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OCEAN FREIGHTSevere Congestion Colombo
Severe congestion at Sri Lanka’s Colombo port is making life more difficult for Indian shippers already badly bruised by tightening vessel space and skyrocketing freight rates under the crippling effects of the COVID-19 crisis.
Colombo commands the bulk of India’s transshipped volume, especially for trade in and out of the country’s east coast corridor, with fewer direct long-haul sailings.
While warning shippers to anticipate further delays and disruptions to their cargo, major carriers noted an acute labor shortage following the enforcement of fresh community lockdowns intended to contain surging COVID-19 infections, combined with wage contract disputes plaguing one of the Colombo terminals, has led to current excessive slowdowns at the harbor.
Australia and New Zealand: Shippers hit lack of port workers and containers as lines add congestion surcharges. Shippers around the world face huge supply chain challenges from port congestion and an acute shortage of containers. According to the The Loadstar the problems “will get worse”. “There are so many pinch points building now and they will only get worse before the holiday season and may well run until Chinese New Year [in February],” it was warned.
The New Zealand port of Auckland is the latest in a long line of container hubs to see its shipping community slapped with a port congestion surcharge. MSC said today that, effective a B/L date of 9 November, it would impose a $300 per TEU congestion surcharge on all imports to Auckland from Europe, Turkey and Israel, and imports from China, Japan and South-east Asia, although this has been labelled as a PSS (peak season surcharge).“Delays and wait times for vessels to berth in Auckland are being reported between 10 to 13 days,” said MSC. “The congestion is due to a lack of workers,” claimed the carrier, according to the information from the Loadstar.
Airfreight rates between Shanghai and North America last week reached their highest level since early June. The latest Tac Index figures show that average prices on services from Shanghai to North America increased by 26.2% week on week to reach $6.07 per kg. Meanwhile, prices from Hong Kong to Europe have climbed steadily since the end of August and are now at $3.82 per kg, which is the highest level since the start of July, according to the Air Cargo News.
Rates on both routes also continue to track at a higher level than a year ago as a result of stronger load factors. An increase in rates at this time of year is not too surprising as the industry is heading into the peak season. However, with different market dynamics in play this year, rate progression and capacity availability has been harder to predict.
Figures from WorldACD show that capacity and demand appear to be increasing at roughly the same level. Its figures show that last week worldwide demand was up by 4% on the previous week, while capacity increased by 3%. From Asia Pacific, the chargeable weight of cargo carried was up by 11% and capacity 10%. Shanghai to Europe rates have also been increasing over recent weeks but by a lower level. Last week prices were up by 0.5% to $4.22 per kg to reach their highest level since mid-June.
Air cargo demand continued its gradual recovery in September with figures heading back towards year-ago levels, according to data from WorldACD.
Figures from the data provider show that demand in September was down 12.5% year on year, which brings “some reason for optimism”. This compares with a 33% decline in demand in April when the market low was reached.
“We have noted that quite a bit of the Covid-related equipment is marked as general cargo. With the ‘second wave’ growing over the past months, this may well be one of the reasons why general cargo was up by 8% (month on month) in September, and other product categories by only 4%.
“Transport of flowers increased by 7% month on month, but other perishables, vulnerable goods and pharmaceuticals by around 2% only. Thus, general cargo’s share of the total business showed a month on month increase from 65.5% to 66.5%.”
For origins, Africa, Europe and Middle East & South Asia (MESA) improved by 11%, 10% and 8% respectively compared with August.
“Freighter capacity in September was the same as in August, but cargo capacity on passenger aircraft increased by 3%,” WorldACD said. “Average load factors on the two aircraft types improved by one and three percentage points respectively.
WorldACD also looked at performance over the second and third quarters — the Covid quarters. Overall demand was down 21% against last year.
“The origins MESA, Africa and Europe suffered most (-37%, -30%, -28% respectively), and Asia Pacific least (-12%). Most areas suffered losses on all major trade lanes (i.e. region-to-region markets) in more or less equal measure. The exceptions were Asia Pacific, and Central and South America (C&S Am). The former lost very little on the lanes to Europe and North America, whilst C&S Am only lost 7% on its lanes to the north.”However, due to the capacity shortage caused by a loss of belly capacity, revenues were up by 42%.
Another finding is that forwarders outside the world’s Top-30 increased their worldwide share, from 54% to 55%, but they ‘bought’ that increase by accepting charges that were 85% higher YoY, whilst the Top-30 saw their charges increase by 76%.
In the largest market (i.e. ex-Asia Pacific) the Top-30 paid average charges that were 6% lower than those paid by the smaller forwarders (last year they were 12% higher). This is the more telling when taking into account that the Top-30 do much more in the markets to North America, where charges are highest, WorldACD said.OCEAN FREIGHTStrong demand and Tight Supply
The inactive containership fleet continues to shrink as strong transport demand creates vessel employment opportunities. The fact that some factories in China were in production over the Golden Week holidays adds to a healthy demand for box shipping and, thus, container tonnage.
Capacity deployed on the world’s two largest trade lanes, the Transpacific and Asia-Europe, therefore remains exceptionally high for the time of the year and the inactive fleet’s usual Q4 growth has not yet materialized.
The year-on-year comparison shows that the latest inactive fleet number is the lowest observed for the October month in the past five years. It stands at 130 ships for 438,410 teu, representing 1.8% of the total containership fleet as of 12 October. This marks a decline of 82,421 teu from Alphaliner’s previous survey, a fortnight ago.
The number of ships kept inactive due to scrubber retrofits outside or beyond routine class maintenance has further decreased from 14 units in the previous count to 11 units for 90,938 teu, accounting for 21% of the inactive fleet’s capacity.
2M and The Alliance continue to boost Transatlantic capacity
The 2M partners Maersk and MSC continue to deploy larger ships on their three remaining North Europe-US East Coast services while the ‘TA4 / NEUATL4’ service remains suspended until the end of the year. THE Alliance from its side has decided to reinstate the week 43 sailing of the North Europe-US East Coast ‘AL1’ service.
2M will pursue this week the upsizing of the North Europe-USEC ‘TA2 / NEUATL2’ loop and of the North Europe-USEC-US Gulf ‘TA3 / NEUATL3’ loop with the replacement of 4,800 teu ships by units of 5,500-8,800 teu.
Maersk has just re-deployed the 8,044 teu MAERSK KOTKA in the ‘TA2 / NEUATL2’ service and the 7,250 teu MAERSK SERANGOON is to follow later this week. Both vessels are replacing the 4,822 teu MAERSK GAIRLOCH and the 4,600 teu CAP JACKSON.
Maersk is still deploying four classic 4,800 teu panamax ships in the US Flag ‘TA1 / NEUATL1’ service where the 6,478 teu US-flagged MAERSK HARTFORD joined this week-end as first LCS, replacing the 4,822 teu MAERSK IOWA. Average weekly nominal capacity for the three Transatlantic 2M services will increase to 19,800 teu per direction this week, up 16.5% in three week time.
Cargo demand on the Transatlantic seems to be slightly increasing as the partners of THE Alliance have decided to re-instate a voided sailing of the ‘AL1’ service. This service, which turns in five weeks, is currently using only three 4,520-5,100 teu ships resulting in a systematic blanking of two voyages in each cycle of five weeks. Hapag-Lloyd will introduce the 3,534 teu GERHARD SCHULTE in the ‘AL1’ for one round voyage to re-instate the sailing from Hamburg (25 October), Antwerp and London-Gateway to Norfolk, Philadelphia, New York and Halifax. This means that THE Alliance will skip only two N. Eur-USEC sailings in October, compared to four in September, according to the Alphaliner.Substantial backlog in deliveries in UK
London Gateway reports that due to the recent factors, such as bad weather, abnormal increases in volume throughput, terminal productivity with additional measures taken to be COVID-19 secure and transport shortages, they are currently experiencing congestion in the berthing plan and container yard for all Marine.
In recent weeks this has resulted in several port omissions, cut and runs and move count restrictions. Various efforts and actions at the terminals are ongoing to improve the situation, but while improvements are expected gradually the expectation is that this congestion will continue further until mid-November. The situation will continued to be monitored and up-dates issued.
Shortage of containers in India
Shipper groups and freight forwarders say containers of all sizes are in short supply and that the shortages — more evident at the ports of Jawaharlal Nehru Port Trust, Mundra, and Hazira, as well as across northern hinterland locations — have already developed into a bottleneck of alarming proportions for the country’s resurgent export trade, according to the Journal of Commerce.
“Non-availability of containers for the export sector is posing a serious concern for meeting delivery commitments of foreign buyers,” Sharad Kumar Saraf, president of the Federation of Indian Export Organizations (FIEO), said in a statement. “From the last couple of months, in spite of offering space for three to four weeks ahead, shipping lines are shutting out containers abruptly, giving reasons that the vessels are full.”
Chassis shortage in USA likely to persist into 2021
Intermodal equipment providers (IEPs) say while they are making an all-out effort to remedy chassis shortages in Southern California, the shortages will likely persist into next year if the ports of Los Angeles and Long Beach continue to handle record import volumes from Asia.
Shipments of personal protective equipment, e-commerce merchandise, and home improvement goods have been strong since late June as the US economy reopened from initial COVID-19 lockdowns. Imports are expected to continue at a high level until factories in Asia shut down for the annual Lunar New Year holiday beginning Feb. 12, 2021.
The Los Angeles-Long Beach port complex in September handled 828,880 TEU of imports from Asia, up 22 percent from September 2019, according to PIERS, a JOC.com sister company within IHS Markit. In the four-month period from June through September, imports from Asia moving through the largest US container gateway totaled 3.09 million TEU, up 12 percent from the same period last year, as reported by Journal of Commerce.
THE Alliance Announces Updated Service Adjustments for November 2020 (
15 October 2020, Singapore) . In response to the COVID-19 pandemic, the members of THE
Alliance have been making service adjustments to better align their resources with the fluctuating
demand in the global shipping market. You will find details on the November 2020 updates below.Asia and North Europe
-FP1 will maintain weekly sailings in November
-FP2 will maintain weekly sailings in November
-FE2 will maintain weekly sailings in November except in Week 45
-FE3 will maintain weekly sailings in November except in Week 47
-FE4 is temporarily suspended.
THE Alliance will continue the Extra Loader Program with sailings on Week 45 to 48 in November.
Participation of the Extra Loader Program will be separately advised by respective Lines.Asia and the Mediterranean
MD1/MD2/MD3 will maintain their weekly sailings in November, except for in the following week:
-Week 45 – MD2, MD3 void
-Week 48 – MD1 voidTranspacific – West Coast
All PSW and PNW loops will maintain their weekly sailings in November except for the following:
-PS3 Asia-India-Asia leg:
-PS3 Asia to India – Week 44, 46 void
-PS3 India to Asia – Week 46, 48 voidTranspacific – East Coast
All USEC loops will maintain their weekly sailings in November except for in the following weeks:
EC3 – Week 45, 48 void
Current Asia to Oceania market continues to face severe space/capacity issues and restrictions from all ports to Australia and New Zealand. Equipment shortages throughout Asia with carrier prioritising high-yield trade.
During September Australian ports went through massive industrial action affecting all ports, this has caused havoc and major disruptions to the trade forcing carriers to take the drastic action of suspending new bookings from most regions to Australia.
Ports have agreed to resume normal operations, however, this has created a huge backlog of cargo especially in Asia; the Golden Week rush adding to the pressure for space .
A new entrant to Asia/Australia trade, Goldstar Line (ZIM Line) is launching a new standalone China to Australia service, “CAX service” with first sailing in mid-October. Based on the current market condition, any additional capacity is welcomed at this stage.
The expectation that the same level of demand for space to continue until the end of Q1 2021
Asia/Europe trade outlook:
Space is very tight on Far East and IPBC westbound trade and dry equipment stocks are depleting very fast especially in CN/TH/VN/BD/IN. The market is expected to be very strong at least until end Nov 2020.
GRIs and PSS are enforced by majority of carriers in Q4
Far East/North Europe at 98-100% and Far East/MED at 95-98% on average for all carriers. Vessel stability problems are ongoing and most carriers are still rejecting heavy 20’ in big lots.
China Golden Week blank sailings lead to more than 30% overall space cut in weeks 41/42 but tapered down to 10% in the latter half of October for Far East Westbound. A sharp rise in demand post Golden Week led to a space crunch notably with these blank sailings.
Average 2H Oct FAK rates are at USD 2000/40’ and USD 2100/40’ for Far East/North Europe and MED base port to port respectively. GRIs expected to take place on 1 November in view of continuously strong utilization.
West, East India base port/Europe base port FAK is at USD 1600/40’and 1500/40’ respectively. Equipment shortage is very acute in India leading to many pending bookings including FAKs. As such, PSS and GRI likely to place wef 1 Nov.
Intra-Asia & Asia to India
The current market is stable and Volumes have revived to pre-COVID-19 levels. However, due to the current challenges with equipment and space, booking acceptance is rather difficult.
The vessel utilizations is at 100% and space is also looking tight for the future.
Oil prices have increased but compared to pre-convid (Q1) are still lower, which leads to a very volatile spot market.
For 40’DC/HC Container there is a huge shortage in Asia for the Intra-Asia trade. This is especially due to the fact that priority is given to long haul cargo due to very high freight rates on these trades. Even inter Asian carriers are facing equipment issue as large main carriers are paying higher price for lease containers to the leasing companies.
It is expected that this unpredictable and volatile market will last until CNY holidays in 2021.
WorldACD has released its findings for air freight in week 40, ending 4 October. Yields crept up, in what is expected to be the start of a gradual rate climb over coming weeks. But chargeable weight declined, likely to be due to China’s Golden Week holiday which ended on Thursday. Capacity declined 1% globally, although Africa saw a 4% increase while Asia Pacific saw a 4% decline.
Asia to Europe:
After the blank sailing program from golden week, equipment shortages are calming down. In November Geodis expects no major bottlenecks and a more moderate equipment situation. Vessels are well utilized and the market is recovering slightly faster than other trades after COVID-19, hence, market rates are at a higher level.
Europe to Asia:
October is rather solid with slight volume increases. The expected rebound of cargo after summer holidays and the major dip of volumes due to COVID-19 has not materialized. Instead we observe slowly increasing volumes. No concerning obstacles due to COVID-19, all container vessels are operating normally. Only eefer equipment is scarce in Europe and certain flows due to COVID-19 lead into structural bottlenecks of availability. One important fact on the Europe to Asia trade is the up-coming blank sailing program as of mid-November 2020. This will lead to significant capacity and equipment shortages.
Europe to Middle East/ IPBC:
This market has not recover yet and is considerably underperforming in terms of volume. Unfortunately the demand is growing very slowly after a significant shortfall during COVID-19. The trade to the Red Sea and some destinations in India will show some capacity shortages as of mid-November, as will the Asia EB trade, due to golden week’s blanking sailings.
Europe to Australia:
Ongoing port congestion in Sydney. There is a sincere hope that Port Congestion Surcharge (PCS) will stop mid to end-November once the container backlog has been cleared up. However, the backlog in Asia will most probably last until Christmas. The main reasons for the congestion are the ongoing challenges with the stevedore strikes in the port ,), bad weather in Sydney and the Typhoon season, which will all lead to schedule deviations. Hence, empty container stocks are huge in the port and the clearance of the back log takes much longer than expected.
Transatlantic West Bound:
The Blank Sailing Programs continue in Q4, but with fewer void sailings than in Q3. In addition, there has been a recovery in volumes and an increased demand as from August onwards with much stronger volumes also in September and October. High vessel utilization is expected to continue also in November. As per status quo the equipment situation in SCAN and Baltics, including Poland, is volatile. There are no major service and capacity changes announced for Q4 2020.
Latin America South Bound:
There are no space pressure for the South American East Coast, but some space constraints to Central and West Coast South America. There are high vessel utilization to Mexico as volumes are slowly recovering.
The Market appears to be stable. However, Brazil is heavily impacted by the effects of COVID-19. There are no major service and capacity changes announced for Q4 2020.
During these volatile times and overloaded ships, Geodis offers as a possible solution a reliable and sustainable ocean product called “Priority Loading” with guaranteed loadings. For further information please reach out to your local sales contact in GEODIS.
Alternative coverage for ME1 suspension
There will be no or marginal impact on transit times for all destination ports currently served via ME1, except cargo to Jeddah which please take note of the revised transit times for week 30 and 32 departure only: