Freight market report – April 2022
Just when we thought we had turned a corner and the logistics environment might start easing, it has probably hit new heights of challenges, that will continue to be disruptive as the impact of China’s lockdowns and Russia’s war unfurls in the coming weeks.
SEA
The ocean freight market remains pressured, with space remaining tight due to ongoing China regional lockdowns and an advisory from a leading shipping line suggested that reduced trucking capacity at many Chinese ports could see cargo volumes diminish temporarily, as China battles the omicron surge.
A report by the United Nations Conference on Trade and Development (UNCTAD) warns 1.5 million containers of Asia-Europe rail cargo could be re-routed to the air and ocean markets, driving rates higher.
The war between Ukraine and Russia has disrupted land and air cargo shipments between Asia and Europe. Restrictions on Russian air space, service suspensions and security concerns are complicating trade routes going through both countries which are part of the Eurasian Land Bridge.
The impact of the war on the global economy and consumer confidence may weaken growth prospects and consumer demand, which could lead to an earlier ‘return to normal’, which in turn could ease congestion in ports.”
Eyes remain on China’s lockdown for direction, with the fallout from Shenzhen’s now-ended lockdown and Shanghai continuing lockdown causing congestion in these area’s.
Container availability remain tight and ongoing at many key origins and early booking is still recommended.
AIR
Global air cargo demand was up 2.9% in February, year on year, but capacity is still constrained, according to the latest IATA data.
Cargo is tracking above pre-COVID-19 levels, with demand, measured in cargo tonne-kilometers (CTKs) rising 2.5% yoy, but while capacity was 9% above February 2021, compared to pre-COVID-19 levels, it is actually 5.6% below 2019 levels.
Air capacity from Asia has reduced significantly due to the ongoing Ukraine/Russia situation and with all of Shanghai under lockdown airline handling has become almost impossible, due to lack of staff, leading main carriers to suspend many flights.
OVERLAND
Cross-channel capacity has been slashed by the fallout from P&O’s controversial redundancy actions, fuel prices are spiking and driver shortages continue to be a very real concern. There have been a number of major channel port delays, with 10 mile tailbacks on the M20, due to the P&O situation, bad weather and Easter holidays.
Since the onset of the Ukraine crisis, the cost of filling up a truck has rapidly risen by £200 and with the government’s 5ppl duty cut failing to make any impact, UK hauliers have been imposing huge fuel surcharges, while they eye their peers across the channel with envy.
A report by the United Nations Conference on Trade and Development (UNCTAD) warns that 1.5 million containers of previously routed Asia-Europe rail cargo could be diverted from the closed rail services to the air and ocean markets, driving rates higher.
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