THE STRETCH CONTINUES.
THE CRITICALITY OF THE SITUATION RAISED DUE TO COVID IMPACT, CONTINUES WITHIN THE GLOBAL OCEAN, AIR AND RAILFREIGHT MARKET, WITH NO IMMINENT SOLUTION OF STABILIZATION INSIGHT.
Ocean price levels have continued to escalate as a result of the supply and demand situation that significantly promotes the supply side, breaking new records on a weekly basis. This situation is effectively pushing forward a bidding war behaviour where you can get the requisite capacity by paying premium rates.
Some experts expect that the blank sailing instrument will continue to be used by ocean carriers to control capacities, with the ultimate objective of sustaining current levels. As a consequence, the regulatory attention of both the Chinese and US agencies on the practice of deliberately controlling supply and demand is growing high. However, it is not anticipated that such regulatory focus would affect the short or mid-term outcomes of the prevailing situation.
This week, container freight prices from Asia continued to increase, hitting peaks well above average levels. On top of this, if a shipment is cancelled within two weeks of the loading date, carriers plan to add heavy charges like a $1,000 per Teu.
The trend of the turbulent year 2020 remains inside the air freight industry and the mammoth challenge of delivering the COVID-19 vaccine is looming on the horizon.
Compared to demand, capacity continues to be limited, which plays a part in keeping very high prices and causing regular delays and cancellations. The lingering sea freight congestion created by the shortage of equipment can also force shippers to use air freight as a back-up plan, raising even higher demand for air freight.
Trade lanes affected by the cancellation of passenger flights have reduced the capacities by up to 70-80% in some areas with a similar impact due to freighter cancellations but to a slightly lesser percentage.
Last week, container freight prices from Asia continued to increase, hitting peaks well above the long-term average. With the second and third waves hitting across different countries, the chaos on the supply chain continues to push road freights northwards. This is combined with the capacity constraints in sea, air and now even in the railroad.
The trucking companies continue to quote higher lead times along with higher rates and don’t see that changing in the near term.
The news of coronavirus mutation spreading in the United Kingdom has caused travel and traffic bans between the UK and several European countries. Multiple large trucking and courier companies have announced immediate interruption of all road freight import and export traffic in the UK.
The outlook for rail freight reflects similar sentiments as ocean freight. Scarcity of container equipment is as persistent and demanding as ever. As a result the freight rates have also seen appreciation. For example, due to extreme demand and shortage of equipment, China-Europe rail freight rates have increased significantly.
On the basis of air and ocean space limitations, rail volumes were reaching full capacity, while delays caused by military activity at the Kazakh-China border were contributing to congestion.
An agreement between the EU and the UK is allegedly still hanging in the balance, as EC negotiator Michel Barnier warned recently that just a few hours” was the time left to reach an agreement. Meanwhile, according to a recent study from Logistics UK, UK logistics operators now face the growing possibility of crucial workforce shortages on top of port congestion, skyrocketing freight prices and the risk of Brexit turmoil.
In the past 12 months, the twin pressures of the pandemic and Brexit have culminated in almost 80,000 EU citizens leaving the country’s logistics sector, leaving a large skills gap.
Wiima Logistics is a provider of fourth-party logistics (4PL) services. The 4PL service provides the customer with a complete solution for supply chain management, administration and outsourcing.
4PL operations can be described as outsourcing the management and coordination of the entire supply chain – this allows the customer to focus on their core business.
Wiima staff will be more than happy to advise you in supply chain and logistics related matters. Our logistics experts and digital tools will provide you with a winning combination if you are looking for an effective and efficient logistics management setup.
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