Freight market report – September 2022
Our September freight market report provides multi-modal situation updates and insights, together with strike and carrier updates, that will provide you with critical insights for the weeks ahead.
While Eurozone real GDP growth remained positive QoQ, just, due to inventory accumulation and pent-up demand, growth prospects are rapidly deteriorating and the UK slipped into recession, as high inflation erodes household incomes and consumer sentiment plunged to a record low.
SEA
As global economies take a battering, with purchase manager (PMI) indices and consumer sentiment plunging, the inevitable slowing in demand is leading carriers to blank sailings ahead of Golden Week in October, with 8.8% of capacity due to be pulled from Asia to Europe over the next 12 weeks.
The continuing unrest at Felixstowe and Liverpool – with two weeks of strike starting 19th September – raises concerns about more vessel omissions, while North Europe Port congestion could be on the cusp of easing as demand falls and strikes comes to an end.
- Rates softened in August, with biggest drop in months some routes
- High inventory levels contributing to weak demand
- Bunkers prices have plateaued contributing to rate erosion
- UK fuel surcharges remain high, those these are expected to soften in time too
AIR
Overall the airfreight market has been pretty flat and has continued to slow, with a pronounced drop in July.
On many routes space on aircraft is freely available, but we expect this will change in the coming months, even though Peak season is unlikely to trigger any volume surge, with inventories at high levels.
Tensions between the US and China could affect westbound trade, with the US potentially using EU aircraft to ship their product via Europe.
European bottlenecks still ongoing, but with fresh strikes averted by Lufthansa reaching a deal with their pilots, there are hopes we could see further delays start to diminish.
- Airfreight rates continue to soften but are expected to increase as the traditional peak and Chinese Golden Week holidays approach
- Fuel surcharge have softened, contributing to the softening of the rates
- European bottlenecks still ongoing, with fresh pilot strikes at Lufthansa averted
OVERLAND
Despite shrinking industrial output, falling consumer demand and rising costs, the need for domestic and international road transport remains high, but any continuity in demand is offset by reduced transport capacities – primarily due to the shortage of drivers – and less cargo space.
In addition to the persistent driver shortages, the reduced availability is a result of higher commodity and energy prices, with the average EU diesel price up over 40% in a year.
While some carriers have elected to reduce their cost exposure by not reactivating previously shut-down transport resource, the capacity imbalance in the market has been lessened by the end of the summer holidays, the seasonality of the road transport market and the decision to give Ukrainian drivers easier access.
- European road transport prices break new records
- Haulage rates remain on the high side and will continue to see disruptions
- Instability are driving tumultuous developments in road freight prices
- Drivers pushing for better working conditions due to continued disruptions
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