Transport Update 18th 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: Chinese air freight squeeze, Ningbo to reopen, congestion climbing

• Ocean

• Air

• Road

In Focus: Closed Loop Management System squeezes capacity at main China airports

Workers in China are facing new quarantine rules in the wake of the spread of the Delta variant of Covid-19. The Closed Loop Management system means that workers are required to work for 7 days, rest for another 7 days and then quarantine for a further 7 days. This has meant that workforces have been reduced by a third and handling speeds at main airports such as Shanghai Pudong, Beijing and Xiamen are severely affected.

We are seeing a lot of flights departing with limited or no cargo,  hundreds of other flights cancelled and reports of ground handling staff in China quitting in large numbers.

This will undoubtedly have an effect on any freight departing China in the coming weeks and will continue to have an effect on uplift of cargo and air freight rates well into September. Shippers should be prepared for handling issues, offloads and increased rates.

In addition to this, due to several crew members testing positive for Covid-19, China Cargo Airlines and China Eastern Airlines have suspended passenger belly freighters until the end of August.

This situation, on top of the already severely reduced capacity we were facing means that demand is now even further outstripping the supply, with prices to the US increasing by $1.5-$3 per kg over the past two weeks, while rates to Europe were up $0.7-$1.5 per kg.

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Ocean

Asia

US market

• Rates are stable this week, but we expect the current issues faced in Shanghai and other main airports will eventually have an impact on the airfreight rates.
• China Southern, American Airlines, Qantas, Asiana, Korean Airlines and China Cargo Airlines all continue to cancel a number of flights into various destinations in North America.
• 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)

• Rates into Europe have increased compared to last week
• China Southern has cancelled some flights, which is affecting capacity into Europe.
• Air France/KLM have cancelled passenger cargo flights until further notice
• Recommendation is still to try and book space well in advance.
• 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

• Rates into Europe have increased compared to last week
• China Southern has cancelled some flights, which is affecting capacity into Europe.
• Air France/KLM have cancelled passenger cargo flights until further notice
• Recommendation is still to try and book space well in advance.
• 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 is space available on Cathay Pacific and Singapore Airlines, if booked well in advance.
• 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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