Weekly Market Update - November 3, 2020

Focus Areas of the Week: UK Port Congestion and Equipment Shortages in Asia – Challenges and Recommendations 

“With 2 major carriers reducing their services into the UK and severe problems at Felixstowe, peak disruption is certain and shippers must act now in anticipation of delays and increased costs.”

– Scott Irvine

Port Congestion at Felixstowe continues to cause problems, shipping lines imposing surcharges

Problem:

• Severe disruption at Felixstowe Port, leading to increased waiting times and reduced working hours, causing delays in schedules and limited empty restitution. 
• Shippers Asia – Europe are being quoted rates of over $5,000 on the Maersk Spot Tool per 40 ft. 
• Cosco have pulled one of their services into Felixstowe and Evergreen have announced that they are not taking new bookings into the UK. 
• Post Congestion charge for the Port of Felixstowe, now between $200-$300 Per teu. 
• Carriers look to limit Felixstowe Imports in order to provide sufficient time to evacuate empty equipment which has been building up due to insufficient berthing time to evacuate.
• Some shipping lines not stopping at Felixstowe
• Congestion at Felixstowe has caused vessel and cargo diversion to Southampton and London Gateway
• Southampton and London Gateway are becoming strained. There are congestion charges at Southampton and additional trucking costs for empty containers due to space availability. Congestion at London Gateway could last until mid-November according to Hapag-Lloyd.

Your Freight Provider should help you: 

• Increase Booking Window at origin from 2 weeks to 3 weeks
• Book Container Haulage 2 weeks in advance
• Get information about your detention and demurrage days
• Consider alternative ports such as Southampton, London Gateway, via Antwerp into Teesport , Liverpool , Bristol or South Shields. Some Carriers now quoting FAK rates to Rotterdam, Hamburg and Antwerp up to $500 cheaper than for the UK
• Try and restrict cargo

Equipment shortages in Asia

Problem: 

• In particular 40’ & 40’HQ, equipment substitution a possible solution NOR’s
• HPL imposing HQ surcharge $175

Your Freight Provider should help you: 

• Look at loading 20’s / NOR’s / SOC’s

Ocean Freight Market Update

Asia → North America (Transpacific Eastbound)

Rates: Have remained Stable. 

Capacity: Space is at a premium with carriers reporting fill utilization 2 to 3 weeks prior to departure. 

GRI : Despite the strong demand no further GRI’s have been announced.

Notes: Under pressure West Coast ports are not being helped by a shortage of Chassis, an issue exports are expecting to last until early 2021.

Asia → Europe (Far East Westbound)

Rates: Increases announced for November, as carriers look to increase the PSS charges, and the Post Congestion charge for the Port of Felixstowe, now between $200-$300 Per teu.  

Capacity:  Space is still under constraints however the key issue is equipment, which is in scarce supply across all trades, and market information indicates that AS-EU is currently 4th priority. 

Notes: UK Ports under increased pressure as Carriers look to limit Felixstowe Imports in order to provide sufficient time to evacuate empty equipment which has been building up due to insufficient berthing time to evacuate. 

Carriers looking at alternative ports in order to evacuate equipment via feeders into European ports.

India → Europe

Rates: Have sharply increased as of 1st November as rates are now reflecting the acute equipment shortages in India and globally.

Capacity: Restrictions on capacity remain, however equipment issues are the key driver in the market.  

Air Freight Market Update

Asia

• Shanghai and North China have seen the rates stabilize at a relatively high level.
• South China especially CAN has seen the rates continue to increase, and at the moment there is no sign of them stabilizing.
• It is the traditional peak season before the Christmas Holiday and Black Friday which also has a massive impact on rates and space.
• Project shipments continue to surge into the air freight market, Iphone 12, Huawei Mate, XBOX, PS5 and other commodities like auto parts etc are taking up a lot of the available capacity. They are securing the space by paying high freight rates to the airlines, this is one of the main factors that is causing the serious space issues and higher rates.
• The spreading of the 2nd wave of COVID-19 has resulted in high demand of PPE related products all over the world which has also had an effect on air freight rates and space availability. This has also affected the air charter market with availability also becoming harder to find.

Americas

• There are capacity challenges to almost all South American destinations. Space to Australia and South Africa remains scarce, resulting in increasing rates.
• A backlog into North East Asia caused by cancellations due to Golden Week has eased
• The congestion at the very busy US seaports is occupying truck capacity, spilling over to other parts of the transportation industry. Full Truck Loads (FTL) are hard to come by resulting in additional demand for LTL, evident by delays and increasing rates for domestic transport. It has become much harder to find TSA compliant trucking companies.
• The spike in COVID-19 cases across Europe and the consequential lock-downs will make for a further decline in passage traffic. Belly capacity will be pulled from the market.
• Traditionally London has been the entry point of choice for e-commerce into the European Union. Brexit is forcing e-commerce merchants to look for an alternative to London which is expected to put additional pressure on air freight to Amsterdam and other destinations in Northern Europe.

Europe

• With the expected announcement that the UK will go into lockdown space is expected to become very constrained as passenger numbers will again be expected to drop meaning a reduction in capacity.
• Rates are still at a higher than normal level to most destinations, although there are some decent spot rates available to China and some Far East destinations at the moment but as we are in the peak season and with the expected lockdown these will become harder to find.

European Road Freight Market Update

• European road trailer demand is on the increase as businesses prepare to stockpile in Europe ahead of the Dec 31st deadline.
• They’ll be a significant increase in demand for trailer equipment in the lead up to Black Friday (27th). Please book early to secure your trailer requirements.

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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