Weekly Market Updates

Zencargo Market Update: 3rd May

May 03, 2022

In focus: China’s manufacturing activity fell to its lowest level in April since February 2020

Official data released on 30th April shows that manufacturing and services activity in China was at its lowest level since the start of the pandemic in early 2020. 

China’s Non-manufacturing Purchasing Managers Index (PMI) fell from 48.4% to 41.9% in April. The Manufacturing PMI decreased from 49.5% to 47.4% in March. China’s Steel PMI decreased from 44.3% in March to 40.5% in April. The drop shows the slowdown of activity in manufacturing and services in China. 

There have been reports that freight traffic volumes in the Shanghai metropolitan area decreased by 81% year-on-year in the first three weeks of April. The neighbouring Jiangsu province recorded a decrease of 30% year-on-year. Nationwide, freight volumes decreased 15% year-on-year in April.

China

Ocean

  • The Port of Qinhuangdao in Hebei province is the latest port to face Covid-19 restrictions in China, although reports say that the port is operating normally. 
    • The city’s Haigang district has been placed under restrictions, which includes a giant coal-handling complex.
    • Tangshan, China’s largest steel-producing city based in Hebei province, has also been locked down for most of April. 
  • Shanghai remains in lockdown and there are growing concerns that Beijing will follow.
    • The capital city has detected a rise in Covid-19 cases and 22 million of Beijing’s inhabitants had already completed three rounds of testing by 30th April.
    • As of 28th April, at least 26 cities across China were in partial or full lockdown. 
    • Carmakers and phones are experiencing component shortages in China. 
      • The US imports nearly 18% of all products from China and 33% of electronics.
      • Apple and Microsoft have warned that China’s lockdowns have intensified global supply chain disruption. 
  • Shanghai struggles with the resumption of production having been in lockdown for over a month. 
    • Factories are having difficulties resuming work as workers are unable to go back to work under the indefinite lockdown.
    • Only a small fraction of Shanghai’s factories have been allowed to restart, under closed-loop conditions. 
    • Some warehouses reopened in Shanghai in mid-April. Other warehouses have remained operational at other ports, including Ningbo, Shenzhen, Qingdao and Xiamen, although there are local restrictions on drivers who need to provide a negative Covid-19 test within 24 hours before entering the port. 
  • In April, the average containership capacity seen at a port in China stood at 2.3m TEU. This is 0.6m TEU higher than pre-Covid levels.
    • Following the lockdown restrictions, the average container capacity at Shanghai increased by 30% in April 2022 compared to the start of 2022.

Air

Central China to USA and Europe

  • Shanghai is still in lockdown. Businesses should coordinate with their freight forwarding partners about whether this affects their shipments. 
    • Deliveries into Shanghai Pudong International Airport are backed up and the congestion has spread to Shenzhen due to the rerouting of shipments. 
    • All residents are required to do one PCR test a day. 
    • Despite this, daily operations remain normal.
    • From Shanghai to the USA and Europe, rates have increased a little and there is less capacity this week. 
    • All international inbound flights to Shanghai have been banned.
  • From NGB Airport to Europe and the USA, rates are stable this week 
    • Final rates depend on a case-by-case basis. 

North China to USA and Europe

  • The space in the air market from TSN Airport is tight. This week is China’s public holiday ‘Labour Day’, therefore rates are high and space is tight this week. 
  • From PEK Airport, space is also tight due to China’s Labour Day holiday and rates are level to both the USA and Europe.
  • Some areas in Beijing have been placed in lockdown due to a rise in Covid infections.
    • This has limited trucking services due to restrictions that have been put in place to prevent the spread. 
  • Please work with your freight forwarding partners to reconfirm rates and space in advance. 

South China to USA and Europe

  • CAN terminal has detected a new COVID-19 case and therefore more stringent controls are in place. 
  • CAN Airport terminals are busy and the wait times to get into the terminal have reached over 12 hours.
  • From SZX Airport, the market and rates remain stable.
  • All shipments need to be checked on a case-by-case basis. 

Road

  • Truck drivers are subjected to daily PCR tests for drivers and local road permits are required when entering the cities in Jiangsu province. 
    • Local permits must be applied by the local manufacturer and cannot be generated by an agent of the trucker. 
USA

Ocean

  • Transpacific carrier on-time performance to the US West and East coasts improved in March.
    • On-time performance also improved globally in March. 
    • From Asia to the US West Coast, on time arrivals in March improved by 7.3% from February to 20.4%. 
    • From Asia to the US East Coast, on time arrivals in March increased to 19.7%, an improvement of 4.4% from February.
    • There are a couple of reasons for the disproportionate increase when comparing the US East Coast and US West Coast:
      • East Coast imports from Asia increased in the first quarter. Imports declined at West Coast ports as businesses shifted volumes to avoid potential disruption linked to the West Coast labor negotiations. 
    • However, containership capacity at USEC ports is 100% higher than pre-Covid levels in April despite decreasing levels from the start of the year. 
  • Delays on the US East Coast and US West Coast vary for each destination. 
    • Average delays on the US East Coast for vessels from Asia increased by 0.89 days to 12.18 days. 
    • Delays on the US West Coast for vessels arriving from Asia decreased by 4.25 days to 12.22 days. 

Air

  • The Airforwarders Association (AfA) are looking for solutions to tackle US airport congestion.
    • Five critical issues were identified following a survey of airport cargo stakeholders. 
    • The committee will focus on developing solutions on technology and automation, service standards, airport facilities and infrastructure, staffing and hours of operation, and regulator and paperwork challenges.
Benelux

Ocean

  • Due to EU sanctions against Russia, 8000 cars are stranded at the Port of Zeebrugge. 
    • The vehicles arrived at the port from Asia and were to be prepared for transhipment to Russia at the Belgian port. 
    • The ban on luxury goods to Russia has resulted in the vehicles staying put at Zeebrugge with no indication as to when they can move. 
    • The port can accommodate up to 10,000 vehicles so there is still capacity at the moment.
United Kingdom

Road/Rail

  • European road freight rates index up 4.3 points in Q1, hitting a new record high.
    • According to the latest report by Upply, Ti and the IRU, European road freight rates hit an all-time high in Q1 2022 due to rising cost pressures, supply and capacity disruptions, regulatory change and the war in Ukraine. 
    • The Q1 2022 European Road Freight Rate benchmark index stood at 110.9. This is 4.3 points higher than in Q4 2021 and 7.5 points higher than in Q1 2021.
    • Rising fuel costs (up around 52.7% year-on-year on average across European markets) and driver shortages have contributed to the increase in road freight costs and rates across Europe. 
  • Further Border Controls Delayed
    • The following controls which were planned for introduction from July 2022 will now not be introduced:
      • A requirement for further Sanitary and Phytosanitary (SPS) checks on EU imports currently at destination to be moved to Border Control Post (BCP).
      • A requirement for safety and security declarations on EU imports.
      • A requirement for further health certification and SPS checks for EU imports.
      • Prohibitions and restrictions on the import of chilled meats from the EU.
    • The UK Government will publish a Target Operating Model in the Autumn that will set out the country’s new regime of border import controls.
  • New bilateral ferry deals between UK and Europe will drive up ferry costs
    • European governments are negotiating bilateral agreements aimed at formalising pay and working conditions on board ferries between Europe and the UK, which will likely push up the cost of freight on a number of key routes.
    • With the events at P&O Ferries which saw the redundancy of 800 staff members, UK trade unions have been in discussions with the Department for Transport. This will see collective bargaining agreements (CBA) in place on key routes out of the UK.

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

April 27th – NL, SI

May 1st – AT, AD, BE, BG, BA, BY, CH, CZ, DE, ES, EE, FR, FI, FL, GR, HU, HR, IT, LU, LT, LV, MD, ME, NO, PT, PL, RO, RU, SE, SK, SI, RS, TR, UA

May 2nd – BG, BA, GB, GR, IE, MD, ME, RU, SI, RS, TR, UA

May 3rd – BY, PL, RU, RS, TR

May 4th – LV, TR

May 5th – EE, NL

May 6th – BG, DE

May 8th – CZ, FR, SK

May 9th – BA, BY, LU, MD, RU, UA

May 10th – BA*

May 13th – DK

May 17th – NO

May 19th – TR

May 21st – ME

May 22nd – ME

May 24th – BG

May 26th – AT, AD, BE, CH, DK, FR, FI, FL, NO, NL, SE

May 30th – GB, HR

 

*Not in all regions

The route ahead

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