Be aware of delays
As the global logistics industry remains extremely challenged, container spot rates continues to surge, with rates setting records non-stop for the past 17 weeks. The marked struggles with bottlenecks, delays, massive demand, and container shortage. Massive demand as well as container shortage have driven up the rates, and the “Ever Given” incidence in the Suez Canal as well as port lock down in Yantian and the Meishan terminal in Ningbo are only adding to the increasing service disruption.
All time high rates and costs
These days, freight rates on sea freight have reached a level never seen before. Unfortunately, there is no immediate cure, and new Covid-19 outbreaks can potentially extend the situation even further. Carrier schedule reliability continues to be very low. Most of the top 10 carriers are around 30-40%, which on a year by year level is down -39,7%.
Our recommendation is to book well in advance (at least 4-6 weeks). Submit a forecast, consider premium options, and be flexible in regards to equipment.
The situation in Shanghai, where an outbreak of Covid-19 has led to strict crew and quarantine rules for all airlines, and reduced manpower on the ground by about two-thirds. The depleted workforce has led to a temporary ban on passenger freighters out of China, reducing already limited capacity, while charter approvals have been put on hold.
However, we expect the European Union Aviation Safety Agency (EASA) to extend the rules allowing passenger aircraft to be used as temporary freighters until 2022.
Since the beginning of the Summer, the transport industry has experienced extraordinary pressure on road transport throughout Europe. The reasons for the constantly increasing pressure are:
Extended transit times
Due to these issues, all European road networks are already operating with max. capacity, causing delays on both import and export. We monitor the situation and do everything we can to handle your shipments as quickly and smoothly as possible. However, we expect multiple delays to and from many European destinations, primarily France, Germany, and Benelux. At the same time, please expect road transit times to be longer than usual.
Lack of equipment on sea freight
Space and equipment are still very tight on sea freight from China and we expect this to continue and worsen in the coming months.
During the next 4-5 months, events such as Golden Week in October, Christmas sales rush after October Holiday and the Chinese New Year in February, 2022 will create chaos in China, with an additional lack of space and equipment, as well as rate hiking to an unprecedented level.
Rail freight continues to be congested from China to Europe
This is a mix of overheated lack of capacity but also Covid-19 shutdowns, delays due to military exercises, and railroad maintenance in Brest and Mala.
Air freight delays due to Covid-19 shutdowns
Air freight is also congested due to Covid-19 shutdowns in Nanjing and Pudong airport (PACTL) where airports have been completely shut down. Due to this many flights have been canceled.
Up to and after the October Holidays, we expect a rising number of air shipments, due to the fact that shipments are being shipped by air instead of sea, caused by many delays on sea freight. This will cause further rate increases and possible delays, both on air and sea freight.
Inland transportation and warehousing
Trucking and equipment availability continues maxed out in all major markets. Going intermodal is proving a shaky alternative to the trucking market, as rail operators restrict the number of domestic containers. The congestion at sea and inland ports has taken its toll on performance: according to providers and industry observers, service standards for intermodal cargo have slipped under the relentless flood of imports pouring into the US.
There are solutions available through LEMAN’s extensive warehouse and distribution network to transload and store freight in less effected locations.
We are predicting very high rates and a turbulent air peak season, as a host of issues combine, leading to demand significantly outstripping supply out of Asia as well as Europe. The Shanghai airport situation continues to cause strain to global supply chains. Both freighters and charters played a very important role in adding capacity last year, but both are now constrained.
Additional complexity was added to handle US outbound Air freight. On 1 July, the mandate from the International Civil Aviation Organization for 100% screening of all international airfreight carried from member states on freighter aircraft will come into effect. The US Transportation Security Agency (TSA) has officially presented a concept for exporters that want to bypass screening of their cargo at the departure airport: they can register a Safe Packing Facility (SPF), with security protocols approved by the agency. At this moment most US cargo handler throughout the US are overwhelmed as they are adapting to the new rule.
Unprecedented capacity constraints continue to impact all major trade lanes to the US. Especially the Transpacific eastbound and Transatlantic westbound routes. Sea carriers run at near 100% utilization levels throughout the remainder of the year and most likely into the first quarter 2022. Rates are expected to be on the upward trend in the coming months as space and equipment remain tight. Some carriers have started to charge congestion surcharges at destination due to congestions issues and chassis shortages at ports and inland rail ramps. We expect the situation to remain tense at least into the middle of next year.
The situation at US ports continues to worsen and causes a series of ripple effects. For instances we are seeing up to 15 days waiting time for vessels on the West Coast due to yard congestion. Ongoing lack of truckers and intermodal providers blended with the port congestion creating the perfect storm and cause delivery delays, detention charges and excessive pricing affected all core services services.
Charter vessel and slot charter agreements are available but sell out very quickly. Please reach out to your local LEMAN contact for more information.
You are always welcome to contact your personal LEMAN representative to learn more about the situation and alternative logistics solutions.