+++ ALWAYS UP TO DATE WEEK 8 +++

Regular information on current developments

What is currently shaping the air freight market? What about sea freight? What about the rail connection with China? Read more.

AIR FREIGHT

Air freight spends the majority of its travel time on the ground. Even in normal times. Currently, the situation is getting even worse at all of Europe's major airports. Ground handling is slowing down as cargo volumes continue to grow. Added to this is the import of Personal Protective Equipment (PPE - masks, etc.), often on an ad hoc basis and thus without the ability to plan. Special handling requirements for PPE imports are causing additional work and delays. The situation is likely to remain critical for some time.

Demand for exports from Europe to the USA remains extremely high. The consequence: capacity bottlenecks. SENATOR INTERNATIONAL responds with extra flights on the "SAB" SENATOR Atlantic Bridge. After the Chinese New Year, exports from Europe to China also pick up significantly: here as well, there are capacity bottlenecks.

On February 20th, 2021, the first non-stop "SAB" cargo flight landed from Mexico City (MEX) in Frankfurt (FRA). Kick-off for the expansion of our "SAB" SENATOR Atlantic Bridge: with immediate effect, a Boeing 767-300F of the Mexican cargo airline MasAir will initially fly twice a week between Frankfurt (FRA) and Mexico City (MEX). From March 8th, Frankfurt will be served 3 times a week.

OCEAN FREIGHT

Worldwide, there is still a shortage of empty containers. Equipment is scarce. For export from Europe to Asia, free space is rare, often only bookable with the help of higher special rates. BAF surcharges (fuel costs) and rates continue to rise. Shipowners react again with surcharges, especially due to the equipment imbalance and lack of shipping space. The market is picking up again.

Even after the Chinese New Year, the space and equipment situation remains stubbornly tight. The usual easing after the holidays is not in sight. An improvement in the rate situation can hardly be expected before the end of April/May.

Due to the political unrest in Myanmar, two shipowners have already suspended services to ports there. It is expected that others will follow.

For exports to North and South America, the situation remains critical. Depending on the destination, ships are currently fully booked 4 to 6 weeks in advance. Shipowners are again reacting by increasing surcharges (PSS, EIS). In the USA, several ports (e.g. US West Coast, Savannah, New York) are experiencing massive backlogs. One of the main reasons is the lack of trucks for hinterland connections and of personnel capable of working. The trucker shortage is coming to a head.

The plant health control in Hamburg and Bremen informs that from March 1st, 2021, the implementing regulation (EU) 2021/12711 must be implemented by all EU member states. Affected by the regulation are consignments from China, India and Belarus, which contain packaging wood and/or dunnage, which consists completely or partially of solid wood (= raw or solid wood) with a thickness of more than 6 mm and is therefore subject to the regulations of the International Standard ISPM 15. Specifically, this applies to shipments for import into an EU member state in which the wood in question is either used as a load carrier or for load securing purposes, or constitutes the goods themselves (CN code 4415) and belongs to a listed type of goods (Annex SP 042a/2021 and SP 042b/2021).

RAIL FREIGHT

The Chinese government is apparently considering allowing the rail transport of hazardous goods between China and Europe before the end of this year. The aim is to enable both the export and import of corresponding products. If this announcement comes to fruition, it will mark another milestone for Eurasian rail freight. As the demand for electric cars, e-bikes and similar items grows, so does the demand for lithium-ion batteries and similar hazardous goods via rail (source: railfreight.com).

Overall, the number of freight train journeys between China and Europe increased to 1,165 in January 2021, up 66% year-on-year. That's according to data from China State Railway Group Co. Ltd, which said this was the ninth consecutive month that the number of trips exceeded 1,000 (source: China International Import Expo).

CURRENT SITUATION WORLDWIDE

CHINA

According to new Eurostat data, China has overtaken the U.S. as the EU's top trading partner in 2020. EU exports to China grew by 2.2% in 2020, while imports from China increased by 5.6%. In contrast, the EU saw significant declines in trade with the rest of the world, including just the U.S. (source: merics.com).

INDIA

Because the COVID19 situation in India is improving noticeably, export volumes are rising again significantly. This puts ocean freight transports in a tight spot: due to missing containers and schedule changes as a result of empty runs, there is an extreme backlog of freight. The shipowners' solution: whoever pays the most gets the fewest free spaces. To make matters worse, Indian exporters are now pushing volumes again as the Indian fiscal year ends on March 31st, 2021.

Strong demand for cargo space is expected to continue through March 2021. Many customers will not be able to meet planned shipping windows, which will further increase demand in air freight. However, with spare capacity also scarce, air freight prices will continue to spiral upward.

MEXICO

Mexico continues to struggle to establish a viable vaccination program. To date, less than 1% of the population has been vaccinated. In the Mexican economy, automotive, pharmaceuticals, high tech, and perishables are expected to achieve the largest gains in 2021.

Ocean freight rates are still high, especially for cargo from Asia. After the Chinese New Year ends, utilization to ZLO (Manzanillo) and LZC (Lazaro Cardenas) will pick up in the foreseeable future.

South Africa

The South African Federation of Trade Unions SAFTU is calling for a general strike. This week, work is to be stopped for a reorganization of the entire South African economy. The demands go even further, ranging from a "Green New Deal" to improve greenhouse emissions, to free access to a better education system, to the fight against corruption, racism and sexism. It is not yet clear what impact the protest will have.

USA

For Ocean freight to and from the U.S., supply chains continue to be disrupted by the equipment imbalance. Many containers are stuck on ships that lie in the roads outside ports for days waiting to be cleared. Recently published expert reports do not expect the rate situation to ease in the coming months. Competition for free places is so fierce that premiums continue to be paid to snatch free places. Capacities are stretched to the limit. It will take time to reduce the backlog.

Prices for Air freight from Germany to the USA have risen dramatically compared to the previous year. Due to COVID-19, market development is hardly calculable. Air freight prices are expected to remain at a high level in 2021 in view of the loss of passenger aircraft freight space normally available. Key airline executives interviewed believe it will take at least until 2024 for passenger traffic to return to pre-COVID levels.

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