Zencargo Market Update: 7th March

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: The conflict in Ukraine has added pressure on global supply chains

Supply chains are facing new challenges from the conflict between Russia and Ukraine due to government sanctions such as port and air space bans, as well as the hike in fuel costs and the threat of cyber security attacks. 

Things are likely to get worse for businesses around the world as 374,000 businesses worldwide rely on Russian suppliers and 241,000 businesses rely on Ukrainian suppliers. 

Port and air space bans have caused disruption on trade routes as airlines have cancelled flights from the Far East to the rest of the world and carriers have had to find alternative routes instead of flying across Russia. 

In reaction to the severity of the situation, Zencargo have released a regularly updated FAQ section on how the global supply chain market is impacted by the Russian invasion of Ukraine.

Find out more here.

Asia

China 

Ocean

• Post Chinese New Year capacity in 2022 is scheduled to be higher than previous years. (N.B. The following week numbers are not actual ‘Week’ numbers of the year. They are ‘Week’ numbers relative to Chinese New Year for each respective year for up to 12 weeks.)
  • On the Asia to US West Coast, deployed capacity is scheduled to increase from Week +7, reaching a peak of 414,200 TEU in Week +9. 
    • In 2021, the peak also reached Week +9 but capacity only peaked to 350,000 TEU. 
    • The 2017 to 2019 average weekly capacity in the 12 weeks after Chinese New Year was 287,000 TEU. In 2021, this rose to 302,700 TEU. And in 2022, this is scheduled to increase to 363,900 TEU.
    • The high level of average weekly capacity in the 12 weeks will put even more stress on West Coast ports. 
    • Capacity growth post Chinese New Year in 2022 is going to be 20.2% YoY on this route. 
  • On the Asia to US East Coast, deployed capacity in Week +6 and Week +12 is planned to be lower in 2022 compared to 2021.
    • Deployed capacity in 2022 will hit its peak at the 300,000 TEU mark in Week +8. 
    • The 2017 to 2019 average weekly capacity on this route was 145,037 TEU. In 2022, this is scheduled to increase to 228,363 TEU.
    • The East Coast ports are starting to struggle to handle additional volume and this figure shows that this may get worse. 
    • Capacity growth post Chinese New Year in 2022 is going to be 40.1% YoY on this route.
  • On the Asia-North Europe trade, capacity is expected to be in line with 2021 levels.
    • The increase in capacity will increase rapidly in Week +7 to 345,200 TEU and then peak to over 400,000 TEU the following week. 
    • From Week +8 to Week +12, capacity levels are scheduled to decrease. However, this level is still inflated compared to previous years.
    • On this trade route, the average weekly deployed capacity is scheduled to be 324,563 TEU in 2022, a significant increase from 2021 levels at 272,007 TEU. 
    • Capacity growth post Chinese New Year in 2022 is going to be 19.3% YoY on this route.

Air

Central China to USA and Europe

• Due to the conflict between Ukraine and Russia, many flights are cancelled this week from Central China. 
  • Airlines such as RU/PO/AY/U3/VS/KZ/JL/F5 cancelled their flights from SHA Airport and NGB Airport to the EU this week. 
  • Airlines including CA/CZ/K4/5Y/PO have cancelled either all or some of its flights to the US this week from both NGB and SHA Airports. 
• Rates have increased to both USA and Europe from SHA Airport and NGB Airport.
• Space is fully booked until this Saturday. Please collaborate with your partners and book space in advance. 
• The epidemic controls at PVG airport are still in place. However, there are no rules that are specific to Omicron due to the day-to-day control on COVID-19.
  • Over 40% of cargo flights are cancelled
  • Terminals are at 50% in terms of labour resources.

North China to USA and Europe

• From TSN Airport to the USA and Europe, space is tight as factories have resumed work after coming back from the Chinese New Year holidays. The Russia/Ukraine war has also made space quite tight as airlines have cancelled flights. 
• Businesses may have to accept higher rates and longer lead transit times. 
  • Please check with your partner on a case-by-case basis. 
• Air rates from PEK Airport to the US and Europe remain level compared to last week. 
  • The Paralympic Winter Games started on 4th March, therefore space is tighter and trucking services will have more lead time. 
  • Please reconfirm rates and space 3-4 days in advance. 
  • Heavy dense cargo is available at a special rate so please check on a case-by-case basis. 

South China to USA and Europe

• From CAN Airport to the USA and Europe, space is extremely tight due to the Russia/Ukraine War. 
• From SZX Airport to the USA and Europe, rates are decreasing.
• Due to the situation in Ukraine, airlines are making adjustments to their flight schedules. Under these circumstances, air costs will increase dramatically. 
• All shipments need to be checked with carriers on a case-by-case basis. 

Road/Rail

• China’s project to connect its manufacturing hubs to markets in western Europe has hit a road bump following the conflict between Russia and Ukraine. 

• • Rail has played an increasing part of this project, especially when disruptions to maritime supply chains have led to long delays. Container lines such as Maersk and CMA have been offering rail services as an alternative to ocean transport. 
  • However, those services may be paused following the sanctions imposed on Russia because of the conflict. 
    • Maersk has announced that it had suspended new intercontinental bookings ‘without exception; both east and west bound between Asia and Europe’.

India

Ocean

• Jawaharlal Nehru Port Trust (Nhava Sheva, India) was hit by a cyber-attack on 20 February and is making slow progress in getting their terminal systems back on track. 
  • The system disruption has been a source of concern for shippers and freight forwarders, who are already navigating a capacity-stressed market. 
  • Cargo owners are faced with the challenges of obtaining arrival notices and customs clearances. 
  • Cargo freight stations were unable to release cargo in the absence of import manifest filings.

North America

USA

Ocean

• This year, the Transpacific Maritime Conference (TPM) was held in Long Beach, California. This brought together thousands of BCOs, forwarders, NVOCCs and a few carriers together. 
  • Equipment fees and shortages, blank sailings, port congestion, and record-high freight costs have stifled efforts to get goods moving in the supply chain. 
  • White House Ports Envoy, John Peorcari talked about progress on data-sharing across the industry and cracking down on some of the fees hitting shippers and truckers. 
  • Deputy Executive Director of the Port of Long Beach, Noel Hacegaba, said that supply chains will never go back to pre-pandemic times and that the supply chain crisis has forced all parties to work together to tackle record cargo volumes and tightened capacity. 
• President Joe Biden has announced that his administration will target regulations that allow carriers to collaborate on vessel sharing and other elements on the supply chain. 
  • The US is dominated by three major alliances: The 2M, Ocean Alliance and The Alliance. 
  • The President plans to ‘crackdown’ on shipping alliances, claiming that it is a contributing factor to consumer price inflations as the alliances have raised their freight rates. 
  • The World Shipping Council (WSC), representing container lines, responded by stating that unprecedented demand has driven up freight rates rather than shipping lines. 

Air

• The US Department of Transportation and its Federal Aviation Administration are issuing orders to block Russian airlines from entering the US airspace. 
  • This includes all passenger and cargo flights, and scheduled as well as charter flights. 
  • This means that the air space will be closed to any Russian commercial air carriers and other Russian civil aircraft. 

Europe

Benelux

Ocean

• Congestion along Antwerp and Rotterdam’s inland waterways has reached its highest peak in several years. 
  • Wait times at Antwerp have more than doubled over the past week, increasing from 44 to 94 hours.
  • Congestion at Rotterdam has increased by more than 50% to 128 hours.
  • The main cause of delays was linked to the onset of ultra-large container vessels (ULCVs) and failures of coordination between stakeholders. 
  • Increasing container capacity at the largest European ports has also added to the crisis. 

Air

• Russia closed its airspace to airlines from 36 countries on February 28. This includes all 27 members of the European Union. 
  • The flight ban will force airlines that fly over Russia to get from Europe to Asia to find new routes. 
  • The EU has also closed its airspace to Russian aircraft as sanctions continue to be imposed in response to the war in Ukraine. 
  • The airspace ban will increase flying times and costs for air cargo operations. 
  • Services are likely to be changed and cancelled at short notice.

UK and the Rest of Europe

Ocean

• The UK has enacted legislation banning Russian ships from UK ports.
  • UK ports are being urged to refuse access to Russian ships as part of the sanctions the UK has implemented on Russia for the conflict in Ukraine. 
  • Transport Secretary Grant Shapps has written to all UK ports asking them not to provide access to Russian vessels. 
  • According to the BPA, the UK handled around 12.6m tonnes of cargo to and from Russia in 2020, the bulk of which was hydrocarbons. 
• Hamburger Hafen und Logistik AG (HHLA) and Europgate have announced the suspension of all container handling to and from Russia from 1 March. 
  • Terminals in Hamburg handled 337,000 TEU in seaborne transport with the Russian Federation last year. 
  • The Port of Hamburg has been one of the most significant hubs for imports and exports as 13 liners service travel between Russian ports and the Port of Hamburg. 

Road/Rail

• Rates Update – Situation in Ukraine
  • Due to the devaluation of the Russian Ruble, contract and spot rates for domestic transports in Russia are in steep decline.
  • Spot and contract rates for transports from and to Russia are also affected. Spot rates on the lane Russia to Germany have increased 51% since last week. Spot rates from Poland to Russia are now 35% more expensive than last week.
• Hauliers urge ministers to take action on record fuel prices
  • Hauliers have urged the UK Government to take action on record fuel prices which they say are “wiping out” their profits. The average price of diesel has reached £1.56 per litre amid soaring oil prices due to Russia’s invasion of Ukraine.
  • To ease the impact on the logistics industry, trade body the Road Haulage Association (RHA) urged ministers to delay upcoming changes to the use of untaxed red diesel by 12 months.
  • It called for fuel duty to be frozen for a further two years and greater flexibility with the Apprenticeship Levy to help address driver shortages. It also asks for continuation of the HGV bootcamps to train new generation lorry drivers and more lorry parking facilities to “plug the current shortage”.

European Bank Holidays

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

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

The information that is available in the Weekly Market Update comes from a variety of online sources, partners and our won teams. Click below to learn more about how Zencargo can help make your supply chain your competitive advantage.

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