Weekly Market Updates

Zencargo Market Update: 28th March

Mar 28, 2022

In focus: A full lockdown has been imposed on Shanghai’s Pudong and Puxi airports starting March 28th.

From 5am on Monday 28th March to 5am on Friday 1st April, a lockdown will be imposed on Pudong, Punan and the adjacent areas to carry out nucleic acid testing. 

All residential communities will be closed and residents are required to stay at home. Companies within the lockdown areas are permitted to conduct closed-door operations, and where possible, allow staff to work from home. Manufacturers are either closing factories or limiting work capacity, and cargo ready dates are likely to be postponed.

The lockdown will increase delays and congestion, with an estimate of 2-4 week delays in the lockdown areas.

China

Ocean

  • South China area has previously been in lockdown, but some areas are lifting restrictions.
    • The lockdowns have caused major congestion in China, and with the shutdown of Shanghai, it is unlikely that this congestion will ease for some time.
    • Congestion has affected truck productivity, such as for container picking and delivery, in the ports of Shanghai and Shenzhen, causing waiting times of around 3-5 days.
  • There is an average decrease of rates in April of 4-10% with more intense rate drops for some carriers.
  • Space is hard to secure well into May and the high demand for space has resulted in an increase of rates during May.
  • MSC is currently experiencing some scheduling issues on the Transatlantic and delays are expected.
    • It is recommended that you book 6 weeks in advance of the cargo ready date.

Air

Central China to USA and Europe

  • Air freight to and from Shanghai is still underway despite the lockdown. However, some factories that remain open are avoiding Shanghai airport and are focusing on airports such as CGO, Wuhan and Xi’an. 
  • There have not yet been new rates released in light of the new restrictions, but these are expected to be available by the end of the week. 
    • It is speculated that rates might be increased from 1st April once the Pudong area reopens after local lockdowns are lifted.

 

North China to USA and Europe

  • Space is limited in Northern China with 5-6 days required ahead of booking. This is due to lockdowns, pending factory production and difficulty for trucking companies to pick up and deliver.
  • Air rates are increasing due to the Tomb Sweeping Day holiday from the 3rd to 5th April. Space is already getting tight before the holiday so it is recommended to book as soon as possible. 
  • Covid regulations in China are creating further delays as some areas are coming out of lockdown, causing a limited availability of trucking services through the Beijing city area. 
    • To avoid delays, please aim to confirm rates and space 4-5 days in advance.

 

South China to USA and Europe

  • Some airlines have cancelled flights from South China due to lack of staff caused by Covid restrictions. It is therefore expected that space will be limited this weekend.
  • While the market is stable, the rates have increased further this week as airlines are having to reschedule routes to avoid Russian air space.

 

 

India

Ocean

Equipment supplies are limited at ports and inland container depots due to growing Indian exports and reduced supply of empties available from China.

USA

Ocean

  • Last week there was a seasonal downturn in rates and this week’s Drewry Index shows a marginal reduction in Shanghai to L.A rates, compared to last week’s downturn of 2% (around $200). However, the East Coast rates remain unchanged.
  • Some importers are bringing forward shipments to try and avoid the impact of the peak season approaching. This could result in further congestion and limited space availability in the coming weeks.
  • Delays are also expected in June when the International Longshore and Warehouse Unioncontract expires.
  • Congestion has improved on the West Coast due to lower number of sailings and supply chain disruptions in China which has all led to a slight easing on the West Coast.
  • However, congestion on the East Coast has not eased as growth has increased 27% year on year for the month of February, emphasising the shift in carriers moving to the East Coast to avoid congestion on the West Coast.
  • While there have been minor changes in rates week on week of 0-2% across carriers, it is expected that rate increases will be applied from the beginning of April.
  • Extra vessels that were previously deployed on Russian routes are now being used for alternative routes.
    • MSC has now started a Baltic service that starts at the end of March that will provide further capacity.
    • The CMA Panama Direct Line (PAD) service that currently runs on a fortnightly basis will be changing to a weekly basis.
  • Equipment supplies from the Indian subcontinent to the UK are limited and worsening and space is very tight due to demand and congestion.
  • Routes over Colombo are expected to encounter delays, so it is advised to avoid this route if possible.

Air

  • Expenses for airlines to carry cargo has increased by 13% over the past year, making rate increases likely.
  • Some airlines, such Alaskan Air Cargo, are increasing their fleet to grow cargo carrying capacity from 3 planes to 5.
  • US ground handler, Alliance Ground International, has invested $100,000 into a new control centre for air cargo to help overcome the congestion in Chicago.
Benelux

Ocean

  • The Port of Rotterdam has enabled Sleipnir and Thaid, Heerema’s largest crane vessels, to switch from using their engine to shore power.
    • This allows the vessels to use sustainable energy generated from wind turbines.

Air

  • Swissport has increased its cargo handling capacity at Schiphol Airport to 35,000 square metres.

 

United Kingdom

Ocean

  • Space is limited from UK to US with some carriers fully booked into May. It is recommended to book 6 weeks in advance of the cargo ready date.
  • Ports in Northern Europe are seeing rising congestion, resulting in carriers changing schedules and restricting import and export operations.
    • Delayed vessels from China are arriving late at North Europe container ports with some containing sanctioned goods from Russia. This is causing further delays as shipments are being searched for Russian cargo.
  • Maersk has advised that its Samba service between North Europe and Latin America will exclude the port of Le Havre for a further eight weeks in response to the operational bottlenecks throughout North European ports.

Air

  • Rising fuel costs are leading air cargo carriers to implement higher surcharges for flights operating in Europe.
  • It is estimated that airlines are travelling 40% longer routes to get to their final destination to avoid Russia.

Road

Fuel Duty Cut is a welcome boost for the transport industry says the RHA

The RHA has welcomed the Chancellor’s announcement of a 5 pence per litre cut in fuel duty in his Spring Statement. The cut equates to a £2,000 per year saving on running a typical HGV. Long term, the RHA believes that the government should bring in an essential fuel user rebate for lorries in order to bring UK operating costs into line with key European competitors.

Operation Brock deployed to avert freight delays as P&O ferry crisis continues

National Highways said Operation Brock has been reintroduced as a precaution, due to reduced ferry capacity at the Port of Dover, following P&O’s decision last week to sack 800 ferry workers and suspend services whilst it recruits cheaper agency labour to run the ships.

Operation Brock will keep the M20 open in both directions by using a contraflow on the M20 London-bound carriageway between junctions 8 and 9 (between Maidstone and Ashford) with lorries heading for mainland Europe being directed onto the coastbound carriageway, where they can be queued if necessary.

Spanish strikes continue

A Spanish government offer of €500m of direct aid to the road haulage sector has failed to end a two-week driver strike sparked by spiralling fuel costs, which has hit production and manufacturing.

Transport associations rejected the €500m (£417m) aid package the government offered on Monday, and the effects of the strike are already being felt by the food industry and consumers.

Furlough schemes may need to be introduced to Spanish retail and food industry associations. “As the strike lengthens it is clear that there will be no choice but to use this (furlough) tool,” Jose Maria Bonmati, head of the AECOC business association, told a press conference.

French hauliers to receive €400m in state aid

France’s road hauliers are to receive direct state aid of €400m ($441m) to soften the blow of surging fuel prices.

The emergency package removes the threat of national-scale industrial action due this week to highlight the impact of the hikes on the sector. “The aid will concern more than 500,000 vehicles and will be paid out quickly to strengthen the cash flow of companies,” said employers’ organisations the Fédération Nationale des Transporteurs Routiers (FNTR) and Transport et Logistique (TLF).

It will be allocated on a per truck/gross laden weight basis, with individual aid ranging from €400 to €1,300. French haulage firms will also continue to benefit from a rebate of €0.15 per litre of diesel or per kg of gas fuel.

European Bank Holidays

We anticipate 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.

April 7th – CH*

April 8th – DE*

April 10th – BA*, ES*

April 14th – DK, ES, NO

April 15th – AD, CH, CZ, DE, DK, ES, EE, FI, GB, HU, LV, NO, NL, PT, SE, SK

April 16th – DK

April 17th – BA, DE, DK, EE, FI, HU, IT, LT, LV, NO, NL, PT, PL, SE, SI

April 18th – AT, AD, BE, BA, CH, CZ, DE, DK, ES, FR, FI, FL, GB, HU, HR, IT, IE, LU, LT, LV, NO, NL, PL, SE, SK, SI

April 22nd – BG, BA, GR, ME, RO, RS

April 23rd – BG, TR

April 24th – BG, GR, MD, RO, RS, UA

April 25th – BG, BA, GR, IT, MD, ME, PT, RO, RS, UA

April 27th – NL, SI

The route ahead

The information that is available in the Weekly Market Update comes from a variety of online sources, partners and our won teams. Click below to learn more about how Zencargo can help make your supply chain your competitive advantage.

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