Shipping market dynamics in week 23
Maritime Market
Asia → North America (trans-Pacific eastbound route)
The reliability of the shipping schedule is still facing challenges, as the carrier still needs to work hard to overcome the delayed berthing problem in extremely congested ports such as Auckland. The outbreak of the new crown epidemic at the shipping port has caused labor disruptions and prompted the suspension of some routes to Yantian Port, which is likely to cause a cargo backlog in the coming weeks. The combination of limited space available, large number of suspensions, congestion and temporary port calls/cancellations caused by interference and strong demand means that the Trans-Pacific Eastbound Route (TPEB) is facing a huge challenge.
Price: GRI has been implemented on June 1, and GRI is expected to be implemented on June 15
tight space
Capacity/equipment: tight/severely lower than capacity
Suggestion: Book the space at least 4-6 weeks before the cargo date.
Asia → Europe (Far East West Nordic Route)
The shortage of space and equipment continues. Demand in the market exceeds supply. The number of suspensions in June/July will increase, and the condition of the equipment has not improved. The carrier’s area is under severe pressure and cannot accept more bookings. The restrictions and congestion at Yantian Port have caused more impact on transportation. The first batch of alliances diverted from Yantian to alternative ports such as Nansha and Shekou.
Price: A sharp rise on June 1st, and a further rise on June 15th and July.
Cabin: The cabin situation is extremely tight
Capacity/Equipment: All Asian shipping destinations have severe equipment shortages
Suggestion: book the space at least 4-5 weeks before the delivery date. A limited priority transportation scheme can be considered. Flexible use of alternative equipment.
Europe → North America (transatlantic westbound route)
As capacity is still in short supply, the new price increase took effect in June.
Price: The freight rate in July is expected to rise further.
Space: Tight, all services are facing high demand.
Capacity/Equipment: As the carrier has implemented a series of suspensions and port jumps in order to restore the voyage to normal, the capacity has been affected. Ship schedule reliability is improving, but it is still below 35%. The supply of equipment in northern European ports has improved slightly, but inland storage yards will continue to face equipment shortages in the medium term.
Suggestion: book the space at least 5 weeks before the delivery date. If you need to transport goods that require higher reliability, please apply for priority transportation services.
India → North America
The COVID-19 restrictions in the region are being relaxed, and port congestion is causing downstream delays. Since the region recently adopted restrictions on the new crown epidemic, manufacturing and exports have slowed, leading to short-term relief in shipping space and is now over. We expect to face cabin difficulties throughout the summer. Due to the reliability of shipping schedules, the congestion of major base ports and transshipment ports is causing carriers to use space to clear the cargo backlog, further increasing the difficulty of finding space for new bookings. The backlog in southern India and Colombo, Sri Lanka is the most worrying.
Price: The first half of GRI has been implemented in the first half of June, and the second half of GRI is expected to be implemented in the second half of June
Space: The space for shipping to the West U.S. and Canada is tight
Capacity/equipment: The shortage of equipment is alleviating. Southern India still faces challenges
Recommendation: Book priority shipping services for urgent shipments and goods that are close to the delivery date
North America → Asia
The delay and suspension of freighters continue to compress capacity. The west coast of the United States is still the most affected by the loss of capacity. As the carrier is giving priority to returning empty containers, the situation is even worse.
Price: It is expected that the quarterly BAF level will be raised on July 1. Current GRI recommendations are mainly limited to refrigerated container shipments.
Space: The shipping space in the east and west of the US is tight. The U.S. Gulf of Mexico started operating a new service, and its capacity will be significantly increased.
Capacity/Equipment: The shipping capacity in the East and West of the US is tight. The supply of equipment and chassis vehicles in most ports and all yards is tight.
Recommendation: Book more than 4 weeks in advance.
North America → Europe
Congestion in the United States and Europe has compressed available capacity. Ocean carriers have implemented a series of port jump operations to resume freighter voyages, leading to a new wave of backlogs.
Price: Stable, but due to the BAF adjustment on July 1, the price is expected to rise accordingly.
Space: The shipping space on the west coast of the United States is tight. Due to the loss of space caused by ship delays, the capacity management of several ocean carriers on the east coast of the United States has become more tense.
Capacity/Equipment: There is ample supply of equipment for the East US ports, but the supply of equipment for railway yards is very tight.
Recommendation: It is recommended that the cargoes shipped by East America be booked more than 4 weeks in advance, and cargoes shipped by West America should be booked more than 5-6 weeks in advance.
Air transport market
Asia
As demand and capacity gradually stabilized this week, markets outside of Asia (including TPEB and FEWB) cooled slightly.
Demand-In terms of demand, the outbreak of new crown pneumonia in many shipping destinations, including TPE, SGN, BKK, KUL, etc., prompted local officials to implement regional blockades, affecting factory output and traffic to the airport.
Capacity-With the lifting of crew restrictions, some Asian carriers have increased the capacity of their cargo fleets, the most notable of which is China Airlines. Cathay Pacific also announced the resumption of 90% of its planned cargo flights, bringing a timely rain.
As the new crown epidemic restrictions are lifted before the middle of this month, and factory output in most places returns to normal, these market conditions are expected to return to short-term vitality. The speeding up of shipments by major shippers in order to meet their targets before the end of the second quarter is another temporary factor. With the arrival of the end of June, we expect that the TPEB air freight market will be very tight, while the FEWB market will be slightly less tight.
More sea and air freight and special projects are coming soon, which will keep the air freight market very strong throughout the summer.
Europe
Demand for European exports to North and South America and Asia continues to show strong momentum. The shipping space to the west coast of the United States is still tight. In the past week, there has been no real increase in shipping capacity to North America, although some carriers have expressed their intention to increase capacity for transatlantic trade. The utilization rate of shipping space to Asia is still very high, especially the shipping space to China, Japan and the Indian subcontinent (mainly rescue supplies).
The import and export throughput of major hub airports and secondary airports in Europe is normal.
America
Although it has eased in some European markets, the utilization rate of export space is still high due to the continuous lack of cargo capacity in the belly compartment of passenger aircraft. For cargo to major European destinations (mainly from the West Coast of the United States), it may take 2-3 days from booking to departure. The transportation capacity of the gateway airport on the west coast of the United States to Europe is the most tight, while the transportation capacity of the Midwest and East Coast of the United States is at a very controllable level. Although the speed of seizure has not been as fast as in recent weeks, the capacity from the west coast of the United States to Asia is full.
Spaces sent to India, Nepal, and Bangladesh are still very tight. Because of the severe epidemic in the region, there is a large amount of relief supplies waiting to arrive-the space currently sent to India has been sold out until mid-to-late June.
Due to the large number of freighter flights from Asia and Europe, Los Angeles International Airport (LAX) and Chicago O’Hare International Airport (ORD) are facing a cargo backlog and are using off-airport facilities to deal with the influx of cargo. According to reports, the delay period for ground crews to sort the cargo on inbound flights is as high as 3-6 days.
Truck capacity to support airport recovery and local delivery is still scarce, especially on the west coast of the United States.
Other news
Factory output news
South Korea’s economy is recovering moderately, exports are maintaining good momentum, and the consumption slump has eased.
Japan is closing its borders to all newly arrived foreigners (except Japanese foreign residents) until further notice, and expects to receive enough vaccines for the entire population by the end of September
Vietnam is seeking to establish a vaccine program by purchasing vaccine production technology and building its own factories in the country
Philippines A tropical storm hit the southern and central parts of the Philippines, and many villagers were displaced. Passengers and cargo handlers were trapped in the seaport. A small cargo ship was abandoned by the crew when it started to enter the water.
India As the number of new coronary pneumonia infections has fallen, some Indian states are relaxing the blockade restrictions. 114,460 cases were recorded on June 6, the lowest record in two months.
Bangladesh's exports in May grew at a record rate, up 112% year-on-year. The export revenue of garments accounted for 84% of Bangladesh's exports. In the first 11 months of the 2020-2021 fiscal year, the export revenue of garments soared by 11.1%.
Bangladesh will extend the COVID-19 lockdown period by 10 days to June 16.
Sri Lanka will extend the lockdown period for the COVID-19 pandemic by 7 days to June 14.
Pakistan will reduce some import taxes to promote growth. The key tax reduction targets are raw materials to promote the development of manufacturing.
Major economic events provided by Dr. Phil Levy, Chief Economist of Flexport
Eurozone inflation rate rose in May The estimated inflation rate for the Eurozone in May was 2.0%. It is worth noting that this is an increase from 1.6% in April and reached the ECB's target inflation rate. This figure has risen as energy prices have soared.
Global price increases For a wider range of countries, a month ago, the OECD measured the inflation rate of its member countries in April of 3.3%, the highest level since October 2008. In addition, the United Nations World Food Cost Index reached its highest level in the past decade.
U.S. cost accounting has increased unit labor costs by much more than the initial estimate in the first quarter. In general, the annual growth rate of non-agricultural costs increased by 1.7%, while manufacturing costs increased by 10.7%.
Decline in EU retail sales EU retail sales fell in April after increasing in March. Retail trade in the Eurozone and the European Union fell by 3.1%, but Germany and France fell by 5.5% and 6.0%, respectively.