Infomail March 2017

Sea freight: Export eastbound, Spain: Ports on strike, Air freight: Asian Operations

Ladies and Gentlemen,

Sea Freight: Export eastbound

Shipping eastbound from Europe was “business as usual” for a long time. There was more than sufficient capacity, adequate departure options and ships that were loaded well below capacity offered favorable options for export. But now things are very different.

At the end of last week, a tsunami struck. Shipping companies out-did each other with price increases and announcements of pending changes, with Cosco starting it all. Over the short-term the Chinese carrier abrogated all current contracts, leading everyone to follow in a stampede. UASC, Evergreen, Hapag Lloyd, Maersk, APL, K-Line, OOCL, Yang Ming… the list includes the most-used shipping companies for the trade line.

Starting in April the rates are going to increase drastically. It is speculated that the increase will bring an added charge of up to USD 1,200 per container. Whether this is a General Rate Increase (GRI) or Peak Season Surcharge (PSS): The bottom line is that the shipping companies are already talking about rates possibly being at 1,600 to just under USD 2,000 for the month of May.

This does not seem unrealistic. After a long dry spell the service providers sense an opportunity to make their rates lucrative. Full ships make it possible. It seems clear that this will go on through May. Only then will additional new construction come on the market. Only then will supply and demand approach each other again. At the moment, providers are dominant. However, they will dictate the prices only until the pendulum that is the rotation of services, mainly ship space, capacity, demand and utilization, swings back in the other direction. This market is still shaped by volatility. Securing and booking space in a timely fashion is urgently recommended.

Spain: Ports on strike

The Spanish government plans to adapt the working conditions in its domestic ports to the EU-Guidelines. Port workers are striking to maintain the status quo. They have announced work stoppages between the 03.06 and 03.25.2017 in each week with interruptions:

  • Week 10 definitely on 06., 08., 10.
  • Week 11 definitely on 13., 15., 17.
  • Week 12 definitely on 20., 22., 24.

Productivity is already suffering. Sines in Portugal and Fos-sur-Mer in France are both considered as alternatives for Spanish cargo. According to reports, though neither of them is accepting freight with Spain as the destination until further notice.

Air freight: Asian Operations

It already feels like an eternity since Chinese New Year, but the effects of annulled freight connections and changed flight plans continue to have effects after the holidays in the Middle Kingdom.

Air freight shipping to and from Asia is still in high demand. Capacities are short. Currently no airline is really able to come out with any long-term prognoses or more stable rates. Air freight shipments vary drastically from one week to the next, always dependent on the utilization of available flights, which is currently quite pressed.

The principle here as elsewhere is: Book early.

We will gladly keep you further informed.
Your SENATOR INTERNATIONALTeam