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.
The war in Ukraine, with all its political and economic consequences, continues to have a noticeable impact on supply chains. The same applies to the lockdowns in China, especially the restrictions still imposed in the Shanghai region.
At SENATOR, the situation is particularly noticeable in cost surcharges. For detailed and product-related questions, please contact your personal SENATOR contact person directly.
Fuel prices continue to pose enormous challenges. Costs continue to rise on an almost weekly basis. This factor should be factored into all bookings. Top priority: plan early.
Demand in the direction of the USA remains high. Capacities continue to be scarce and corresponding bottlenecks cannot be ruled out. SENATOR reacts and has confirmed an additional rotation on the "SAB" SENATOR Atlantic Bridge to Greenville-Spartanburg (GSP) for June and July 2022. This is to accommodate any congestion that may occur. Further additional options are currently being worked on.
The situation to and from China also remains tense. Despite contradictory reports, the Shanghai closure continues to be strictly enforced. Consequences for airfreight are clearly noticeable: fewer connections, longer waiting times and incalculable delays. According to the Chinese government, the lockdown is to be largely lifted from June 1. It remains to be seen whether the situation will gradually normalize over the next 2 to 4 weeks.
Towards South Africa, the consequences of the floods in the province of KwaZulu-Natal have led to fuel shortages. Some airlines responded by skipping Johannesburg airport. On the "SAB" SENATOR Africa Bridge from Frankfurt (FRA) to Johannesburg (JNB), no problems have occurred so far. It is assumed that operations will continue to run normally.
The situation remains tense worldwide. In particular, the lockdowns in China and their effects determine the picture. For exports from Europe to Asia, this continues to mean a lack of schedule reliability and delays in departures. The lockdown of the greater Shanghai area has now lasted 50 days. There is no de facto end in sight. According to the latest reports, the local government is planning to classify the region into different zones. Depending on the covid infection risk in each zone, it might then be possible to open certain industrial areas. According to suppliers, most container depots in Yangshan port were closed last week. This is causing congestion and waiting times. On-site handling is affected accordingly. Rates are currently continuing to fall because supply and demand are out of balance. Freight forwarders at the Port of Shanghai are struggling to handle the piled-up containers.
In Sri Lanka, the port of Colombo has resumed operations after a strike. The strike followed the resignation of Sri Lanka's Prime Minister Rajapaksa and resulting political unrest. The important container port is suffering from the tense situation on the island. The situation is likely to remain difficult to calculate in the coming weeks. Some shipping companies are already looking for alternative ports in the direction of India (source: theloadstar.com).
For imports from Asia to Europe, the situation remains correspondingly challenging: delays and poor plannability determine the picture. For export and import to and from India, many shipowners charge a booking cancellation fee (BCF). This has been announced by MSC and Hapag Lloyd, among others. The providers justify this step with a necessary cost recovery in view of the scarce capacities. The fee takes effect in case of non-collection of the containers. SENATOR points out that these costs will be borne by the goods in case of occurrence.
For export from Europe to North America and Mexico the rates are on a high level as recently. Free slots are scarce. Congestion outside major US ports continues to cause delays. Added to this is the risk of a major strike at West Coast ports. Tensions between port workers and employers are expected to rise in the wake of collective bargaining negotiations that began May 10. As a precautionary measure in light of possible work stoppages, some importers are already moving containers to the East and Gulf coasts.
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.
While sea freight is currently less reliable and air freight is very expensive, SEA-AIR offers an interesting alternative. You can go to the Middle East by sea - mainly via Dubai - and continue to Western Europe by air.
CURRENT SITUATION WORLDWIDE
For air cargo the situation to and from China is problematic. Many flights from Shanghai PVG and other airports have been cancelled. The backlog at Brazilian airports is growing. SENATOR is currently working on solutions in Brazil to move cargo through other airports. In São Paul, the situation at Guarulhos (GRU) and Viracopos (VCP) airports continues to be complicated. Both only accept cargo with an expected time of arrival (ETD) of less than 48 hours. This is intended to relieve the pressure on warehouses.
For ocean freight, the Shanghai lockdown is also disrupting supply chains. Rates are currently rising on all trade lanes to and from South America. For exports to the LATAM region, the situation has improved somewhat, except for Peru. The alternative for freight to Peru is overland trucking.
China's economy continues to suffer extremely from the zero-covid strategy and lockdowns. The effect on the world's second largest economy has been greater than initially expected. Industrial production fell 2.9% year-on-year in April. Retail sales slumped as much as 11.1%. The rapidly spreading omicron variant is putting China's strict zero-covid strategy to a severe test (source: spiegel.de).
In Shanghai, the lockdown is also clearly noticeable in the unemployment rate. This rose to 6.1% in April. This is the highest level since the initial phase of the Covid pandemic in February 2020. The main factor of this rate represents the current closure of many companies, especially in retail and manufacturing (source: bbc.com).
Cathay Pacific airline has welcomed the Hong Kong government's relaxation of quarantine requirements for crews. Thanks to the new regulation, the airline hopes to boost its cargo business as soon as possible. From May, the number of cargo flights is expected to gradually increase significantly. Due to the covid situation in Hong Kong, Cathay Pacific had forced to severely restrict the entire long-haul cargo network at the beginning of the year (source: aircargonews.net).
For air freight, no shipment is currently accepted from Shanghai PVG. Good alternatives to and from Mexico are Hong Kong, Thailand, Singapore and Vietnam. From Europe, our "SAB" from Frankfurt (FRA) to Mexico City (MEX) is an excellent option. Fuel prices currently remain an important factor. Planning ahead is the key.
For ocean freight, the lockdowns in China are also causing delays and equipment shortages in Mexico. To and from Europe, availability has improved, especially for the automotive sector from Northern and Central Europe.
The fifth Corona wave is picking up steam. The number of new infections is increasing daily, averaging more than 7,500 per day. The major cities of Johannesburg, Durban and Cape Town are particularly affected. So far, the government has not imposed any new restrictions.
In the province of KwaZulu-Natal, clean-up work after the devastating floods is still underway. Damage was last estimated at ZAR 17.6 billion. The government has declared the province a disaster area. Among other things, the rail line between Durban and Johannesburg is currently being repaired. The destroyed rail network has also affected the supply of kerosene. This has been temporarily interrupted at the airports in Johannesburg. Some airlines canceled their flights to South Africa, while others diverted their flights to Cape Town. In the short term, fuel was transported from the coast to Johannesburg. In the long term, however, the solution can only be the complete repair of the rail link.
Congestion at many US airports is causing delays. On the other hand, a slight drop in demand from Europe to the USA is ensuring more stable rates. Should the bottlenecks at the airports ease again, many customers could expect a noticeable reduction in prices in the foreseeable future. This is confirmed by current statistics from the analysis company "Clive Data Services". Capacity on the transatlantic route increased by 21% between mid-March and the end of April 2022 (source: freightwaves.com).
Aircraft manufacturer Airbus is expanding its A320 production in the US. The Airbus plant in Mobile (Alabama) in the U.S. will receive an additional final assembly line, creating around 1,000 new jobs along the way. Construction of the new facility is scheduled to begin in 2023. Production is scheduled to start in 2025 (source: aerotelegraph.com).
The U.S. military is cooperating more and more with commercial cargo airlines in the face of the war in Ukraine. According to official media, at least three airlines are currently transporting U.S. military equipment and weapons toward Ukraine. Among others, 747 cargo planes of Atlas Air and Kalitta Air brought such cargo from Dover Air Force Base in Delaware to Poland (source: freightwaves.com).
Stay Up To Date with SENATOR INTERNATIONAL