Transport Update 22nd June 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: US customs changes, continued rate pressure, container crunch

• Ocean

• Air

• Road

In focus: US Cargo Screening

What is happening?

For more than a decade, shipments departing from the USA on passenger aircraft have required screening by either a Certified Cargo Screening Facility (CCSF) or by the airline itself. Shipments departing on a freighter aircraft were excluded from this rule but this is about to change.

• As of July 1st, 2021, all shipments must be screened.Including shipments moving on freighter aircraft.
• Usual forms of screening may not be suitable for shipments requiring a freighter. Out of gauge shipments will not fit through an x-ray machine and certain commodities cannot be hand searched.
• Many airline terminals and General Handling Agents are currently very busy. Adding additional screening is certain to create delays, until everybody in the supply chain is familiarised with the new regulations.

What does this mean for shippers?

• Screening will now be a requirement for all exports from the US.
• A cost for screening will now apply to all US exports – you may not be used to these charges if your cargo typically requires a freighter aircraft.
• US handling agents are already struggling under the weight of increase in demand. With new regulations being announced around screening, this will almost certainly lead to delays in uplifts.

Ocean

Asia → North America

Rates

• Rates to the West Coast are average $11,500 to LA, East Coast rates sit at around $16,000.
• Hapag-Lloyd has announced a new PSS from East Asia ports to North American destinations of $1,000/ 20′, $2,000/ 40′.

Capacity

• For vessels calling at Yantian, there is a 1-2 week delay to berth across all carriers.
  • Cosco has announced they will call at Yantian from July.
  • Yang Ming has started to release space to the US West Coast after a three week delay
• According to SeaTrade Maritime News the number of blank sailings has remained elevated through to 24 June, and the fall off after that is conditional on the Covid-19 situation in the port and the South China region continuing to be brought under control.

Equipment:

• JOC explains this week that slow container processing is behind much of the current rate squeeze. Normally 17-18% of chassis have more than 11 days of turn-time before the customer returns it, but right now that number is 43%. This reduces the ability to move containers to/from vessels and railheads, leading to a pile-up of containers across the US.

Ports

• Trucking out of the province around Yantian is being restricted due to new testing processes, time constraints and increased scrutiny.
  • Capacity at port is now 80-85%, expected to be 100% by end of June but there will still be a significant backlog.
  • Shekou, Nansha and Hong Kong have a waiting time for berths of 2-4 days.

Asia → Europe (Far East Westbound)

Rates

• Rates for July have not yet been released but UK rates currently sit between $13,200 – 16,000, and $11,900-14,000 for Northern Europe.
  • Shanghai – Rotterdam rates increased 6% over the previous week to $11,196 per teu
• Rates are generally expected to increase.

Capacity

• According to recent reports from Hapag-Lloyd, for vessels that are still calling at Yantian that have not been diverted, there is a waiting time to berth of 1-2 weeks.
  • Hapag-Lloyd have diverted 15 vessels to Nansha and omitted 9 vessel callings.

Equipment

• Yantian congestion continues to restrict equipment levels.

Ports

• The 2M alliance is not calling at Hamburg for the next four weeks, diverting cargo to Bremerhaven due to congestion and yard density.

Europe → USA (Transatlantic Westbound)

Rates

• Rates released for June indicate an increase of $500/40’ of Equipment imbalance and another $500/40’ of Peak Surcharge. No further increases have been announced but increases are likely for July.

Capacity:

• Demand and stock levels are still maintaining upward pressure on rates.

Equipment:

• The East Coast is still facing a severe shortage of chassis.

Air

IATA has reported in its latest market analysis that air cargo volumes in April this year continued to outpace  2019 levels.The association said this was largely due to the strong performance of carriers based in North America, the Middle East and Africa.

Global air cargo demand in April 2021, measured in cargo-tonne kms (CTKs), was reported as 12% higher than in April 2019 (used instead of last year for comparison purposes due to impact of Covid). IATA said that since May 2020, when strict global lockdowns were lifted in a number of countries, air cargo demand has continued to “display a steep upward trend”. It added: “This solid cargo growth performance this month was primarily driven by North American airlines, but all the regions outside Latin America contributed positively to the growth outcome.”

• Global capacity in April 2021, measured in available CTKs (ACTKs), was recorded at 9.7% lower than in April 2019.
• Cargo load factor was up by 11.2 percentage points to 57.8%.
• IATA said: “Cargo belly capacity did not improve in April compared to March. As has been the case since the start of the crisis, airlines are regularly increasing their freighters fleet size as well as daily freighter utilisation.”

Asia

US market

• Rates remain around approx USD6-7/kg ex PVG into North American hubs. Rates ex NGB haved reduced slightly this week.
  • CZ cancelled PAX flights from PVG-JFK
  • CA now running cargo flight into JFK
• 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 remain between approx USD4-5/kg. Rates ex NGB have reduced slightly this week.
• 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 have gone up this week due to increase in cargo ex PVG
• There are direct flights with CA/BA, AIR-AIR by SQ and normal air-truck service. Space using deferred carriers is fully booked.
• 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

• No real change on rate levels into Europe/UK/Asia
• Space remains constricted due to reduced capacity.

Europe

• Rates are still dropping into North America and Asia
• Capacity is expected to improve slightly into the US due to some airlines reinstating PAX flights

Road

Availability

Availability generally reliable across all routes and regions.

Rates

Rates remain stable across consolidated, groupage and dedicated trailers.

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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