+++ ALWAYS UP TO DATE WEEK 28 +++

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  

High energy costs as a result of the Ukraine war, rising covid infection figures and the beginning of the vacation season are creating numerous challenges for all modes of transport. In particular, ground handling at many airports is affected.

At SENATOR, the situation continues to be reflected in cost surcharges on certain shipments. For detailed and product-related questions, please contact your personal SENATOR contact person directly.

AIR FREIGHT

Rising numbers of corona infections caused by the highly contagious omicron subtype BA.5 and the start of the vacation season are causing staff shortages at many airports. The number of passenger flights is rising rapidly due to the vacations, while the number of air cargo imports is also picking up after the end of the lockdowns in China. As a result, many European and U.S. airports are experiencing enormous delays in ground handling. In Germany, more or less all airports are affected. 

In Frankfurt am Main (FRA), the situation is currently particularly difficult. Passenger flights always have priority over cargo aircraft in processing, so waiting times for cargo flights are increasing even more. Fraport AG's ground handling services (BVD) are asking for cargo flights to be rerouted on weekends. This is to provide more stability to the handling process. In response to the current difficulties, Lufthansa Cargo is announcing changes to cargo operations at its Frankfurt and Munich hubs. An ice embargo will apply to Frankfurt (FRA) from now until the end of August. All shipments booked as General Cargo product and additionally filled with dry ice will no longer be accepted. As an alternative, it is possible to check in freight as a passively cooled shipment.   At the Munich hub, an ice transit embargo is now in effect for dry ice for General Cargo shipments. 

In theory, much more capacity is available thanks to the high number of passenger flights with cargo options (PAX). In practice, however, the above-mentioned factors make for rather tight capacity. SENATOR can continue to offer sufficient seats on all "SAB" routes because airports with an airfreight focus (such as GSP or RFD) are served for the most part. Furthermore, SENATOR is working on commercial solutions in order to be able to offer even more seats at attractive prices, especially in the direction of the USA. By the end of September, the maintenance of the "SAB" fleet will be fully completed. At the beginning of the fourth quarter, all aircraft will be available again. 

Jet fuel prices remain at the recent high level. Fuel surcharges are therefore expected to continue. Due to the general development of energy prices, there is currently no end in sight to this price spiral.

OCEAN FREIGHT

The current crises - war in Ukraine, rising inflation, high energy costs - are also curbing demand for Ocean Freight to Europe and North America. Container spot rates are reacting to this with a downward trend. Global demand data released this week by Container Trade Statistics (CTS) show further signs of a weakening market: 2.8% fewer full containers were transported in May than in the same month last year. For Latin America, on the other hand, there is a more optimistic assessment of capacity utilization on the routes. Capacity utilization is comparatively at a high level. For the routes from Asia to Northern Europe, spot rates are moving stable (source: theloadstar.com).

In India, several major strikes caused delays last week. In Chennai in eastern India, truck drivers have since ended their strike. The clearing of the cargo backlog has begun. Work has also now resumed at the ports of Ennore (Kamarajar) and Kattupalli. However, it is likely to take a few more days before port operations resume at full capacity (source: theloadstar.com).

For exports from Europe to Asia, strikes at German seaports remain a challenge. The VVer.di trade union has again called for warning strikes between July 14 and 16, 2022. The call also affects the ports of Hamburg, Bremerhaven and Wilhelmshaven. As a result of the expected work stoppages, significant disruptions to operations are to be expected. This should be taken into account for both import and export. For all shipments to China, longer waiting times in some Chinese destinations remain a factor to be calculated. For imports from Asia to Europe, little has changed recently. Many shipping companies are reacting to the drop in demand in Europe with "blank sailings" (cancellation of ship departures). In this way, suppliers are trying to protect their profitability (source: theloadstar.com).

For exports from Europe to North America and Mexico, the situation has also hardly changed. At the major ports on the U.S. West Coast - especially Los Angeles and Long Beach - more containers than recently are again waiting to be loaded at the terminals. The background to this is a lack of space on ships and acute congestion on the US rail network.

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.

The consequences of the Ukraine war and the sanctions imposed on Russia have enormously weakened growth on the New Silk Road. For the first time in more than ten years, the growth in freight traffic between China and Europe has stagnated. The number of freight train journeys increased by 2% in the first half of 2022. In 2021, it was still around 22% for the same period (source: railfreight.com). To give a new boost to rail as a mode of transport, the transport ministers of Turkey, Bulgaria, Serbia and Hungary have set up a coordination council and a working group for rail transport. The new four-country partnership is intended to connect the Middle Corridor directly to Europe. Specifically, the strategy paper is about investing in and expanding rail infrastructure. The focus is on freight transport. The long-term goal is to become a "regional and global logistics leader," as Turkish Transport Minister Adil Karaismailoğlu emphasized (source: railfreight.com).

CURRENT SITUATION WORLDWIDE

BRAZIL

For Air Freight, delays are to be expected at some airports for both import and export. In São Paulo, this continues to affect Guarulhos (GRU) and Viracopos (VCP). All shipments should be requested as early as possible.

For Ocean Freight, rates have recently remained stable. The space situation has also eased slightly - especially for exports to the LATAM region. In contrast to Europe and North America, demand in South America has hardly declined.

CHINA

China's strict zero-covid policy is dampening trade and consumption growth in the Middle Kingdom this year. Trade and domestic consumption are unlikely to recover in the second half of the year either, according to recent forecasts. Uncertainty in the world's second-largest economy is too high, experts say. While China's main problem in the first half of the year was its supply chain, falling demand in Western industrialized nations is currently holding back China's exports (source: scmp.com).

Five regions of China have a special responsibility in China's "covid recovery," according to Premier Li Keqiang. Shanghai and the southeastern provinces of Guangdong, Jiangsu, Zhejiang and Fujian form the backbone of the economy, Li said last week at a symposium of local regional leaders. Therefore, he said, "all means must be exhausted" to stabilize production and employment. The country is at a "critical juncture," he said.  In detail, this involves eliminating bottlenecks in the supply chain and stabilizing the economy. At the same time, potential new covid outbreaks would have to be kept under control (source: scmp.com).

MEXICO

For Air Freight from Asia to Mexico, some Asian operators are returning to the market, especially to Guadalajara (GDL). SENATOR is also IATA-registered here. From Europe to Mexico, the Ukraine war and its consequences continue to complicate the situation. Capacities in general are still a problem. Our "SAB" from Frankfurt (FRA) to Mexico City (MEX) remains a reliable option.

For Ocean Freight, the peak season is dawning, especially from Asia to Mexico. Rates are rising, free slots are harder to come by than just a few weeks ago. Early planning is the key. From Europe to Mexico, space conditions are also complicated. SENATOR continues to offer available capacity from Hamburg. For export to the LATAM region and the USA, the SENATOR Gulf Bridge is an optimal solution for shipments to the East Coast of the USA. 

SOUTH AFRICA

For Air Freight, rates are currently at a high level. Delays and problems in ocean freight are currently boosting demand for air freight to South Africa. Our "SAB" SENATOR Africa Bridge to Johannesburg offers a reliable connection.

For Ocean Freight, shipping companies are forecasting the peak season from the end of July into the fourth quarter. South Africa's main ports continue to be congested in some areas. Rail traffic is experiencing delays. Truck traffic lacks sufficient chassis.

The fuel price crisis in the country continues to worsen. Last week, the government announced another price increase for diesel. This will increase by 2.31 rand per liter. As a reaction to the price increases, there was a truck road blockade by demonstrators on the N4 highway towards Mozambique. The blockade has since been lifted.

USA 

Online mail order company Amazon has scrapped plans to build air cargo facilities at Newark Liberty International Airport in New Jersey, USA. The Port Authority of New York and New Jersey (PANYNY) said July 7 that negotiations with Amazon on a lease to develop the existing air cargo buildings at the airport had ended without result. Alternative plans for the development of the buildings have not yet been announced (source: aircargonews.net).

Congestion of containers at the California ports of Los Angeles and Long Beach has recently worsened again. Container dwell times have increased significantly again. The total number of import containers at both ports sitting for 9 days or more has more than doubled since early February, to more than 48,000 as of Wednesday last week (source: freightwaves.com).

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