, to better reflect the ‘polluter pays’ and ‘user pays’ principles.

MEPs secured that member states will phase out “vignettes” (time-based road charging) for heavy-duty vehicles across the core Trans-European Transport Network network within eight years of the new rules entering into force, and start applying tolls (distance-based charges). However, member states will still be able to retain vignettes for specific parts of this network, if they can prove that a new mode of charging would be disproportionate to expected revenue.

Fuel prices continue to rise

The situation in Ukraine, alongside other factors, including the COVID-19 pandemic, has pushed prices at the pump to record highs.

 The current average for diesel is now approaching 152p per litre with motor organisations describing current pricing as the highest it has ever been.

Haulage operators are having to pass on rising costs and every penny means another $450 per year to the cost of operating at 44-tonnes.

Government Changes HGV Law to allow for Aerodynamic Features and Longer Cabs

Government legislation has been changed to permit the use of aerodynamic features and elongated cabs on lorries to reduce fuel consumption and emissions.

Since 14th February, haulage operators are able to choose vehicles which reduce fuel consumption by an estimated 7% to 15%. Previous legislation in place since 1986 meant that the aerodynamic rear devices – fitted on the back of trailers – were not permitted. Alongside emissions reduction through fuel efficiency, the elongated cabs also improve driver vision and can accommodate larger beds in sleeper cabs.

European Bank Holidays

Zencargo anticipates a shortage of availability and the occurrence of delays around the bank holiday periods. Plan ahead and allow extra time for your products to be delivered.

February 23rd – RU

February 24th – EE

February 28th – AD, ES

March 1st – BA*

March 3rd – BG

March 7th – GR

March 8th – BA*, BY, DE, MD, RU, UA

March 11th – LT

March 14th – AD, HU

March 15th – HU

March 17th – GB (NI only), 

March 19th – CH*, ES*

March 25th – GR

*Not in all regions

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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