March 15, 2021 / By TJ China Freight / Shipping

freight volume will continue to remain high

Due to the prevalence of port congestion and box shortages in Europe and the United States, freight volumes on the European and American routes will remain high.

Industry insiders predict that shipments from Asia to Europe will continue into the third quarter, and delays in US and European ports will continue to be the main bottleneck in the supply chain.

The National Retail Federation (hereinafter referred to as NRF, The National Retail Federation) predicts that this year's retail spending and consumer demand may further soar, the increase may be as high as 8.2%. According to NRF data, due to the substantial increase in demand, container throughput will increase by 23% in the first half of the year.

Consultant Jon Monroe pointed out, “Given that many importers are struggling with low inventories, replenishing inventory in order to meet their volume may be the key driving force for this year’s growth. Therefore, the question that everyone needs to face is how to deal with another possible occurrence. A turbulent year?"

NRF predicts that freight volume will continue to remain high; Clarkson: trade volume will exceed 2019

Monroe said that most cargo owners (BCO) now intend to end contract negotiations and try to plan for expected market fluctuations, which may mean that contract requirements have not been met, soaring freight rates and shipping schedule reliability have been put on hold again.

Monroe made some suggestions for companies facing supply chain disruptions this year, including finding alternative delivery ports for imported goods other than Los Angeles and Long Beach, while optimizing warehouse efficiency while free time is reduced.

According to the table below, it is currently estimated that the "new normal" delivery time for goods arriving on the West Coast of the United States is currently expected plus 4 to 5 weeks.

The current situation of European cargo owners is similar to that of the United States. Port congestion is still the main problem, and the shortage of containers has exacerbated these difficulties. Especially in the United Kingdom, due to the problem of the space for storing empty containers, there has been a significant increase in delays in container delivery. Brexit has also had a certain impact.

According to data from Container xChange, “the trade interruption and continued congestion after Brexit are causing serious container accumulation in British ports.” said Dr. Johannes Schlingmeier, CEO of xChange, when the CAx index exceeds 0.5, it indicates that more containers are imported than exported. The index "increased significantly last year, with 40-foot containers rising from 0.71 to 0.86, and 20-foot containers rising from an average of 0.72 to 0.85."

Schlingmeier said, “The British ports are full of empty containers. If this problem becomes too serious, you may see additional charges for new (arriving) containers next.”

Container xChange stated that the link between Brexit and CAx is that as the United Kingdom leaves the European Union, British ports (mainly the Port of Felixstowe, but also the ports of Liverpool and Southampton) are facing severe congestion. British companies have become a problem, and some shipping companies have increased surcharges.

"To make matters worse, some shipping companies are currently unloading at EU ports such as Hamburg, Rotterdam and Antwerp to avoid congestion at British ports. As a result, the CAx values of these ports have increased in the past few weeks," Schlingmeier explained. And added a reminder that CAx will further monitor the number of containers entering and leaving the port. Four or five months ago, shipping companies waited for return goods at European ports for two months, and now they are "carrying back to Asia with empty containers full."

Clarkson predicts that the volume of seaborne trade this year will exceed the level of 2019

Clarkson Research Services acknowledged that major uncertainties still exist, but it is expected that the global seaborne trade for the whole year of 2021 is not only expected to return to the level of 2019, but also expected to be this level.

Clarkson predicts that this year's seaborne trade volume will increase by 4.2% to 12 billion tons, which is 0.5% higher than the level in 2019. Clarkson estimated in a recent weekly report that in 2020, global seaborne trade will fall -3.6% for the whole year to 11.5 billion tons. In the first few weeks of 2021, most non-tank shipping industries will show high utilization rates and high rates.

The International Monetary Fund (IMF) predicts that the global economy will grow by 5.5% this year. Following a 3.5% drop last year, the economy in 2021 will grow by 1.8% over 2019. Looking at emerging economies and developed economies separately, only emerging economies will return to the level of 2019 this year. The IMF expects that emerging economies will grow by 6.3% and will fall by 2.4% in 2020. On the other hand, advanced economies are expected to grow by 4.3%, which is lower than the 4.9% decline in 2020.

A report from the Baltic International Chamber of Shipping (BIMCO) at the end of last month pointed out that the recovery in 2021 will not bring good news to everyone. The exact speed of the recovery will depend on the development of the epidemic and changes in travel restrictions and other containment measures.

March 10, 2021 / By TJ China Freight / Shipping

Will the freight rate go up?

The prosperous situation of the container shipping market will continue for a longer period of time. The profit of the shipping company in the first quarter of this year is expected to increase to several times that of the fourth quarter of last year, and the profit in the second quarter will be equal to or higher than that of the first quarter.

After the Spring Festival, the congestion problem of European and American ports has not been relieved as expected. Instead, it has spread everywhere. Major international ports such as Los Angeles, Oakland, Rotterdam, Hamburg, Felice Du, Liverpool, and Le Havre continued to be congested. Singapore is not immune. Although the current shortage of containers has improved, it is estimated that as the volume begins to increase at the end of March, it will return to the original situation in April.

Jeremy Nixon, CEO of ONE, pointed out that Asian terminals currently operate 24 hours a day, while berths on the west coast of the United States work 112 hours a week, container terminals work 88-90 hours a week, and land operations are limited to daytime. Therefore, the current situation of the trans-Pacific route is unlikely to improve in the short term.

On the whole, the off-season of the shipping market after the Spring Festival this year is not weak. The number of days for seasonal correction of freight rates before and after New Year's Eve is between 50 and 64 days. The rate of freight rate decline is between 17% and 27%. After the festival, only 3.8% is revised, which is still obvious. Less than historical convention.

Looking forward to the market outlook, analysis institutions are optimistic about the market performance this year. Drewry predicts that the global container shipping demand growth rate will reach 10.9% in 2021, which is much higher than the 4.5% growth rate of supply.

The Danish shipping consulting agency Sea-Intelligence also estimates that the surge in freight rates may continue until the spring of 2022, and the freight rates for the US line may increase by another 25%.

Sea-Intelligence's research report pointed out that the current US retail industry inventory is still at a historical low, and the relative inventory level has been the lowest in 28 years. This is undoubtedly good news for the shipping company. As long as the sales situation is normal, the US retail industry needs to be in Continue to replenish inventory in the next few months.

Executives of CH Robinson, the world's leading third-party logistics service provider, pointed out that global road, sea and air cargo congestion is likely to continue into next year and continue to increase transportation costs.

Although there is still room for increase in freight rates, the various operating costs of container shipping companies are also increasing significantly. Port congestion has reduced ship turnover by 20% to 30%, and container ship rents have soared, which has doubled in the past year. In addition, the price of marine fuel oil has increased by 60% since November last year, and the difficulty in crew dispatch caused by the epidemic has also increased labor costs by about 20%.

Consolidation company believes that starting from May this year, the long-term freight rate of the western US route has started from US$3,000, which is several times higher than that of last year’s US$1,400. Therefore, as long as the freight rates of the European and Southeast Asian routes are stable, the company’s profit in the second quarter may be The first quarter is equivalent. If it is a consolidator that starts to substantially increase US flights in mid-March, there is still a chance that the second quarter will make more profits than the first quarter.

March 8, 2021 / 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.

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.

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.

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.

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).

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

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.

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.

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

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.

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.

February 20, 2021 / By TJ China Freight / Shipping

2021 container shipping market is better than 2020

BIMCO's data shows that the global container traffic volume in 2020 will only drop by 1.2% compared with 2019, far exceeding previous expectations. Among them, the container volume in the first six months fell by 6.8%, while the container volume rebounded sharply in the second half of the year, an increase of 4.2% over 2019.

The Far East to North America route has the largest increase. In the second half of 2020, the container volume of this route increased by 3.6 million TEU compared with the first half of the year, and 2.1 million TEU compared with the second half of 2019, achieving a positive growth for the whole year (+1.4 million TEU) . Among the three major routes, the Far East to North America was the only route that achieved growth in container volume throughout the year. The Far East to Europe route decreased by 1.1 million TEU in the first half of 2020, and only increased by 200,000 TEU in the second half of the year. The annual container volume of this route decreased by 5.2% compared with 2019. In the first half of the year, the volume of the Asian regional routes dropped by 4.0%, and only increased by 2.2% in the second half.

The increase in freight volume has pushed up freight rates. In recent months, although the upward trend of spot freight rates on trans-Pacific routes has ceased, the freight rates remain high due to still strong demand.

The surge in demand is not only reflected in the spot market, but also in charter rates. Since June 2020, charter rates have seen a V-shaped recovery, and the rates of all container ship types have been much higher than their pre-epidemic levels. At present, the 1700 TEU feeder ship charter for 6 to 12 months is USD 13,700/day, the 3500 TEU ship type is USD 23,000/day, and the 8500 TEU ship type is USD 42,000/day. Faced with high charter rates, carriers are still trying to obtain more capacity to ensure shipping schedules.

The high demand for shipping capacity means that the volume of ship scrapping will drop sharply in 2020, and a total of 188,800 TEUs of shipping capacity will be scrapped throughout the year. In the fourth quarter of 2020, only 7,448 TEU of capacity was scrapped, and all of them came from feeder vessels, a decrease of 70.9% from the same period in 2019.

At the same time, orders for new ships have picked up, with 65 new ships ordered for a total of 751057 TEU. In 2020, the container fleet capacity increased by 2.9%, adding 857,616 TEU.

Peter Sand, chief shipping analyst at BIMCO, believes that the increase in freight rates in recent months does not mean that the fundamentals of the container shipping market have improved. In the long run, the industry will have to face the problem of overcapacity in the market before the epidemic, and the emergence of new orders in recent months will make this situation worse. But even so, BIMCO predicts that the consolidation market in 2021 will be better than in 2020.

February 18, 2021 / 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’.

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Pioneering Portuguese charter operator Hi Fly led this trend, being the first to convert an A380 for freight by removing the majority of seats

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

As the development of successful COVID-19 vaccines continues, approved vaccines are already being administered as part of ongoing mass vaccination programmes worldwide. Temperature-controlled packaging manufacturers continue to play a pivotal part in the global deployment of these, but as COVID-19 vaccines fall into different families of technology, some have frozen and deep-frozen temperature requirements, leading to a scramble to qualify existing solutions for shipping at those specific lower temperatures.

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.

January 26, 2021 / 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. .

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.

January 26, 2021 / 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 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.

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.

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.

January 19, 2021 / By TJ China Freight / Shipping

From USD 13-1.6 million/FEU, freight rates on Asia-Europe routes continue to rise! The tight capacity has not yet eased and will continue into the second quarter

Equipment shortages, strong demand, and soaring freight rates in Asia and Europe have almost run through the entire Christmas-New Year holiday. Freight forwarders and carriers are almost unlikely to see market conditions ease before the Chinese New Year in February.

According to data from the Baltic Daily Freight Index (FBX), spot prices from China to Northern Europe reached an incredible $7,701 per TEU on January 15 , a year-on-year increase of 268%.

The freight rate from China to the Mediterranean region also drew the same curve, and the rate per FEU7496 USD increased by 203% over the same period last year.

Data from Xeneta, an internationally renowned freight benchmark and market analysis platform, shows that since the end of October 2020, spot freight rates in Asia and Europe have risen almost vertically, from US$1,164 per TEU to US$4,191 on January 2, 2021.

These indexes reflect the total rate of trade payments, and shippers are also reporting that freight forwarders have given them eye-popping prices for Asia-Europe freight. A shipper told reporters that, last week, a freight company reported a one-week Asia-Northern Europe freight rate, which reached US$13,000 to US$16,000 per FEU.

The shipper said: "I know the capacity of this route may be more tight than other routes, but such prices are still too crazy."

From February 12th, China will begin to celebrate the Lunar New Year, and factories are usually closed for three weeks around the Spring Festival. However, since the beginning of this year, there have been various mixed reports from Chinese manufacturers. Some factories will cancel holidays in order to cope with the backlog of orders, and some factories will take longer holidays.

This uncertainty makes the capacity management of carriers more difficult. The sea intelligence agency (sea intelligence) recently stated in a newsletter that during the three-week Spring Festival beginning at the end of January, the carrier has so far announced only seven cancellations of the Asia-Europe route. The shipowners have announced that they will cut their total capacity by 6% to 13%, compared with 40% in January last year.

The newsletter pointed out that shipowners usually announce cancelled flights six to eight weeks before the Spring Festival, putting people under pressure of "time pressing". However, there may be other reasons behind the silence of the shipowner.

A Maersk spokesperson said that although the demand outlook for this year is still limited, the current freight purchase model and the supply of container equipment and ships are only temporary. Maersk expects that demand will "normalize" in the first half of the year, and plans to reduce voyages around the Spring Festival to rebalance the flow of containers. The spokesperson said that stocks in the US and European markets have basically been replenished, and the introduction of vaccines "will also ease this situation."

For the time being, we still see no signs of weakening demand

But obviously not everyone agrees with Maersk's view. Dominique von Orelli, Executive Vice President and Global Head of Ocean Freight at DHL Global Forwarding, said that continued strong demand will keep container freight rates high in the first quarter of this year run. He said that " this extremely strong demand momentum" showed no signs of abating .

Von Aurely said, "During the Spring Festival, freight rates may drop slightly, but the overall upward momentum should continue until March or even the second quarter." He added that any shipment exceeding the agreed minimum quantity commitment (MQC) The volume will increase the price.

"Now if you go to a retail store in Germany and want to buy a sports jacket, or go to IKEA to buy a bed, or go to a furniture dealer to buy a chair, they will give you a lead time of 12 weeks or more because the inventory has been It’s emptied.” The source added, “Most companies are trying to replenish inventory, but at the same time, the strong demand has not been reduced. Therefore, it is still difficult to increase the inventory to the customer’s demand. It will take some time to achieve The state of supply and demand balance, so we predict that demand will not stabilize until March or April."

Rolf Habben Jansen, CEO of Hapag-Lloyd, also holds the same view. He said in the latest market report in late December last year, "Two months ago, I said that (high) demand will continue until the Chinese New Year. The traffic will drop."

He added: "Today, I have to honestly say that we may still have to deal with very high transportation volumes in the future. After all, the bottleneck that cannot ease the current capacity shortage is not only in the logistics link, but also in the production link. There is still a lot of work to be done. I’m afraid it will take some time to solve the bottleneck. China Spring Energy allows us to breathe in two to three weeks. But not everything will be resolved within this time."

Since the peak of the third quarter of 2020, with the high demand in Asia and Europe, China has faced a serious shortage of empty containers. The executive of the European logistics industry said that the problem of tight container supply will continue into the second quarter. He said: "The second quarter is expected to see the relief of the new crown epidemic. By then, there will be more labor supply in warehouses and terminals in Europe and other destinations, which will accelerate the flow of containers."

January 7, 2021 / By TJ China Freight / Shipping

The Freight Rate has Increased to More Than $10,000! Hapag-Lloyd has Announced New Prices

The spot rates in Europe have surged by 230 percent compared with the same period last year, after a sharp rise initially due to the outbreak lagging the Pan-Pacific region.

At present, the freight quotation from Asia to Europe has exceeded $10,000 /40 feet high container.

Towards the end of the year, European market volumes remain high.The recurrence of the epidemic has also stimulated local import demand growth, and the demand for transport between Asia and Europe's Mediterranean is strong.The containers shortage has also affected European routes, with strong market demand and severe equipment shortages expected to continue beyond the Spring Festival in 2021.

At present, due to the severe epidemic situation in Europe, Germany has taken "mandatory measures" to close down the city. Coupled with numerous uncertainties such as brexit, major ports in the UK are severely congested, cargo volume of European ports has plummeted, and shipping companies have jumped to their ports. Please pay attention to the recent shipment to Europe.

Freight forwarders are feeling over $10000 freight rates of hot Asia-Europe route market.

According to the freight agent, shippers are postponing or cancelling shipments pending a certain adjustment in freight rates due to a year-on-year increase of at least 5 times and the total freight rates for some shipments have exceeded US $10,000 /FEU.

Liner ship operators have cut UK import quotas to ease congestion at UK ports amid capacity constraints and congestion at major container ports in the UK and China.

However, booking space severely exceeded the remaining quota, resulting in severe backlogs at busy Chinese ports including Yantian, Ningbo, Shanghai and Qingdao.

Hapag-Lloyd announced increase rates from Asia to Northern Europe and the Mediterranean

Hapag-Lloyd has announced new prices from Asia to Europe and the Mediterranean, effective January 1, 2021.

January 4, 2021 / By TJ China Freight / Shipping

5 Tips on How To Choose a Freight Forwarder

Last week we looked at the question, “Can anyone be a freight forwarder?”

how to choose a freight forwarder Hariesh commented on our blog, as well as mentioning in his own, that “any Tom, Dick, or Harry can call themselves a Freight Forwarder.”

Of course, you don’t want any Tom, Dick, or Harry handling your imports and exports. It’s important your freight forwarder knows how to handle your international shipping.

With all the freight forwarders that are out there, and the surprising ease to call yourself a freight forwarder, how do you go about choosing a freight forwarder whom you can be confident in?

Well, today’s blog covers just that. Here are 5 tips on how to choose a freight forwarder.

1. MAKE SURE THE FREIGHT FORWARDER HAS EXPERIENCE.
This could almost be the whole list. Experience, experience, experience.

It might be fairly easy to start a freight forwarding company, but the international shipping industry is not the easiest business sector in the world and if you don’t know what you’re doing, you won’t last long.

During TJ China Freight’s 27+ years as a freight forwarder, we’ve seen many, many company’s come and go.

Years of experience means your freight forwarder has dealt with different situations like dockworker strikes and port shutdowns, needs for rerouting cargo, smoothing out customs or warehousing issues, and so on.

Experience usually means your freight forwarder will help you avoid customs, warehousing, and routing problems before they even start so your international shipping will go smoothly.

Experience also gives time for a company to form and cultivate business relations around the world from which you will benefit. Which brings us to…

2. ASK ABOUT THE FREIGHT FORWARDER’S NETWORK OF AGENTS AND BUSINESS PARTNERS IN THE COUNTRY YOU’RE EXPORTING TO OR IMPORTING FROM.
This is obviously important for the local handling of your international shipments.

Your freight forwarder should have a strong network around the world, but you need to know that they have the connections in the countries/cities of origin and destination for your imports and exports.

If you’re exporting and importing to and from Germany, it doesn’t matter how good the freight forwarder’s connections are in China.

TJ China Freight has a very large network and ships to and from almost anywhere in the world; however, you may have noticed a key word in there: almost. There are a few places in the world TJ China Freight does not ship to or from.

You may have found a freight forwarder who is great for shipping to the Philippines, but don’t have the connections or experience to do a great job handling your imports from China. So make sure you ask about your freight forwarder’s connections and experience in the specific locations you need.

Business partnerships around the world also allow your freight forwarder to offer additional services, which brings us to…

3. MAKE SURE THE FREIGHT FORWARDER OFFERS THE SERVICES YOU NEED FOR YOUR SHIPMENT.
Look at the services the freight forwarder offers.

A freight forwarder should be able to handle more than just the air shipping or ocean shipping part of your import or export. They should also be able to handle the rail and/or trucking portion of your international shipping.

I guess if you only need port to port services instead of door to door shipping, you wouldn’t find it a big deal whether or not the freight forwarder offers this service; however, if they do not have a trucking option, that says something about the freight forwarder’s network.

However, there are more services you may want from your freight forwarder. For example, TJ China Freight partnered with TOLL to offer Supply Chain Value Added Services. This means we can help you with things like warehousing, distribution, etc.

Of course, cargo insurance better be among their services and shipment tracking is nice to have if only for your peace of mind.

4. MAKE SURE THE FREIGHT FORWARDER HAS GOOD REFERENCES.
This is good advice when you’re looking for any kind of service, not just freight forwarding.

If there’s no one willing to say a freight forwarder did a great job taking care of their imports and exports, that’s a big red flag.

5. MAKE SURE THE FREIGHT FORWARDER HAS GOOD CUSTOMER SERVICE.
This is hugely important.

How fast does the freight forwarder get back to you on your freight rate request or on answering your questions?

If you’re new to international shipping, are they able and willing to walk you through what you need to know and do to make sure all goes well with your imports and exports?

Your sales person at a freight forwarding company may not have all the answers to your questions as they might be new to the company or even the industry, but they should be able to get the answers for you from the experienced team they’re working with.

How good your freight forwarder is at taking care of your individual needs speaks a great deal about their ability to give the needed attention to your shipments.

Notice, I didn’t even put freight rates in this list as much more important is your freight forwarder’s ability to take care of your shipping needs professionally and precisely.

One freight forwarder may offer shipping rates well below the rest of the competition, but you’ll usually find yourself paying for choosing them in additional costs, delays, and very poor customer service.

But if you follow the five tips above, you should find a freight forwarder who has the contracts and network which allow them to offer competitive rates.

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