Zencargo Market Update: 28th 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: Shippers are to expect further rate increases and supply chain disruption as a result of the conflict in Ukraine.

The Russian invasion into Ukraine has led to supply chain turmoil with disruption and delays highly likely. The UK, USA and EU have placed sanctions against Russia including the shutdown of airspace to Russian planes. Russia has banned aircraft from 36 countries from entering its airspace; this includes EU members. US and UK authorities have also warned of a growing increase in cyberattacks that could affect supply chains. 

Prices of crude oil have increased to levels last seen in 2014 and there is a 40% increase in low sulfur fuel from December 2021. There is also potential for carriers to introduce emergency bunker chargers and rates are expected to increase.

At least two merchant ships have reportedly been hit since the invasion resulting in insurers either not offering vessel cover or demanding large premiums.

With cargo stuck in Ukraine and some carriers not accepting cargo to or from Russia, other European ports will see congestion increase with alternative ports receiving more cargo than usual. The congestion also has a knock-on effect with other trade lanes as containers will be stuck at ports, reducing container availability and affecting other trade lanes due to the lack of equipment. 

Please speak to our experts if you have been affected by the recent events, and we will be happy to help. 

Asia

China 

Ocean

• The market remains stable with space still open 2 weeks in advance.
• The market is still operating with fortnightly or monthly FAK rates and due to the current market conditions, there is no real commitment on long term rates from the Alliances.
• Carriers in China have released rate drops and space is quite easily available.
• TP Eastbound trade lane rates from Asia to US:
  • Shanghai to LA was up 3% last week.
  • Shanghai to New York was up 1% last week.
• Some international and Chinese traders have cancelled or diverted some trading channels and routes to tackle potential disruption.
• Russian Railways have been hit by sanctions but these do not impact the actual operation of the rail services and hence the China-Europe overland freight still moves.

Air

Central China to USA and Europe

• Rates to the USA have increased significantly.
• The epidemic control in PVG airport is still serious, but there are no special rules for the Omicron variant as there is daily control on COVID-19.
  • The rule that over 40% of flights should be cancelled has not yet been changed and there are still COVID-19 checks in place.
  • Many flights are still impacted by the pandemic and have not returned to pre- Covid levels.
• Due to the conflict in Ukraine, many flights were suddenly cancelled. This has greatly affected the EU market.
• • Cargo booked on RU/PO had to change from air freight to ocean. As a result, there is nearly no space available until this Friday.
  • Airlines such as RU/PO/AY have cancelled their flights from last weekend and this week.

North China to USA and Europe

• The air market remains normal with rates continuing to decrease.
• Space is tight between TSN to the USA and Europe.
  • For the USA, you will need to book 5-6 days ahead.
  • For Europe, you will need to book 3-4 days ahead.
• Air rates are decreasing compared to last week, but the available space is tight due to the Beijing 2022 Winter Olympics closing this week.
  • Please reconfirm the rate and space 3-4 days in advance.

Road/Rail

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

North America

USA

Ocean

• The good news on U.S. port congestion is that the number of ships waiting for berths in Los Angeles/Long Beach continues to decline.
  • Falling to 66 last week compared to an average of 109 in January.
  • This is mainly down to the fact there have been fewer departures from Asia in early 2022.
• However, relief is temporary as scheduled departures going forward rise steeply between March and April.
  • Congestion is set to increase once again on the west coast but will also worsen on the east coast.
  • There is a shift in volumes to the east coast of 60% due to vessels departing Asia to the east coast in the coming months as carriers try to circumvent congestion on the west coast.
• The ILU west coast labour negotiations are due to start in April.
  • Potential impact for significant port disruption, congestion and congestion charging if the discussions don’t go well.
• Rates to the USA from Europe remain high, and capacity remains tight, it is recommended to book at least 4-5 weeks in advance.

Air

• Rates from the USA have increased significantly.
• Similar disruptions are to be expected from the USA to Asia as seen from Asia to the USA.

Europe

Ocean

• • As of this morning, ONE has announced a suspension of booking acceptance to both St. Petersburg and Novorossiysk – which means all cargo to Russia must be transferred via ports in Europe.
  • Container terminals are now also blocking cargo. ECT in Rotterdam has just announced that containers destined for Russia will be blocked by customs and cannot be loaded.
  • The situation for freight to, from and through Russia is uncertain as new sanctions unfold and it is difficult for freight providers to predict and prepare for what may unfold in the coming days and weeks.

Air

• • Due to the conflict between Ukraine and Russia, many flights to and from Europe have been cancelled.
  • RU/PO/AY/CK/CZ/CA have been cancelling flights to and from Europe and Russia/Ukraine in light of the recent events.
• It is still unclear what volumes are possible with the new air sanctions between Russia and the UK.
• These sanctions are also affecting cargo transportation in Asia and America.

Road/Rail

Tensions in Ukraine

As the situation in Ukraine escalates we have taken the decision to pause our Overland services in and out of the country while we assess the impact. Many hauliers operating European road freight services employ HGV drivers of Ukrainian nationality and we are thinking of our partners during this difficult time. Safety is our main priority and we will keep our clients informed of any further changes.

Fuel price uncertainties are creating disruption

It is forecasted that hauliers will become more selective in the jobs that they will undertake due to the current fuel price uncertainties. Crude prices have hit their highest in several years, passing over $100 a barrel. Following the news of increasing tensions in Ukraine, it looks likely that the prices will continue to rise.

Hauliers warned 2G phase-out could shut down their fleet tracking systems

Operators relying on older fleet tracking systems should consider upgrading their technology to avoid “major blackouts” as the UK’s mobile networks begin to phase out 2G. In December, the government announced 2G and 3G mobile networks would be phased out by 2033 as part of measures to increase the security of telecoms supply chains and to support a transition to faster technology, such as 5G and eventually 6G. The ageing 2G network is still used by hundreds of thousands of black-box devices to transmit data, but the move to switch it off means it will become obsolete – forcing affected transport firms to swap out the redundant technology and invest in 4G equipment.

Upcoming Customs Changes from July 2022

From 1 July 2022, the goods listed below will become subject to additional checks. Firstly, there will be a document check to confirm that the goods have the right commercial documentation and certificates/licences. Before the goods depart there will be a check on the seal applied to the consignment for identification purposes. On arrival, the goods will be physically checked.

• All meat products
• All regulated plants and plant products
• All remaining regulated animal by-products
• All remaining ‘high-risk’ food not of animal origin.

From the 1st of July 2022 goods listed above will no longer be checked at the destination place, they will be inspected at border control posts and control points.

From 01 September 2022, Dairy products will also have the same checks as above when they are imported from the EU.

From 01 November 2022, Checks on all animal origin products inclusive of by-products will be introduced. Live animal inspections will take place at border control posts, if there are no border inspection posts at the point of entry the inspections will be carried out at the destination.

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

• • February 28th – AD, ES
  • March 1st – BA*, CH*, ES*, PT*
  • 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 route ahead

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