/ By TJ China Freight / Shipping

Container freight rates trends

The spot freight rates for containers from Asia to Europe and from Asia to the United States fell further from record highs last week. However, it is expected to remain high for a period of time.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

There has been a sharp drop during the Chinese Lunar New Year holiday, but the rate is expected to remain high

Jeremy Nixon, CEO of Japanese liner company Ocean Network Express (ONE), believes that the freight market will not stabilize before the middle of this year.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

The Lowe's Daily said that in the absence of a sharp decline in traditional freight volumes after the Chinese New Year, the spot freight rates for Asia-Europe and Trans-Pacific trade are still at historical highs; the spot exchange rate flexibility during the Spring Festival shows that the factors that support price increases are still Need to be alleviated. Cargo backlogs, port congestion, equipment shortages and continued high throughput mean shippers are still being charged premiums on the main trade routes.

The Drewry Composite Index shows that although it has fallen 2.2% in the past week, it is still 232.6% higher than a year ago. The year-to-date WCI average composite index assessed by Drewry is US$5,231 per 40-foot container, which is US$3539 higher than the five-year average of US$1,692 per 40-foot container.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

The Drewry Composite Container Index fell 2.2% (US$117) to US$5121.04 per 40-foot container.

The freight from Shanghai to Rotterdam dropped by US$286, reaching US$8188/FEU;

The freight from Shanghai to Los Angeles dropped by 130 USD, reaching 4,261 USD/FEU;

The freight rate of the 40-foot container from Shanghai to Genoa fell by US$106 to US$8,505;

The freight from Shanghai to New York rose by 23 dollars to reach 6,651 dollars/FEU.

Drewry expects rates to stabilize relatively this week.

The Ningbo Export Container Freight Index (NCFI) released by the Ningbo Shipping Exchange closed at 2152.91 points, down 4.1% from 2245.32 points last week. Among the 21 routes, the freight index of 5 routes increased, and the freight index of 16 routes decreased. Among the major ports along the "Maritime Silk Road", the freight index of 17 ports fell.

The freight rate of the European-German route dropped as a whole, 3.9% lower than the previous week's European route; the eastern route dropped 4.2%; and the western route dropped 4.9%. While the North American route remained high, the US East route rose 2.5% from last week; the US West route rose 0.2% from last week.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

European-German route: In view of the fact that the transportation demand is still recovering after the holiday, the goods hoarded before the holiday have basically been shipped, and the booking price of the European-German route has dropped overall. According to Freightos' recent Baltic Index (FBX), the price of 40-foot containers from Asia to Northern Europe fell 4% a week to US$8004; according to FBX data, in the Far East to Europe transaction, the spot freight rate was as high as US$8,306. /FEU, but fell by US$432 over the weekend to US$7,874/FEU (daily index).

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

But for Mediterranean ports , the average price dropped by only US$37 last week to US$7,926 per 40 feet.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high



Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

Moreover, many shippers are still obliged to pay additional fees to ensure the availability of containers, and for British ports, a "port fee" of US$2,000 is usually added. A year ago, the FBX index showed that the freight rates per 40 feet in the Nordic and Mediterranean regions were US$1,533 and US$2,130 respectively.

Lory Cheung, an overseas marketing expert at China-based MRF International Forwarding, said that shipping companies must “do everything they can to seize every opportunity” because the shipping market will eventually return to normal. He pointed out: "At present, carriers seem to be more willing to sign long-term contracts with BCO rather than freight forwarders," which shows that shipping companies are working hard to lock the contract price at the highest possible level to avoid the impact of spot market fluctuations.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

In fact, the high inflation rate in current transactions is forcing shippers to cancel orders for low-value products. A British non-vessel carrier (NVOCC) stated that he has noticed that a garden furniture importer’s bookings from China have dropped by a third this year.

North American routes: The market's freight volume has recovered faster than in previous years, and the route's loading rate remains high. According to the Freeghtos Baltic Index, since the end of February, freight rates outside of Asia have decreased, and the spot freight rate for Pacific Eastbound transactions has dropped from a high of US$4922/FEU on February 26 to US$4197 on March 4. /FEU. However, by March 5, the spot freight rate soared again to US$4,709/FEU. At the same time, in the Trans-Pacific region, the West Coast portion of FBX in the United States fell 11% last week to $4,369 per 40 feet. Freightos expects this decline to be temporary, given the strong demand for trade.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

The FBX index for US East Coast ports fell 3% to $5659/FEU.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

Freightos research director Judah Levine said: "Although the rates are falling, they may remain very high for a period of time." "As the US retail inventory level is still very low, it may take until the end of this year to restore normal inventory."

According to the latest data from the signal platform of the Port of Los Angeles, the volume of inbound containers this week reached 175,300 TEU, an increase of 505.56% over the same period last year. There are 17 container ships berthing at anchorages, and 10 container ships waiting to be anchored outside the port, with an average waiting time of 7.5 days.

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

Container freight rates have fallen sharply for the first time since the beginning of the epidemic, but are expected to remain high

Last week, even if the freight rates of the two major trade routes from China to the United States and Europe fell, at least 35 to 40 ships were anchored on the west coast of the United States due to congestion in US ports continuing to spread to ports outside North America. More than twenty container ships waited for two weeks to berth. These container ships were loaded with exercise bikes, electronics and other highly sought-after imported goods. Los Angeles Port Director Gene Seroka said at a recent board meeting: "The backlog is expected to continue until midsummer."

Congestion in Southern California, dozens of container ships waiting to berth

Jon Monroe of Worldwide Logistics said that the traffic congestion in the Los Angeles/Long Beach area was mainly caused by the layoff of more than 700 skilled dock workers due to Covid-19 infection. "Due to the complexity of the operating models of multiple terminals in Southern California ports, this situation is more difficult to resolve quickly. Of course, in addition to this, 45% to 50% of imported goods in the United States are transported through the ports of Los Angeles and Long Beach." He added , The shipping terminal has insufficient storage space, the truck queue at the terminal is also very long, and the chassis continues to be short.

At the same time, Jon Monroe of Jon Monroe Consulting in Washington State suggested that there is evidence that the strong momentum of trade may be maintained until the Chinese New Year in 2022.

The market is unprecedentedly strong, which is bad news for shippers who are struggling to sign new annual contracts from Asia to the United States. "Many people I have spoken to have stated that this will be a fast negotiation," Jon Monroe said. "The question this year is more about'how to ship the product?' rather than'how much is the cost?'"

At present, there is a 40% unbalanced gap in containers in North America. This means that for every 10 containers that arrive, only 4 return, and 6 remain at the arrival port. The average monthly trade between China and the United States is 900,000 TEU, and there is indeed a huge absolute imbalance in containers. In addition, according to the data of consulting company Descartes Datamyne, the current shipment volume is at the highest level in history. In the first quarter of this year, sales increased by 23.3% over the same period last year.

The container shipping crisis has affected various business areas in different ways. For example, the transportation of high-value commodities such as mechanical engineering products, electronic products and computer equipment will be less affected. But for other types of goods, especially the textile industry in Asia, the increase in transportation costs has brought more serious consequences. Exporters claim that the sharp increase in freight rates has led to the closure of many low-profit textile mills. Delays and container shortages are pushing up freight rates. In Asia, delivery delays can be up to several weeks, forcing many companies to negotiate price increases with buyers.

/ By TJ China Freight / Shipping

Best Freight Forwarding Services Providers in 2020

When goods are transferred around the world, they rarely go from departure to destination locations in one step. In fact, they may switch between air, ocean, land, and rail carriers before they reach their destination.

Freight forwarders do the work of organizing, planning, and optimizing global trade routes and logistics solutions to facilitate the movement and storage of those goods. They rely on an expansive network of transport vehicles, warehouses, and intermodal points to streamline the movement of goods and cargo across the whole world.

Freight forwarders and logistics companies gather information from shippers, warehousers, truckers, and more to plan the route cargo will take. When they need to incorporate a shipment, an optimized route is already available and ready to utilize.

International Freight Forwarding Services
International freight forwarding services helps ensure an uninterrupted supply chain for international shipping partners. International logistics include foreign customs, duties, regulations, and fees, that are constantly changing and being updated.

It is important for freight forwarders and logistics companies to carefully handle such processes and stay up to date on issues related to global transport. These things can change from day-to-day, and shippers should be aware of cost fluctuations, new regulations, or procedures at both destinations and departure points.

Cost
A shipping company handles transportation services for you, but an industry-leading freight forwarder can help you optimize your time and money. Freight forwarders incorporate your supply chain into an existing and strong network of shipments.

Asiana USA provides door-to-door transportation and logistics services that are meant to reduce overall costs. Our advanced and integrated shipping network allows us to optimize the movement of goods around the United States and the world.

Services
Freight forwarding services include tracking inland transportation, document preparation, warehousing, negotiating fees, insurance, cargo consolidation, and shipping. These services greatly improve shipping for the shipper, receiver, and freight forwarding company.

Ideally, you should seek a partner who can perform all of these services. If you use more than one or all of these services, this will optimize your supply chain and shipping experience overall.

Mode of Transport

The best freight forwarding service providers make use of all modes of travel. Optimizing shipping routes using land, rail ocean, and air freight allows for an extended network of travel to and from multiple intermodal drayage points.

Drayage shipping means that cargo is moved between major intermodal points using high-volume transport such as a ship or train. Then, smaller vehicles will move them to the cargo to its final destination.

Trucks are an efficient way to move cargo and single containers between drayage points. While long-haul trucking has often been used to transport containers long distances, this practice is being replaced by drayage trucking, and other modes of transport are used for longer transport.

This is a safer alternative and more efficient, as truckers can make multiple trips daily. Additionally, truck companies have been incorporating new technology to further optimize the trucking experience, such as automatic transmissions and multiple cameras.

Rail transport is a far more efficient way to move multiple containers long distances. Instead of one driver per truck per container, a train can move over 200 double-stacked containers, use far less energy, and require far less personnel to operate.

It’s a safer, more effective way to move large goods long distances. Using one train where 100 trucks would have been needed also creates less pollution.

Air freight is used for more time-sensitive shipments. As transporting cargo by air poses weight and size restrictions, it is better used for smaller cargo. Due to high demand and higher fuel costs, air travel may be less suitable for heavy supply chains.

However, when cargo needs to travel far overnight, air freight can usually be the best option. Other situations where air freight is preferable is if you are shipping perishable, sensitive or hazardous items where special handling is required.

The majority of shipping occurs via the ocean. Ships carry large container loads and optimize shipping routes between major global trade ports. Transporting large amounts of cargo between major ports all over the world by ship allows for the rest of the shipping industry to flourish.

Over 11 million containers arrive yearly at different ports in the United States, many of which continue their journey by land to different parts of the country.

Final Thoughts
Choose a freight forwarding service that helps your business perform better by optimizing your supply chain, reducing your shipping costs, and deals with complicated international paperwork for you.TJ China Freight provides the best solution and the timely feedback for all kinds of shipment from every city in China by sea, by air and by railway, and we can provide the competitive price based on the best service, meanwhile we can also provide the other best service, including customs clearance, pick up & delivery service, shipping to Amazon FBA, warehousing & Distribution, cargo insurance, container loading supervision and Express,In a Word, everything you want to ship from China, TJ China Freight can always help.

Contact Info

Tel: +86-755-25117540
Fax: +86-755-25117540
Phone:+86-18928445749
E-mail: info@tj-logistics.com.cn
Website: www.taijielogistics.com
Address: 7/F,Cunjin building,No.3005 Dongmen south road,Luohu district Shenzhen,Guangdong,China

/ By TJ China Freight / Shipping

Air Cargo Trends in a Pandemic World

Dominic Hyde, Vice President Crēdo On Demand at Peli BioThermal, discusses the developing trends in freight that have come about as a result of the COVID-19 pandemic.

Previous predications in pharmaceutical transportation trends, highlighting declining air passenger numbers and increasing air freight demand, have all been propelled by the pandemic. Coronavirus continues to cause worldwide disruption and is anticipated to impact industry throughout 2021 and beyond.

Pandemic response - preighters take off

Pre-pandemic passenger numbers were already on the downturn. However, the crisis has significantly accelerated that trend and the crisis capacity crunch came as the number of passenger flights plummeted. The ensuing scramble to transport pandemic payloads saw the deployment of hundreds of passenger planes as freighters, known as ‘preighters’.

Pioneering Portuguese charter operator Hi Fly led this trend, being the first to convert an A380 for freight by removing the majority of seats to provide more cargo capacity. Despite the sector seeing the grounding of hundreds of passenger planes, earlier than had been initially forecast, which led to a reduction in the availability of cargo space, we’ve seen more planes undergo such conversions.

However, the ongoing drastic downturn in travel means the loss of a lot of capacity in passenger aircraft, and while freighter aircraft are still present and working hard, fleet growth takes time, so there will be a slower response to replacing some of the capacity lost from the passenger side of the industry.

Large widebody aircraft – grounded or retired

Before COVID-19, it was predicted that airlines would cut flights from schedules, mothball larger aircraft, decline production options, and look to utilise smaller, more efficient aircraft – whether for environmental or economic reasons. All those decisions have now been massively accelerated. The forecast to park some of the larger, widebody aircraft has been brought forward significantly due to the COVID-19 crisis, and its ongoing impact has meant the majority of all 747 freighter aircraft have or are being retired. The A380, which Airbus had previously announced it would stop deliveries of in 2021, has also been retired across the board by numerous airlines.

Increasingly, airlines are grounding their A380s in favour of more modern, smaller jets that can fly more efficiently than their four-engine aviation counterparts.

What we will continue to see is a lot more interest in leaner aircraft, such as the A220, the Canadian Bombardier aircraft produced by Airbus in North America.

Sea change in modes of transport

There will be ongoing developments in the sea freight sector too, which has an estimated 17 million TEUs (Twenty-foot Equivalent Unit) serviceable globally, of which six million containers are routinely turning and carrying freight.

Uncertainty in sea and air freight availability saw pharma companies initially ship everything they could, by any mode of transport available, to get it out to the markets. Following months of disruption, passenger airlines began loading aircraft with cargo in the lower decks and loose load cargo on the upper decks.

Whereas I was hoping things might be back to some kind of normality in March, I am now inclined to add another quarter to that. I now think there will be exacerbated sea freight and sea container availability issues throughout the first half of 2021.

Given the sea freight situation, we will continue to see the utilisation of air freight to transport pandemic payloads. When it comes to economics, without the passengers on the main deck is a much more expensive operational option. However, pharma customers are prepared to pay those premiums.

The volumetric efficiency on aircraft is critical at the moment because it is such a scarce resource. We need to ensure the best use is made of it. With air freight capacity a dwindling resource, it is even more important to have the efficient packing density of temperature-controlled products on such limited air freight resources.

Vaccines vs. virus - rapid response

In a rapid response to the logistical cold chain challenges involved, we have adapted our shippers to meet those requirements, as have other providers. There has been an impetus for innovation to support these temperatures in volume. Suppliers stepped up to meet the vaccine temperature challenges by adapting existing shipping solutions. The capacity is there, so I don’t anticipate it will be an issue going forward.

The focus is reverted back to the capacities in the transport modes and – given the nature of these drugs – people are paying whatever it costs to ship them, with rates rising sharply from $2.5 a kilo to $23 – although, that is starting to calm down.

Beyond the current vaccines being approved there will be the need to provide boosters. It is going to create a recurring step up in the volume of vaccines being shipped, alongside the flu vaccines being transported and other pharmaceutical payloads every year.

There will not be a continuous crisis. There will rather be a continuing trend for smaller aircraft with reduced air freight capacities moving pharmaceutical products at temperatures that sea freight cannot do. It really can only fly.

However, there’s not going to be a modal shift from air to sea because sea cannot meet the temperature requirements. You get a displacement, whereby COVID-19 shipments, whether vaccines, test kits and reagents, or some of the therapies which help with recuperation, are flying at almost any cost on a dwindling resource.

The pharmaceuticals, which have more normal temperature shipping requirements, get displaced. In that situation, when the air freight rates get so high, sea freight would normally be seen as a shipping solution.

However, with all of the sea freight challenges, coupled with the fact that their transportation rates have also doubled, there has been some displacement – although not as much as pharma companies would have liked, which is what has kept pushing the prices up in the region of the $23 a kilo figure for air freight we had seen previously in the market.

Sea freight will improve in the first six months of 2021, so some of that displacement can take place more efficiently. Aircraft, however, will still be loaded with COVID-19 related products.

2021 will see the industry learning to operate in ‘the new norm’. Next year, we might start to see some improvements and efficiencies, but I think this year is about adjusting our planning, our capacities and our operations around this spike in demand and the gradually improving capacity picture. Almost like wearing in a new pair of shoes.

/ By TJ China Freight / Shipping

What is “LCL” and “Loss Freight”?

In international trade, companies often fail to ship goods due to various reasons, so they have to bear the corresponding LCL costs. The most important thing is that many shippers are not very aware of these costs, so they are hard to guard against. Today, the editor and everyone will learn about some relevant knowledge about the loss of shipping LCL during cargo transportation.

What is "LCL" and "Loss Freight"?

What is LCL?

CL CARGO= LESS CONTAINER LOAD, LCL cargo refers specifically to small-ticket cargo that is less than a full container (20'/40/45). Usually, the bulk cargo consolidator (consolidator) collects the cargo separately and collects it at the container freight station or inland site, and then consolidates the cargo with two or more votes into one container, also at the destination container freight station Or the inland station unpacks and delivers separately.

For this kind of goods, the carrier has to bear the packing and unpacking operations, and the packing and unpacking fees are still charged to the cargo party. The carrier’s responsibility for LCL cargo is basically the same as that of traditional grocery transportation.

What is the LCL shipping fee?

In the process of LCL export by sea, after 11:00 noon on the working day before the order cut-off date, the cargo cannot be shipped in time due to the reason of the booking person, resulting in the vacant space of the LCL company, and the LCL company will order The fee charged by the cabin crew to make up for the loss.

How to calculate the loss fee?

The calculation of the loss fee is based on the cost of the vacant space. The specific calculation formula is the loss fee = booking billing cubic x (full container shipping fee + full container shipping port fee)/standard cubic number.

Note: Standard cubic number: 25/20' 50/40' 60/40'HQ

Common reasons and preventive measures for loss of cabin charges:

(1) The owner of the cargo is too late to enter the warehouse or the person who temporarily cancels the shipment and the booking person fails to cancel the booking timely. Precautions: Please keep the freight forwarder regularly in communication with the owner before the customs cut-off date, and provide timely feedback. And inform the owner that he has the responsibility to notify, otherwise it will incur damages.

(2) A larger proportion of super square/reduced square/overweight. Precaution: Please ask the freight forwarder to ask the owner of the consignment to be consistent with the actual cargo as much as possible, and notify in time if there is any change.

(3) After the goods have entered the warehouse, it is found that the characteristics or specifications of the goods cannot be carried, such as "liquid/dangerous goods/oversized and overweight items". Precautions: Please inform the freight forwarder that liquid/dangerous goods/semi-dangerous goods will not be accepted. Oversized and heavy items must be confirmed in advance.　　

(4) The customs inspection resulted in the inability to ship in time. Precaution: Please ask the freight forwarder to require the owner of the declaration to be consistent with the bill, the documents, and the goods. If the customs has any questions, please cooperate with the customs broker of the forwarding company to reply to the customs in a timely and clear manner. What are the requirements of the customs to cooperate as much as possible to ensure timely shipment of goods.　

In short, the most important thing for the prevention of LCL loss costs is to maintain close and good communication between the owner and the freight forwarder. At the same time, the freight forwarder is dedicated to solving the problem for the shipper in time, and the shipper must also trust the forwarder and meet frankly.

/ By TJ China Freight / Shipping

“When the pressure on the maritime supply chain can be eased, no one can say”

In the past two months, the cost of transporting goods from China to Europe has more than quadrupled, hitting a record high, due to the pandemic disrupting global trade and the shortage of empty containers.

 

Data from shippers and importers show that the freight for transporting a 40-foot container from Asia to Northern Europe has risen from approximately US$2,000 in November last year to more than US$9,000.

Lars Jensen, CEO of maritime consulting company SeaIntelligence, said that the reason for the increase in freight rates is the market's competition for limited resources-containers.

 

In the first half of 2020, due to a sudden slowdown in global trade due to the epidemic blockade, shipping companies have suspended large-scale shipping and thousands of empty containers are stranded in Europe and the United States. In the second half of the year, when Western countries' demand for Asian-made goods rebounded, competition among shippers for available containers pushed up freight rates.

 

John Butler, Chairman of the World Shipping Council, said, "The freight volume has dropped from a sharp decline to soaring to the highest level in history, and the effective handling capacity of the terminal has exceeded the upper limit."

 

He added that the congestion in the port has caused freight rates to rise, and shipping companies charge additional fees to compensate for the longer waiting time.

 

 

"When the pressure on the maritime supply chain can be eased, no one can say"

 

 

British freight forwarding company Edge Worldwide CEO Philip Edge said that some shipping companies charge US$12,000 per container, much higher than the US$2,000 in October last year.

 

The British Household Electrical Appliance Manufacturers Association stated in a statement, “According to member companies’ disclosures, shipping costs have increased by more than 300% since 2020. Especially for some commodities, the increase in shipping costs has exceeded the net increase Profit. Therefore, these costs will have to be passed on to the end user."

 

The owner of a leisure goods importer in Manchester said that the shortage of containers is having a “huge impact” on his business, and some orders placed in November are still waiting to be shipped. "The question is, is it to pay $12,000 now and pass the cost on to the customer, or to wait at the risk of exhausting inventory?"

 

Economists say that such interruptions and delays are beginning to affect global supply chains. Neil Shearing, chief economist at Capital Economics, said that "transportation pressure is accumulating and may increase further."

 

A recent survey by IHS Markit found that in December last year, the delivery time of manufacturing suppliers in the Eurozone reached the worst level since the peak of the pandemic lockdown in April. Shipping delays and general commodity shortages were "widely mentioned" by suppliers. .

 

 

"When the pressure on the maritime supply chain can be eased, no one can say"

 

 

The companies surveyed stated that they are consuming inventory of raw materials and semi-finished products, resulting in a decline in inventory.

 

Bert Colijn, senior economist at ING, said that "supply shortages and rising freight rates may slightly curb trade growth."

 

On the occasion of the Chinese New Year in February, the Asian manufacturing industry slowed down. Shipping companies hope to use this time to solve the problem of increasing backlog orders, which will temporarily cool freight rates.

 

However, BIMCO chief shipping analyst Peter Sand said that the shortage of containers may continue for a long time in 2021. Although the shipping company has ordered new containers, in his opinion, such a move is "too small and too late."

 

Lars Jensen also believes that although freight rates may drop slightly, "there are still a lot of goods waiting to be transported."

 

John Butler pointed out that only when epidemic-related restrictions are reduced and people have more diverse service choices, the pressure on the maritime supply chain can be alleviated, but no one can say when it can be improved.

/ By TJ China Freight / Shipping

The imbalance between supply and demand of air cargo continues, and the shortage of freighter capacity causes price increases and delays

The air cargo market has ushered in a new year, but there is no sign of cooling. International transportation activities usually weaken after the holiday season, but due to the unusual air transportation mode and the severe shortage of air transportation caused by the new coronavirus pandemic, demand and freight rates remain high.

The logistics company expects that the air cargo volume will not decline before the Spring Festival, because the manufacturer plans to continue operations during the traditional holidays.

The imbalance between supply and demand of air cargo continues, and the shortage of freighter capacity causes price increases and delays

The latest comprehensive statistics of World ACD and CLIVE Data Services in December show that compared with 2019, air cargo volume has fallen by only 3.7% to 5% respectively. These data show that the air cargo industry has recovered a lot since it bottomed out in May last year, when demand dropped by nearly 40%.

The demand for air transportation is largely driven by continuous inventory replenishment, the inventory-to-sales ratio of consumer goods is close to the lowest level in history, and a saturated marine container market. Analysts and logistics providers said that the congestion of ports and railways and the shortage of empty containers continue to push up shipping prices and cause serious delays, especially for main routes from Asia, which promotes a further increase in aviation demand.

The goods sought for air transportation include automotive equipment, consumer goods purchased online, and medical supplies related to COVID-19. Airplanes are also used to transport the new crown vaccine, because a large number of vaccines are transported by land, and sometimes only a few containers are needed for each flight, so it is not clear how many ordinary goods they replace. Nevertheless, when the capacity is tight, the vaccine will be given priority to board the plane.

The imbalance between supply and demand of air cargo continues, and the shortage of freighter capacity causes price increases and delays

San Francisco-based freight forwarding company Flexport said in a customer advisory update report that the remaining demand for game consoles and smartphone product releases in the fourth quarter will increase capacity constraints by mid-February.

Bruce Chan, vice president of global logistics at investment bank Stifel, said in a monthly comment that shippers are also more inclined to use air operations as an inventory buffer because their forecasting models have been completely overturned by the epidemic. He wrote: “Predicting consumption patterns and when they will stabilize is a huge fear, and the path forward is hardly linear, especially when the new coronavirus reignites and the government further implements blockades and border closures.”

In addition, many Chinese manufacturers announced that they will continue production during the Lunar New Year period from February 12 to 26. Factories are usually closed for 10 days or longer so that workers can celebrate with their families, but because the Chinese government encourages workers to celebrate the New Year on the spot, many factories will continue to operate this year. Flexport said this could create a backlog, as many freighter flights were cancelled a few weeks ago due to the expected full transport. Any backlog will depend on whether the factory continues to produce or take vacations at home.

The demand for air freight is so strong that experts predict that by the end of March the market will return to the level before the epidemic. This trend is in sharp contrast to the passenger traffic of the aviation industry, which is expected to remain sluggish until vaccination becomes more common in the second half of the year. Even then, the recovery of international travel may be slower, which means fewer aircraft for long-distance trade. Aviation industry officials said they don’t expect a full recovery until 2024.

Globally, freight rates are more than twice what they were a year ago, and freight rates from China to Europe and the United States are 2.5 times what they were a year ago. According to data from digital sales platforms, market information services and freight forwarders, the aircraft on these routes are full.

According to World ACD data, the average freight rate soared by 80% in December last year, from US$1.80 per kilogram to US$3.27 per kilogram, the highest year-on-year increase since May last year, but it fell by 10% since January this year.

Freight rates are under tremendous pressure, because although more all-cargo operators have added freighters and flights, global capacity is still about 20% lower than 2019 levels. The main culprit is the insufficient supply of wide-body passenger aircraft on international routes, most of which are still grounded due to the poor travel market. In fact, with the strict implementation of travel restrictions, airlines will reduce flights in the first quarter. For example, Air Canada and WestJet suspended 25% and 30% of their system capacity in the first quarter.

The imbalance between supply and demand of air cargo continues, and the shortage of freighter capacity causes price increases and delays

According to data from the International Civil Aviation Organization, the global all-cargo fleet increased by 22.4% to 673 aircraft in 2020. Airlines continue to increase capacity, including improved aircraft from passenger airlines, but this is not enough, because the space shortage is three to four times the decline in demand, and the gap may be even greater in the short term.

In the past month, Qatar Airways has added three Boeing 777 freighters to its fleet, and China Airlines and AirBridgeCargo have each added a factory-built aircraft. Swiss International Air Lines has added Seoul, South Korea and Lima, Peru to its cargo network. The flight from Zurich will be operated by a 777-300 extended-range passenger aircraft dedicated to cargo. The flight from Zurich will be operated by a 777-300 extended-range passenger aircraft dedicated to cargo.

In the past year, many freight forwarders have greatly increased the use of dedicated charter flights to ensure that they can provide transport capacity to their customers. German logistics giant DB Schenker significantly expanded its private aviation network last week. Now it has two routes, connecting Europe, Asia and North America for the first time. The cargo management company controls a total of 43 Boeing 747 or 777 freighter flights every week-equivalent to the space of a 135 wide-body airliner. Munich Airport is the hub for DB Schenker's intercontinental cargo between the United States and Asia. 

/ By TJ China Freight / Shipping

In the spring of 2021, will the shipping companies charge wildly?

The 2020 epidemic has brought tremendous changes to the shipping market. In the first quarter of 2021, this change is expected to continue; both shipowners and shippers may strive to convert long-term leases into short-term leases.

The beginning of each year is the peak period for annual lease negotiations. Many market participants believe that in 2021, many trade routes will maintain high freight rates. Therefore, the negotiated price in early 2021 may hit a record high.

David Bennett, the head of Globe Express Services in the United States, said in his December cargo outlook report: “Don’t tell the other party that 2021 is an ordinary year.”

 

In the spring of 2021, will the shipping companies charge wildly?

 

 

Negotiation time

Most of the annual charter prices for major routes are negotiated in March and April. The source said that if the spot market returns to normal, ship operators will negotiate ahead of time. However, it is clear that shippers/forwarders prefer to wait until the spot market freight rate drops before negotiating.

Las Jenson, CEO of SeaIntelligence, said: "I don't think any shipper is willing to negotiate on the Lunar New Year. At least it is absolutely impossible on trans-Pacific routes."

Generally speaking, the price of the annual lease is negotiated according to the current spot market conditions. Therefore, due to the current good market situation in the consolidation market and the high freight rate, if the contract is signed now, it is likely to appear in the next few months. Because the spot price drops to a level lower than the contract price, the shipper/forwarder bears greater losses.

Market observers predict that due to the surge in freight rates in the second half of 2020 and the confidence of shipping alliances in their own capacity management capabilities, the freight rates proposed by carriers on major trade routes may be higher.

A North American counterpart said: “The freight rates on all major routes will increase in 2020. The days when the freight rate on the west coast of North America was US$1,500/FEU are gone. The carrier will increase the freight rate on the Trans-Pacific route in 2021. The starting price may be as high as US$2500/FEU."

An annual lease can sometimes be replaced by rolling contracts of three to six months, but this is mainly to protect the shipowner and allow the carrier to modify the contract terms when the rent/freight rises, so the shipper/forwarder It is best not to hope with this.

Bennett said: "I think the contract period of a short-term lease and a long-term lease will be different."

The spot market has a growing trend

Currently, the spot market only accounts for less than half of the main routes. However, because some shippers hope to take advantage of the possible downward trend in spot market prices after the Lunar New Year to obtain contracts with lower prices, it is expected that the proportion of the spot market will increase in 2021, showing a mid-to-long term relative to the contracted freight volume. The momentum of growth.

However, some shippers may strive to sign long-term leases (multi-year) to hedge against further increases in freight rates and prevent such situations from happening again in 2020. In the third and fourth quarters of 2020, the spot market aroused strong condemnation from some customers with long-term leases. Some shippers stated that their cargo was abandoned by shipowners who prefer spot cargo and stranded in the docks of North Asian ports. on.

Bennett said: "We expect greater volatility in 2021, so we remind everyone to ensure sufficient cash."

A colleague said: "If the carrier can make a lot of money through long-term leases, then the spot market may not be favored by them. In short, if the long-term leases have already given the carrier huge profits, then they There is no need to attack the spot market."

When a lower-priced lease is signed, the shipper/forwarder will make a profit, but if the spot market freight rate soars, then this shipper’s cargo may also be the first to be abandoned by the shipowner at the port. Therefore, for It can not only guarantee the safe transportation of goods, but also have the opportunity to obtain lower freight rates in the spot market, so some shippers may choose to enter the spot market in 2021.

/ By TJ China Freight / Shipping

New high! The freight rate of the US West route rose to 4189 US dollars, three times that of the same period last year. Many shipping companies continue to charge surcharges

After the freight rate in the trans-Pacific market has remained stable for a period of time, it has recently started a rising mode.

According to the Freightos Baltic Daily Index (Freightos Baltic Daily Index), on December 28, 2020, the freight rate of the Asia-US West Coast route reached US$4,189/FEU, a record high, an increase of 8% from December 25, which is the year of 2019. 3 times over the same period.

New high! The freight rate of the US West route rose to 4189 US dollars, three times that of the same period last year. Many shipping companies continue to charge surcharges

At the same time, the freight rate of the Asia-US East Coast route also reached an astonishing US$5397/FEU, a 9% increase from December 25 and twice the rate of the same period in 2019.

New high! The freight rate of the US West route rose to 4189 US dollars, three times that of the same period last year. Many shipping companies continue to charge surcharges

According to data from the Shanghai Shipping Exchange, on December 25, 2020, the freight rates (sea freight and ocean freight surcharges) for exports from Shanghai to the basic port markets of the West and the East of the United States were 4,080 USD/FEU and 4,876 USD/FEU, respectively. The US West route rose 4.6% from the previous week.

Analysts of the Shanghai Shipping Exchange said that the average space utilization rate of ships on the Shanghai Port to the West and East U.S. routes maintained at a level close to full load. However, the U.S. epidemic has blocked the turnover of containers, and a large number of containers are stranded at the local terminal. The congestion of the port is increasing, and the shortage of containers has not been alleviated.

In addition, a number of shipping companies including CMA CGM, Hapag-Lloyd, Evergreen Shipping, HMM, ONE, Yangming Shipping, and Star Shipping have announced that they will start on the trans-Pacific route from January 1, 2021. , Charge a comprehensive rate increase surcharge (GRI) ranging from US$1,000 to US$1,200/FEU.

The market predicts that the upward trend of freight rates will continue until January 2021.

New high! The freight rate of the US West route rose to 4189 US dollars, three times that of the same period last year. Many shipping companies continue to charge surcharges

In contrast to the fast-growing transportation demand, after a fully loaded ship arrived at the US West Port, it faced the dilemma of nowhere to stop.

According to a report released by the Marine Exchange of Southern California on December 28, 2020, a total of 24 container ships are anchored in San Pedro Bay, and another 5 ships are about to arrive.

According to the report, the local conventional anchorages are full of ships, and some emergency anchorages have also been occupied.

Marine Traffic uses an automatic identification system to draw a map that shows the extent of the accumulation of container ships in San Pedro Bay, which has deteriorated in recent weeks.

New high! The freight rate of the US West route rose to 4189 US dollars, three times that of the same period last year. Many shipping companies continue to charge surcharges

According to statistics, 26 additional ships called at the Port of Los Angeles in November and 31 ships in December. A port manager said that it is expected that in January 2021, more additional ships will call.

The loading and unloading capacity of the Port of Los Angeles and Long Beach has already faced serious shortages. The Port of Los Angeles will import 116,500 TEU containers this week, and it is expected to increase significantly to 150,000 TEU per week by January 2021.

The continuous increase in freight rates and the severe congestion at the US West Port have caused shippers’ costs to hit unprecedented highs, and shippers have to reassess their transportation cost budgets for 2021.

/ By TJ China Freight / Shipping

Continued high freight rates and shortage of containers, DHL&Hapag-Lloyd: The container market is expected to be in the second half of 2021

If shippers and logistics companies hope that the ultra-high shipping container prices will fall in the New Year, then they may be disappointed.

 

Rolf Habben Jansen, CEO of shipping company Hapag-Lloyd, revealed at a press conference that global logistics giants and container liner companies expect that the chaotic market, lack of berths, and container shortages, etc., will still be available by 2021. Will last for a while.

 

In addition, Tim Scharwath, CEO of freight forwarding giant DHL Global Freight Forwarding, also attended the meeting. What the two CEOs have in common is that they agree that 2020 is characterized by great unpredictability, such as promising customers whether their goods will reach their destinations on time, which is very unpredictable.

 

 

 

As time goes by and the year is coming to an end, shippers have to pay more and more freight to ship the goods. This development is largely due to the sharp increase in demand month by month since July. For example, it is not uncommon to have to pay US$5,000 for shipping containers from Hong Kong to New York.

 

▍It will not stabilize until the second half of 2021

 

The two executives agreed that after the outbreak of the new crown pneumonia this spring, the very special environment has caused a historic imbalance between supply and demand. They also believe that the shipping market will not stabilize for the time being.

 

Scharwath said: "As for shipping, I think we must enter the second half of 2021 before we see the market stabilize again. The first quarter will definitely be affected, and so will the second quarter."

 

"We will have to wait and see what happens, because everything is difficult to predict. As a large company, we usually make plans for 3 to 5 years. Now, we are making plans for 3 months."

 

 

 

Inadequate ship capacity and insufficient containers have serious consequences for the industry’s supply chain. In addition to customer dishonesty and record high freight rates, a recent survey conducted by Sea-Intelligence shows that only half of the ships can reach their destinations on time .

 

▍Shipping companies strengthen management and control

 

Mainly affected by the new crown epidemic, container shipping companies’ performance in the second quarter was weak, but their profits have soared to record levels since the summer. However, the quality of service is lacking, and container shipping companies have been stating for months that these conditions are beyond the scope that they can change.

 

On the one hand, they do not have more ships to deploy, on the other hand, they cannot redistribute the containers to the required ports. In addition to other reasons, customers do not return the goods.

 

Currently, Asia in particular is suffering from a shortage of containers because many containers are in the United States. According to a Bloomberg report, it may also be because of port congestion that these containers cannot be unloaded at US ports. This is the case with 20 container ships currently near the Port of Long Beach.

Therefore, at the beginning of December, CMA CGM, Maersk and ONE had to refuse to leave the booking outside of Asia, the reason is very simple, because there is no extra space on board.

 

Hapag-Lloyd, led by Habben Jansen, also benefited from the increase in freight rates in recent months. Therefore, the shipping company has twice raised its full-year 2020 profit forecast, and the company currently expects its operating results to exceed US$2.7 billion.

 

However, the CEO said that it is usually because of an oversupply of ships, and 10 years after the industry has lost billions of dollars, it is time for container shipping companies to start making money.

 

 

 

▍Strong performance in the second quarter of next year

 

Until recently, shipping companies and container manufacturers also predicted that the current shortage of containers will be resolved after the Chinese New Year in February, which will restore the market to a more normal state. But Habben Jansen no longer believes this prediction is correct.

 

"This year’s development is beyond everyone’s expectations. Because of the introduction of economic stimulus measures, people still have money on hand, and most of the money has been spent on container cargo. Many signs indicate that the strong market we see after the Spring Festival has passed. It will appear and will continue into the second quarter."

 

Habben Jansen pointed out that the current market congestion will take some time to resolve.

/ By TJ China Freight / Shipping

The United States’ large ports are seriously pressed! Asian containers are pouring into the United States at a record rate!

It is reported that the Port of Los Angeles, the largest port in the United States, is currently under continuous pressure from a large number of containers entering the port.

Workers are picking out Christmas presents from piles of containers to ensure that these goods can appear under the Christmas tree of American families in time.

According to data released by the Port of Los Angeles on Tuesday, the port handled a total of 889,746 20-foot standard containers in November this year, a 22% increase year-on-year.

 

The United States' large ports are seriously pressed! Asian containers are pouring into the United States at a record rate!

 

 

Factors such as rising consumer spending, holiday gifts and restocking have contributed to an unprecedented surge in freight volumes in recent months.

Gene Seroka, executive director of the Port of Los Angeles, said that the average monthly container throughput since August has been close to 930,000.

It is rare to be so busy at this late in the year, but 2020 itself is not a normal year.

Seroka further stated that as consumers continue to stay at home and shop online instead of going out to consume services, it is expected that the busy port will continue for at least a few months.

To help shippers manage the influx of goods, the port has introduced new data tools and provided more places to stack containers.

 

The United States' large ports are seriously pressed! Asian containers are pouring into the United States at a record rate!

 

 

The logistics pressure at the end of the year was mainly due to the impact of the epidemic in the first half of this year. As of mid-December, the annual freight volume of the Port of Los Angeles was still 3% lower than the same period in 2019. The main reason was the 19% drop in freight volume in the first five months.

Since the second half of the year, containers from Asia have poured in at a record rate.

The Port of Los Angeles stated that the imported 20-foot standard containers reached 464,000 in November, an increase of 25% year-on-year; the export standard containers fell 5% to 130,000;

At the same time, empty container transportation with strong demand in Asia increased by 34.2% year-on-year to 294,000.

According to media reports, the surge in container imports has also caused traffic congestion in the port, making it more difficult for trucks and trucks to transport goods from the port quickly, which has also caused a slowdown in the speed of cargo ships entering the port.

 

The United States' large ports are seriously pressed! Asian containers are pouring into the United States at a record rate!

 

 

According to Seroka, 50 of the 88 ships that arrived at the Port of Los Angeles in November waited 2.5 days at anchor before unloading.

By December, 80% of arriving ships had to wait an average of four days.

The congestion of port transportation has also made the US toy industry worried. There is currently less than two weeks before the industry's most important Christmas.

Isaac Larian, CEO of MGA Entertainment, said that as of Tuesday, the company had a backlog of 250 containers at the port, which had been delayed by three to four weeks before the scheduled delivery date. Currently, it can only get some of them every day with the help of the port.