Transport Update 4th August 2021

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

• Ocean

• Air

• Road

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

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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