+++ ALWAYS UP TO DATE WEEK 26 +++

Regular information on current developments

What is currently shaping the market for Air Freight? What for Ocean Freight? What's happening on the rail link with China? You can read interesting facts here.

GENERAL INFORMATION  

The situation remains challenging on all modes of transport. In many cases, rates are rising noticeably. Especially in Ocean Freight, strikes and worsening traffic jams are causing delays and longer waiting times.

These factors also affect SENATOR in the form of cost surcharges on certain shipments. As always: For detailed and product-related questions, please contact your personal SENATOR contact person directly.

AIR FREIGHT 

The war in Ukraine continues to impact the market situation and supply chains. In particular, the increased energy prices are not without consequences. The average price of jet fuel has risen steadily in recent months. In contrast to previous years, the price is rising at a higher level than the price of crude oil in general. In an article published by IATA, well-known airlines have warned against adjusting both ticket prices and air freight rates. The background is the growing pressure with regard to operating costs. Fuel surcharges are currently becoming the norm for both IATA airlines and charter flights.

Furthermore, part of our fleet of the "SAB" network is undergoing maintenance. The vacation season also provides the market with more pax options thanks to more passenger flights. As a result, SENATOR is adding additional rotations on all routes - especially between Germany and the USA. Capacity bottlenecks are thus avoided, and departures and frequency are secured.

OCEAN FREIGHT

Last Thursday, the responsible union had called for a 24-hour warning strike in all major German seaports. This strike exacerbated the already existing traffic jam of waiting ships in the German Bight. In addition, ships and trains could not be handled as planned. Supply chains, which are already strained, are thus getting further out of step. According to spokesmen, the union's demands had not been met in negotiations. Germany is currently recording an inflation rate of 7.9%. The tariff offer of the ZDS (Central Association of German Seaport Operators) did not take this factor sufficiently into account, the union side said. The timing of the strike is also very unfavorable due to the cargo overhang resulting from the month-long lockdown in Shanghai. Huge increases in import volumes are expected across Europe (source: theloadstar.com).

In east-west container traffic, spot freight rates have continued to fall. The reason: demand is weakening as Western consumers adjust their consumption to higher living costs. This has resulted in an extraordinary effect: according to Xeneta, long-term contract rates on the transpacific eastbound route are now higher than spot rates (source: theloadstar.com).

For exports from Europe to Asia, delays should be factored in for many sailings. Shanghai operations are also far from back to normal despite the official lifting of the closure. For imports from Asia to Europe, rates have recently started to fall again somewhat. Operationally, the situation remains difficult due to the difficulty of planning as a result of strikes and delays. For the Port of Hamburg, HHLA (Hamburger Hafen und Logistik AG) warns that the dwell times of import containers at the container terminals continue to be too high. This would put a strain on operations, capacities and resources. Consequently, the throughput time of imports must be improved as quickly as possible. Otherwise, the continuation of operations would be jeopardized.  

For exports from Europe to North America and Mexico, there has been little change recently. Rates continue to move at a high level. Free slots remain scarce. Congestion off major U.S. ports on the West Coast continues to prompt shipping lines to shift routes to East Coast or Gulf Coast ports.

RAIL FREIGHT

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. We ask for your understanding and will keep you informed about further developments regarding rail freight.

Could Greece act as a transit point between China and Northern Europe? According to the consolidation company Nordicon, this is possible. The port of Piraeus acts as an interface. Nordicon offers a weekly service between Yantian in China and the port of Piraeus in Greece. Goods carried by sea are transferred to trains in Piraeus and continue their journey through the Balkans and Central Europe as far north as Denmark, Norway and Sweden. This could become an alternative to rail freight on the Middle Corridor and to ocean freight from China to northern Europe, which is currently struggling with delays (source: railfreight.com).

CURRENT SITUATION WORLDWIDE

BRAZIL

For Air Freight, shipments continue to pile up at Brazilian airports waiting to be loaded. Accordingly, delays are to be expected. SENATOR is working on solutions to move cargo through other airports. In São Paulo, delays and longer waiting times continue at Guarulhos (GRU) and Viracopos (VCP) airports. 

For Ocean Freight, rates for export and import remain at high levels. For export to the LATAM region, there are again more available slots. Peru continues to be an exception here. Shipments to Peru can be brought to their destination by land.

CHINA

After months of supply chain disruption in China, Vietnam is emerging as an alternative for high-tech manufacturing. This month, Apple decided to move part of its iPad production to Vietnam. Previously, the company was hit harder than other suppliers by Beijing's covid lockdowns. Other high-tech producers such as Samsung and LG have also increased their investments in Vietnam. The Loadstar quotes market observers as saying, "Many companies are opting for alternative production locations to offset business risks. Besides China, Vietnam is the top choice because it has joined a number of free trade agreements." (Source: theloadstar.com)

China's zero-covid strategy has hit Beijing's economy hard. Retail sales plunged 25.7% year-on-year in May. The backdrop was the lockdown imposed to prevent further spread of the Omicron variant. Although this lockdown was limited to a few districts and not applied to the entire metropolis as in Shanghai, consumption and production declined. This underscores the economic impact of the draconian coronavirus controls. Despite a slight improvement in economic conditions last month, Chinese households and businesses are still reluctant to spend given the current uncertainties, according to analysts (source: scmp.com).

MEXICO

For Air Freight from Shanghai, available seats remain scarce and rates are at high levels. From Europe to Mexico, the automotive industry claims much of the capacity. This lowers options on commercial flights. 

For Ocean Freight from Asia, rates are rising as the peak season begins. The most important providers are already running at the limit with their capacities. SENATOR can offer excellent options and good transit times. From Europe to Mexico, the strikes in the German seaports are making themselves felt. Here, too, SENATOR offers assistance for FCL and LCL.

SOUTH AFRICA

South Africa has announced that it will lift all remaining COVID restrictions after 27 months of the pandemic. Among other things, the legal requirement to wear masks is being dropped. Recently, the number of new infections has declined significantly. The government continues to promote vaccination as the best protection against COVID.

Consumers in South Africa can expect gasoline prices to continue to rise in July. The Central Energy Fund has indicated that all data point to an increase to over 27.00 rand per liter. This would be a new record high.

Last week, parts of Soweto saw heavy protests regarding the provision of services. Angry residents blocked all main roads to and from Soweto with burning tires and stones. The protests were directed against the local government in Johannesburg. The latter is said to be more committed to services in Soweto.

USA 

Container spot freight rates for transpacific traffic recently crossed two downward thresholds. According to analysis and consulting firm Drewry's, the rate for the Shanghai to Los Angeles route is down 7% from the same period last year. For the Shanghai to New York route, the rate was also down 7%. Analysts say high inflation in the United States is dampening consumer demand (source: freightwaves.com).

The U.S. Federal Aviation Administration (FAA) has released a new proposal to reduce greenhouse gas emissions from large aircraft in U.S. airspace.  The proposed rule would mandate greater fuel efficiency for new jet aircraft and large turboprop and propeller aircraft. "Today is an important step toward achieving President Biden's ambitious goal of zero emissions by 2050," said U.S. Transportation Secretary Pete Buttigieg. The proposed rule also includes a variety of fuel-efficient measures in aircraft manufacturing, including improving aerodynamics, engine propulsion efficiency and reducing empty mass before loading (source: aerotelegraph.com).

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