AIR FREIGHT
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 FREIGHT
Strong 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.
