+++ ALWAYS UP TO DATE WEEK 16 +++

Regular information about current developments

What is currently shaping the market for air freight? What for ocean freight? What on the rail connection with China? You can read interesting facts here.

GENERAL INFORMATION  

The war in Ukraine, the impact of strict lockdowns in China and the severe floods in parts of South Africa are defining issues this week. 

Further, market conditions around the world are in flux. The war in Ukraine and the political consequences are keeping prices unstable. This leads also concretely with SENATOR to cost surcharges. For detailed and product-related questions, please contact your personal SENATOR contact person directly.

AIR FREIGHT 

The lockdown in the Shanghai region is causing noticeable disruptions. Options are limited for both export to China and import from China to Europe. Due to the enormous backlog, freight is currently hardly getting in or out of the region. Truck routes in and around Shanghai are also partially affected by the closure. As a result, cargo can only be rerouted to other destination airports under certain circumstances. Furthermore, considerable delays or flight cancellations have to be taken into account.

The development of fuel prices continues to put pressure on the market. Most recently, the cargo airline Cargolux again increased fuel surcharges. Other providers are likely to follow suit. At the moment, it is not possible to predict when a reduction can be expected. Cautious planning is called for. Developments should be monitored closely.

In the direction of the USA, the load factor remains high. For the month of May, SENATOR is working on further regular self-controlled charter solutions for export and import. This should provide relief of the situation, more reliability and improved capacity.

Good news: On the "SAB" service to Mexico, A330 freighters will operate three times a week from Frankfurt (FRA) to Mexico City (MEX) starting this week. This means that more capacity is available with immediate effect.

OCEAN FREIGHT  

Little has changed recently for exports from Europe to Asia. The strict lockdown in Shanghai is massively affecting the world's largest container port. According to data analyst VesselsValue, more than 300 cargo ships are waiting to load or unload in the area. The lockdown in the region remains strict. Trucks remain in limited supply. As a result, transport chains to terminals remain interrupted in some cases. This affects both FCL and LCL traffic. Congestion at the port of Yangshan is increasing. Here, too, the handling of ships takes significantly more time than normal. Other ports on the east coast of China and on the Yangtze River are now also overloaded and experiencing capacity bottlenecks.

In general, providers are currently seeking alternative solutions for Southeast Asia. Shipping companies such as Maersk, MSC and Hapag Lloyd have moved dangerous goods and reefer containers to other unloading ports. Intermodal services are sometimes offered as land-to-water or in combination with rail shipments. Many shippers in Jiangsu, Anhui and Sichuan provinces are trying to divert cargo from Shanghai to Ningbo (source: theloadstar.com).

For imports from Asia to Europe, the lockdown is also having an impact. All bookings need to be planned early. Rates are currently still stable. Nevertheless, a price increase as a result of the lockdown is to be expected here as well.

For exports from Europe to North America and Mexico, the picture is the same as recently: full ships, high rates, and in some cases a lack of equipment. The situation off the congested west coast ports of the USA - primarily Long Beach and Los Angeles - has recently recovered slightly. Last week, between 34 and 37 ships were anchored here. However, due to the lockdowns in China, the situation off the US ports is likely to become noticeably worse again soon, as sailing schedules are being severely disrupted.

RAIL BRIDGE

As a result of the war situation in Ukraine, our SARB (SENATOR Asia Rail Bridge) service has been temporarily suspended. No bookings are being accepted at this time. Alternative routes via Caspian Sea and Turkey proved to be not interesting enough or unstable. We ask for your understanding and will keep you informed about further developments regarding rail freight.

What actually still works as a real alternative to the slow, often enough less reliable sea ship and to the expensive airplane? SEA-AIR. The route from Asia by sea freight to the Middle East - mainly via Dubai - and on to Western Europe by air had been dormant for some time and is now experiencing a new upswing because the land bridge by rail through Russia and Belarus has become obsolete.

CURRENT SITUATION WORLDWIDE

BRAZIL

For air freight, high demand and restrictions imposed by Brazilian customs authorities dominate the picture. The two main airports Guarulhos (GRU) and Viracopos (VCP) in São Paulo remain congested, especially for exports. Planning ahead is the key. Flights to the LATAM region are again more flexibly available.

For sea freight, there is a lack of equipment in some cases, especially reefers. For export to Europe there are hardly any vacancies at the moment. This is driving rates up. For exports to Asia, the lockdown in Shanghai is also dominating the situation. Backlogs are also causing massive delays in Brazil.

CHINA

China's trade is increasingly feeling the consequences of the zero-covid strategy. Imports fell 0.1% year-on-year in March. Previously, they had risen 15.5% in January and February. Exports rose 14.7% in March. This also represents a slight decline from January and February 2022 (source: scmp.com).

The severe lockdowns in China are impacting supply chains around the world. In particular, the U.S. economy and its supply chains are affected by the current lockdown in the Shanghai region. American companies have become even more dependent on importing Chinese products due to COVID-19 and the tensions between Russia and the West (source: freightwaves.com).

MEXICO

For airfreight from Europe to Mexico the high demand leads to capacity bottlenecks. All bookings should be requested at least 2-3 weeks in advance. For imports from Asia, the lockdowns in China are causing delays. As a result, there is less available capacity here as well.

For ocean freight, rates in import from Europe are increasing again. Free slots are hard to find. Due to the current market development, the situation will probably remain difficult to calculate for months. For imports from Asia, the lockdown in the Shanghai region is also causing delays here. At least: rates remain stable at the moment.

SOUTH AFRICA

Last week, heavy rains with squalls in parts of South Africa triggered the worst flooding in half a century. More than 440 people were killed in KwaZulu-Natal province, according to official figures. President Cyril Ramaphosa declared a state of emergency. The affected region is also home to Durban, the country's largest container port. Maersk was the first shipping company to announce that it would divert its own ships to Port Elizabeth. Access roads to the port of Durban are impassable. Other shipping companies are also considering temporary detour (source: theloadstar.com).

Port operations in Durban resumed late this week, according to officials. However, operations are not running at full capacity. Around the port area, infrastructure was dramatically destroyed. The rail system has also been affected. Most depots are overloaded. There will probably be a backlog in the handling of import and export containers for some time to come. 

USA 

California's largest container ports are preparing for the consequences of the Shanghai lockdown. This is especially true for Los Angeles and Long Beach. Background: The lockdown of the Shanghai region is upsetting the shipping companies' schedules. Thus, a large rush of ships currently still stowed in China can be expected in a few weeks (source: scmp.com).

According to a report by University Maritime Advisory Services (UMAS), a significant portion of the U.S. shipping fleet could be converted to battery power in the coming years. The so-called decarbonization is part of a report commissioned by the Ocean Conservancy. This includes a proposal to replace a large proportion of U.S. ships with battery-powered vessels. About 24% of ships operating in U.S. waters are already prepared for decarbonization, he said. Technologies are available. Minimal infrastructure changes are also required (source: theloadstar.com).

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