Transport Update 6th October
Oct 06, 2021
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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: Rate decreases, demand surges and a possible ‘bullwhip effect’ from congestion at Chinese ports
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In Focus: Congestion at ports and power cuts in China threaten Christmas
Growing congestion at major Chinese ports combined with the recent power outages in Chinese factories has raised concerns over shipping goods on time for Christmas.
Despite these disruptions, the oncoming surge in demand for Christmas stock will put additional pressure on ports and factories, which are already at capacity.
For businesses, this could be detrimental for the Christmas period as this disruption will affect production and delivery of goods across multiple industries, creating further delays in stretched supply chains.
Ocean
Asia → North America
Rates
- Rates have decreased:
- On the West Coast, rates were previously around $18,000 and has now dropped to $11,000. This is because of a shortage of electricity in China as well as government emissions targets has reduced output of goods
- On the East Coast, the rates have dropped. However, the drop is not as severe as the West Coast as rates are still around $18,000 to $20,000
Capacity
- Spaces have become available as output has reduced from China’s factories.
- However, 100 container ships are waiting to anchor at the Port of Shanghai amid growing congestion at major Chinese ports. These delays could raise the risk of another ‘bullwhip effect’ on container trades to Europe and North America
- Delays in schedules are estimated to be 22 days for the worst cases
- West Coast schedule reliability is 15.7%, therefore 85% of expected cargo does not arrive on time.
- East Coast schedule reliability is 20.9%, therefore 79% of expected cargo does not arrive on time
Ports
- Delays at L.A. and Long Beach have improved however, 67 vessels are waiting to berth
- As of October 1st:
- 51 ships are waiting to berth at L.A. and Long Beach. Ship wait times are an average of 9-12 days to berth. Port volumes are up more than 30% so far this calendar year.
- 4 ships are waiting to berth at the New York and Philadelphia terminal. High berth congestion continues with vessel arrival delays running upwards of 7 days
- 12 ships are at anchor, waiting to berth at Seattle Terminal. Terminals are operating at 91% utilisation and berthing delays are up to two weeks due to heavy volumes.
- 8 ships are waiting at anchor at Houston Terminal
- The ports of Long Beach and Los Angeles are expanding the hours during which trucks can pick up and return containers to reduce delays through ports
- Long Beach said it would maximise night time operations
- Los Angeles has announced that they would extend weekend operating gate hours
Asia → Europe (Far East Westbound)
Rates
- Rates remain stable this week.
Equipment
- Equipment availability has improved in Asia
- There is still a general shortage across most of the carriers
- Despite this, there is now available equipment for MSC, Yang Ming and Evergreen.
Capacity
- Space is starting to be released
- Yang Ming and MSC and releasing space
- The same cannot be said for Costco, CMA, ONE and OOCL
- Evergreen is operating at 4 weeks in advance
- Ocean carriers’ schedule reliability continues to decline, with delays of up to 30 days on the worst-hit China to EU routes
- The 2M Alliance have announced that 7 vessels will leave Asia one week later as they trying to reshuffle their schedules
- Delays of up to 30 days for the worst trade lanes
Ports
- Yard congestion in North Europe is affecting services
- 2M has announced omissions in several ports
- The ‘AE-7, Condor’ service will exclude Hamburg for another thirteen westbound voyages until 29th November. All the cargo going to Hamburg will be diverted to Bremerhaven
- The ‘AE-6 / Lion’ service will omit Le Havre on the next seven voyages until 17th November
- The ‘AE-55/Griffin’ service will exclude Antwerp for another 8 weeks until 12th November. A direct call at Le Havre is induced for the next eight sailings using this service.
- Ocean carriers are reducing the amount of import container free-time at North European ports
- This means it will cost shippers extra detention and demurrage (D&D) charges
- Carriers argue that they are tightening up the free-time to incentivise importers to take delivery of cargo promptly and returning empty equipment back to Asia earlier
Air
Asia
1. US market
-
- Continued ocean freight issues, tech product launches and Christmas stock are all contributing to high airfreight demand this week. In addition to this there will be backlogs caused by the national holiday in China. We expect air freight rates to increase and remain high for the remainder of the year.
- There continue to be major challenges due to the reduced capacity and staff shortages due to the pandemic. So longer lead times should be expected.
- Rates and space must be checked on a case-by-case basis.
2. EU market (base airport like FRA/AMS/LUX, etc)
-
- Continued ocean freight issues, tech product launches and christmas stock are all contributing to high airfreight demand this week. In addition to this there will be backlogs caused by the national holiday in China. We expect air freight rates to increase and remain high for the remainder of the year.
- There continue to be major challenges due to the reduced capacity and staff shortages due to the pandemic. So longer lead times should be expected.
- Rates and space must be checked on a case-by-case basis.
3. UK market
-
- Continued ocean freight issues, tech product launches and christmas stock are all contributing to high airfreight demand this week. In addition to this there will be backlogs caused by the national holiday in China. We expect air freight rates to increase and remain high for the remainder of the year.
- There continue to be major challenges due to the reduced capacity and staff shortages due to the pandemic. So longer lead times should be expected.
- Rates and space must be checked on a case-by-case basis.
Americas
- Rates into Asia, UK and Europe remain mostly the same this week
- USA is set to lift travel ban for most noncitizens from November, so long as they are vaccinated. The eased rules are expected to drive up demand for transatlantic travel. This is good news for the air freight industry as this will no doubt bring more flights and capacity for cargo.
- ORD is still over capacity and there are issues over release updates. Forwarders are having to send in trucks to collect without knowing if freight is ready and the ground handling agents aren’t answering their phones
- Forwarders are choosing to use smaller airports as much as possible as there is less congestion. Freight rates will be higher but there is less chance of incurring additional costs for attempted pickups, waiting time and storage.
- LAX is still a challenge, there are usually waiting time charges applied to most shipments due to the long queues to collect/deliver into the ground handling agents warehouse
Europe/UK
- Rates into Asia and North America remain stable as there seems to be enough capacity to meet demand.
- USA is set to lift travel ban for most noncitizens from November, so long as they are vaccinated. The eased rules are expected to drive up demand for transatlantic travel. This is good news for the air freight industry as this will no doubt bring more flights and capacity for cargo.
Road
UK Haulage
- General bookings are reserved for the last couple of days of October and the beginning of November
- Services have been overwhelmed this week. Felixstowe port was closed earlier this week which has caused issues in booking VBS slots, creating a knock on effect throughout the week
Storage
- Felixstowe’s off dock storage solutions are at capacity
- Felixstowe has opened up more space and are currently storing aan extra 15,000 containers
- However, more storage containers are being landed rather than collected, therefore storage issues are expected to continue
- Southampton has available shunts therefore, storage issues are not as severe compared to Felixstowe
The route ahead
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