+++ ALWAYS UP TO DATE WEEK 30 +++

Regular information on current developments

What is currently shaping the market for air freight? What for sea freight? What's happening on the rail link with China? You can read interesting facts here.

GENERAL INFORMATION  

Falling demand in Western Europe and North America is causing movement in freight rates. The ongoing covid wave in Europe is causing staff shortages and thus delays, especially for Air Freight.

The market is affected by price fluctuations. This may result in surcharges for some modes of transport. As before, for detailed and product-related questions, please contact your personal SENATOR contact directly.

AIR FREIGHT

In general, the situation worldwide remains difficult to calculate. Demand in the West continues to be subdued. Rates are falling for imports from Asia to Europe and to North America. However, according to observers, this does not mean an end to high prices. Although passenger flight operations are again running at a significantly higher level than in the summer of 2021, capacities remain below pre-Covid levels (source: theloadstar.com).

As a result, the rate situation remains volatile despite the decline from Asia. On the one hand, the easing in China is causing rates to fall. On the other hand, sanctions against Russia are weighing on capacity and jet fuel prices have risen extremely in the wake of the Ukraine war. Jet fuel prices reached an all-time high of over $4.00 per gallon in June 2022.

Due to the closure of Russian airspace to Western airlines, Asia-EU flows continue to be diverted via the Middle East. Total cargo volumes declined 2.5% between January and June 2022 compared to the same period last year. Global capacity for the first half of 2022 was 4% lower than the same period in 2019, with routes from Asia to Europe particularly feeling the decline: 22% reduction compared to the same period in 2021.

The situation at most German airports remains difficult. High passenger numbers due to the vacation season as well as lack of staff due to Covid, strikes and other effects lead to delays in ground handling. Frankfurt am Main (FRA) remains particularly hard hit. Here, the current situation should be checked in advance for all shipments. At Frankfurt-Hahn (HHN), there are currently temporary fuel shortages. As a consequence, flight schedule deviations of our "SAB" flights from/to HHN may occur. 

On the "SAB" SENATOR Atlantic Bridge from Frankfurt (FRA) to Mexico City (MEX) 3 flights per week will start again from August 1st. This provides additional capacity and further improvements.


OCEAN FREIGHT

Rates remain on the move for Ocean Freight. According to the latest report from Maritime Strategies International (MSI), the decline in freight and time charter rates is expected to intensify in the fourth quarter of 2022. Supply chain disruptions and a decline in demand in the Western world are exacerbating the rate decline. According to MSI, the downward trend is likely to continue through 2023. In addition, it is apparent that many shipping companies are resorting to empty sailings (blank sailings) on the main trade routes to maintain better rate levels (source: theloadstar.com).

This also affects routes between India and Europe. Indian shippers continue to report significant disruptions due to blank sailings in the shipping schedule, especially for export to Europe. Recently, Hapag-Lloyd announced that it will not operate the Indian Ocean Service (IOS) between Western India and Northern Europe from August to November (source: theloadstar.com). The situation remains challenging for exports from Europe to Asia. Strikes at major German seaports have not eased congestion in the German Bight and delays at ports. Hamburger Hafen und Logistik AG (HHLA) has now informed about measures at the terminals. Since July 1, the following has applied: should a container remain at the terminal for more than ten calendar days after unloading, HHLA reserves the right to transfer such long standing import containers to a separate, guarded area in order to relieve its terminal operations. Once a transfer has actually been carried out by HHLA, a fee will be charged for clearing import containers.

From August 2022, SENATOR will start with a new Consol Service from Hamburg via Bremerhaven to Shanghai. The transit time of the Maersk-based service is 31 days. The company's own consolidated containers have also existed up to now. What is new and different? Advantages are expected in terms of lead time and stability of the processes in China, where local handling also runs directly via a Maersk warehouse there. The supply chain is thus fully integrated.

For imports from Asia to Europe, little has changed. Significant delays continue to occur. Many Chinese terminals are still not operating in normal mode. Rates are falling for the time being.

For exports from Europe to North America and Mexico, there are also delays in departures. According to shipping line Hapag-Lloyd, no new strikes are expected until Aug. 26, 2022, following an intervention by the Hamburg Regional Labor Court. Last week's strike severely affected berth occupancy in the Port of Hamburg. Delays here could continue for some time. On the west coast of the USA, many ships continue to be jammed. Los Angeles and Long Beach remain particularly affected. Oakland is also reporting delays. Rates remain at recent high levels. 

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 Ukraine war continues to massively complicate rail transport on the New Silk Road to Europe. Eastern Europe in particular is looking for solutions. On July 15, the first direct train between China and Hungary now started from Shijiazhuang International Dry Port in Hebei Province. The destination is the BILK intermodal terminal in Budapest. The estimated transit time is 18 days. The train will cross Mongolia, then travel via Russia, Belarus, Poland and the Czech Republic to Budapest. This step is intended to deepen cooperation between the Hebei region and Eastern Europe (source: railfreight.com).

CURRENT SITUATION WORLDWIDE

BRAZIL

For Air Freight, delays in São Paulo at Guarulhos (GRU) and Viracopos (VCP) airports must continue to be considered. Shipments should be requested as early as possible.

For Ocean Freight, rates have recently dropped slightly. Space also depends on the route - transpacific has slightly more capacity than transatlantic.

CHINA

China's banking crisis has now led to a direct response from the government in Beijing. China's banking regulator is pushing to eliminate risks in small and medium-sized banks. This is intended to protect public savings more efficiently. Rural banks in particular are currently suffering from the slowdown in the Chinese economy. The responsible commission is now introducing stricter regulation of equity and related transactions (source: scmp.com).

In the central Chinese province of Hubei, the Ezhou Huahu airport has started operations. According to China's state-run Xinhua news agency, this makes the airport the "first professional cargo airport hub" in Asia. The facility has a 23,000-square-meter cargo terminal and a nearly 700,000-square-meter cargo transit center. There are two runways to increase efficiency. So far, two cargo routes to Shenzhen and Shanghai are served. More international routes to Osaka in Japan and Frankfurt in Germany are to be added later this year (source: aircargonews.net).

Hong Kong-based airline Cathay Pacific is reporting noticeable growth. Strict covid regulations in Hong Kong continue to restrict both passenger and cargo flights. Nevertheless, a full freighter schedule is in effect this month for the first time since the pandemic began. By year's end, Cathay Pacific expects to reach 65% of its pre-Covid cargo capacity. A return to more long-haul flights should also help offset declines from the first half of 2022. In its latest monthly report, the airline expects demand to pick up toward the fall, as that is when the peak season should begin (source: freightwaves.com).

MEXICO

For Air Freight, prices are still at high levels. To and from Europe free seats are rare. Our "SAB" to Mexico City (MEX) provides a remedy. From and to Asia, Cathay Pacific and Korean Air offer regular connections.

For Ocean Freight, prices are falling on the transpacific route. Nevertheless, congestion in Shanghai is causing bottlenecks. In addition to traditional operations, SENATOR specializes in multivendor consolidation with the ability to expedite customs clearance in Mexico through our certification process. From and to Europe, demand is increasing. Shipments should be scheduled a minimum of 14 days in advance.

SOUTH AFRICA

The power utility Eskom continues to struggle with supply bottlenecks. As a result of unannounced strikes, power plant units had to be shut down. According to current reports, most power plants are now running stably again. As a result, the power supply should be secure again as of this week.

The SA Reserve Bank has raised the key interest rate by 0.75%. This is the third consecutive quarterly increase. The measure is intended to combat the growing inflation in the country. This amounted to 7.4% in the second quarter. The government's original target was between 3.0% and 6.0%.

Thanks to the recent drop in crude oil prices and forecasts calculated from this, observers see a chance of a drop in fuel prices in South Africa in August. The official announcement of prices will be made on August 1.  

USA 

Shipping company Maersk is pushing ahead with its transformation into an integrator. Three new B767-300 freighters have been ordered from Boeing. Together with Miami-based cargo carrier Amerijet, the aircraft will be deployed on the transpacific route. The service will strengthen Maersk's air freight division in the U.S. market. The route between Asia and North America is scheduled to launch later this year (source: freightwaves.com).

At the Port of Oakland (California), strikes by truck drivers are causing considerable restrictions. Due to the work stoppages, numerous terminals had to be temporarily closed. According to the Oakland ILWU local, about 450 workers did not show up for duty due to the strike. Vessels anchored off the Port of Oakland are currently frequently diverting to other ports. This further complicates the already tense situation off the U.S. West Coast (source: cnbc.com).

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