The current market conditions are a real mixed bag dependent on trade lane, mode of transport and region. Whilst some areas of global trade are experiencing extreme congestion, other areas are operating as normal for this time of year. Below is an overview of the current situation.
Focusing on the westbound import ocean freight, there is high demand being experienced from China, South East Asia and the Indian subcontinent.
Widely publicised vessel omissions from base ports, reduction in carrier schedules, congestion at transhipment hubs and a significant increase in global demand for products being sourced from Asia. As a result, carriers are being bullish with long line capacity commitments on contracted space and implementation of rate hikes on the spot/FAK market where the model appears to be ‘pay to play’. Some carriers are creating roll pools and generally the market from Asia is seeing containers being offloaded from allocated vessels on a frequent basis.
Ocean freight rates on the Asia to North America routes are at a 5 year high, a good indicator of what will come on the European trades lanes with probable pricing increase. Carriers have announced further increases on the trade, with peak season surcharges and ocean freight rate rising due to be implemented later this month and into September.
Export ocean freight trade has fared better and rates are stable, although still much higher compared to year on year with 2019. Generally, capacity is available with the exception of the Trans-Atlantic routes being the primary area for potential delays and increased pricing. This is predominantly being experienced at US East Coast ports, however, the situation with Montreal port is enhancing issues with Canadian destined container traffic.
UK ports are currently experiencing disruption, including the major ports Felixstowe and Southampton, on the inbound trade due to influx of high volumes of containers and also with new Covid19 processes and general haulage congestion.
The global air freight market is still operating with a vastly reduced belly hold capacity. The majority of passenger aircraft are still not operating due to pandemic-induced lack of demand. Many carriers are still operating passenger freighters, with some airlines removing seats from aircraft to increase their cargo uplift.
Pure freighter services are still in high demand, with rates two to three times higher than they were this time last year on the majority of lanes. Dwell times have reduced from the global highs of May and June and uplift generally is being made within a reasonable time-frame. Some areas are still experiencing capacity shortage, notably, the Australasian and American routes from the UK and Europe.
Due to the launch of many new electronic products, and the potential development and extreme demand of a covid19 vaccine, the airfreight market will pick up quickly. This will result in a global impact on increased demand versus a static supply. This is without the traditional increase in general air cargo volumes experienced during Quarter 4 of the year. It could be a very congested time for air freight movements from September.
Overland services and trucking are functioning as normal with limited delays at borders throughout Europe presently. We anticipate this will change the closer we get to full withdrawal from the EU and as we transition into our new relationship with Europe.
Inland rail freight is in high demand with new services being added and established services being reinstated over recent weeks and months. New train services have been added to cope with the demand, operating on the East Midlands Gateway terminal with intermodal operations.
Metro will continue to report on the latest market conditions and always provide the options available and best fit solution against requirements and expectations.
Finally, we would remind you to please provide transparency and visibility of your forecasts for global movements. This will ensure we can plan and secure capacity as far ahead of time as possible as we enter the traditionally busy ‘peak season’. If we can foresee what is coming through the cargo pipeline, then we can ensure that there will not be any issues, or source alternative services to keep your supply chain moving.
For further information and any new specific projects please contact your usual Metro account handler or CRM manager and we will provide the latest updates.