BRi Global - News Update 29th June 2021
Dear all Valued Customers
Please find our new updates as follows in detail but for ease of interest I have now briefed what is covered so you can focus on what is important to you!
- Shipping tightness to continue through 2022
- Full Market Update
- Department of Transport meets with all industry groups to discuss impact of port congestion
Hapag-Lloyd Warns of Shipping Tightness Through 2022
Hapag-Lloyd’s North American president said shippers face the prospect of elevated rates through 2022, as the ability of all ocean and motor carriers to inject additional capacity is at its limit. The carrier will not be able to add more containerships to the trans-Pacific for the rest of the year, despite expectations that Asian imports into the US will stay strong through the end of 2021.
This message underscores how US import demand is outpacing capacity, forcing importers to prioritize which goods must be in the country and which can wait until next year. The unprecedented volume pressures that began in the spring have been greater than the new capacity container lines have shifted from other trades to the trans-Pacific.
As previously reported, Hapag-Lloyd has ordered another six 23,500 TEU ships as the carrier continues to build out its capacity of ultra large container ships, with 12 of the giant vessels now on the orderbook to be delivered through 2023 and 2024.
Nonetheless, the additional ships and other assets needed to get freight to market right now will be scarce for the foreseeable future, barring a sudden drop in demand. Alpha liner’s last survey showed the idled containership fleet stood at 171 ships, or roughly 645,500 TEU, which is 2.7 percent of the global capacity.
With so many unforeseen incidents stalling global trade, including the Suez Canal blockage and Yantian’ s port closure, carriers are finding it increasingly difficult to maintain schedule reliability. Space constraints, labour and equipment shortages, and rail congestion continue to impact vessel wait times at the ports, too.
With the addition of new routings, premium rates, and lengthened vessel wait times, this unprecedented time of demand has urged shippers to re-evaluate their supply chain needs.
As such, BRi USA has compiled market updates on the everchanging global supply chain:
• FAK space is extremely difficult to secure and is subject to rolled bookings. Currently, nearly every shipper is paying the premium to move cargo, and limited capacity caused a large volume to be postponed. Therefore, carrier premiums may not guarantee cargo movement in all cases. These are evaluated by the carriers on a case-by-case basis. During these critical times, everything is uncertain until cargo is loaded on board. Booking lead time is currently 4 weeks.
• Shippers should prepare to see another round of FAK and GRI rate hikes on July 1, with potential for yet another hike likely in the middle of the month and an added peak season surcharge (PSS).
• Vessel on-time performance to the West and East coasts improved slightly in May for the second consecutive month, although it was still the worst May ever recorded in the Asia-North America trade.
• Ports of Los Angeles and Long Beach which currently average 15-20 vessels at anchorage awaiting berth, have wait times upwards of 5 days. Adding to that, labour shortages continue to impact all terminals with resource allocation wait times now averaging 6 days. Due to the shortage, all large vessels are limited to 4 gangs and therefore are experiencing extended port stays of 3-4 days.
• As vessel delays of 15-20 days are reported in Oakland, Zim Integrated Shipping Services will reroute its premium service from North China to Oakland to call only in Los Angeles due to congestion and vessel backlogs in the Northern California port. This is planned to continue for at least the next two months.
• Vietnam and Thailand are currently seeing increased COVID cases and are implementing social distancing policies that are delaying responses from carriers. In both countries, all shipping spaces are extremely tight at this moment, and carriers are prioritizing the premium space only.
• Shanghai has suspended unnecessary transportation of dangerous goods from June 20, 2021 through July 2, 2021.
• Based on some market forecasts, the equipment shortage problem is not likely to be resolved soon. Tighter box capacity means higher rates shippers must pay liners to move their cargo. Transit times from Asia will continue to be affected, too, with some doubling.
• Shipping lines will continue the “blank sailing” initiative in June.
• All shipping lines are in tight supply of 40HQ at this moment.
• Hong Kong says it will ban all passenger flights from the U.K. starting Thursday as it seeks to curb the spread of new variants of the coronavirus. Several other countries, including the Philippines and Indonesia, also face flight bans to Hong Kong. It is expected that some belly cargo will also see cancellations or delays.
• Carriers are expected to cut capacity slightly, as air cargo moves into its traditional low-demand months of the year.
• Experts say that airfreight capacity is still scarce on many key trade lanes. Pricing strength continues to be seen on the China and Hong Kong to the US trade lanes and from Europe to the US, with all 3 lanes seeing price increases in May over April - although prices peaked in early May and have fallen away in recent weeks.
• Carriers are booking space 7-10 days in advance for US imports and exports.
• We are seeing delays at the airports when tendering the cargo for exports, and the airlines will not hold cargo until the flight schedule departure date.
• Several airlines are moving shipments on more expensive Express Services only.
• Truck capacity is tight, especially with intermodal moves as many truckers are preferring to carry over-the-road loads currently. Currently, new trucking equipment orders are averaging nearly twelve months of production.
• Rates are primarily a spot quote market due to fuel being higher and a lack of stability. Adding to the volatility, the volume of freight moving has made the demand even higher.
• Most domestic loads are booked a week in advance; however, we are specifically seeing a lot of intermodal and dray moves booked 3- 4 weeks in advance.
• Higher dwell times for trailers and a lack of drivers helped reduce freight volumes in May, even as demand remained high, thanks to ongoing supply-chain disruption.
• Due to a safety recall and a lack of available chassis, Norfolk Southern (NS) service alert said ingates will not be allowed to Croxton, New Jersey, from Atlanta, Birmingham, Charlotte, Chicago 63rd Street, Kansas City, Memphis, St. Louis, and Toledo. Service will also be suspended between Chicago 63rd Street and Pittsburgh. Domestic intermodal volume will be metered, but not shut down, on NS moves into Charlotte and Jacksonville.
DOT Meets with Container Lines, Importers on US Port Congestion
Last week, the US Department of Transportation (DOT) met separately with groups representing major container lines and importers, saying afterward the federal government is looking at possible solutions to mitigate the capacity crunch as cargo volumes are expected to stay elevated through year-end.
In its meeting with World Shipping Council (WSC), DOT officials discussed US export delays, detention and demurrage practices, and ways to better share data tied to port performance. DOT said it and the WSC had agreed to “stay in touch and coordinate on supply chain disruptions.”
The unprecedented Asia imports clogging major gateways and inland hubs began in mid-2020, and container lines, ports, and industry analysts do not expect it to ease until early 2022 at the earliest. Frustration with export services and rising storage fees has spurred Congress to consider new legislation giving maritime regulators greater power
Keeping you updated,
BRi Customer Solutions Team
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