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Market report (wk 8)

Managing supply chains is always challenging and over the last year you have been challenged more than ever, which is why we have simplified compliance solutions for deliveries into the EU and continue to provide air freight services from Asia and the US for your time-sensitive shipments.

As we move into 2021, the vaccination roll-out is likely to lead to a return to some sort normality, but until then, it looks like last years’ challenges will remain with us.

Three consecutive blanked sailings by the Ocean Alliance are putting upward pressure on rates from the UK and Europe to the US, with a GRI imposed on the 15th February and another likely on 1st March.

Blank sailings on Ocean Alliance AL1 and AL6 in week 9 and week 14 have been announced, with void sailings expected to continue through March/April.

US terminal operators expect near-record container volumes to continue into the spring, but the backlogs of vessels and laden inbound containers should dissipate sometime between April and June.

Rates from Asia remain high but some stability is expected to persist until the end of February, due to CNY, with the hope of some volume recovery from the 1st March.

Brexit
UK importers and exporters are gradually adapting to the new post-Brexit border processes, but the serious lack of customs clearance capacity in the UK will continue to impede cross-channel movements for shippers that have not appointed a customs broker like PSP Logistics.

Six weeks on and border flows are much better, although some traders continue to suffer delays and difficulties, as evidenced by a British Chambers of Commerce survey of 1,000 mainly SME firms, that found, many of them simply are not prepared.

“Simplifying trade with Northern Ireland”

Over 30% of respondents reported difficulties adapting to changes to moving goods in January, while just 10% said they had found adapting to the changes easy.

The percentage facing difficulties in adapting to changes in trading goods were significantly higher, at 49% for exporters and 51% for manufacturers.

“Putting your EU exports into free circulation on arrival, for distribution across the EU”

We are aware of particular challenges in trading with Northern Ireland and can guide you through the use of XI EORI and VAT numbers, Entry Summary Declaration and using the Trader Support Service.

Our Customs experts have simplified transport/customs compliance solutions for volume traders into continental Europe, that put your goods into free circulation on arrival for easy EU distribution, and for those that want to simplify deliveries to customers in France, Belgium and Holland.

Air
Air cargo capacity from major sourcing regions is expected to remain constrained for some time, resulting in the biggest volume shippers increasingly relying on charter operations.

We work with a global network of global carriers and freight operators, which means that PSP Logistics continue to offer freighter (and ‘preighter’) space across China, Hong Kong, India, North America and continental Europe for your time-sensitive consignments.

“Dedicated air freighters, for the fastest transit of time-sensitive shipments from Asia and the US”

Global vaccination programmes are likely to lead to a pick-up in passenger travel in the second half of the year, but this capacity will mainly be short-haul and domestic flights, which won’t add any capacity for long-haul cargo operations.

Long-haul travel, which is a much bigger part of global air cargo capacity, has been grounded since the first quarter of 2020 and will be slower to resume, with the market unlikely to be back to normal until 2023.

Where limited air capacity is available, spot rates are moving in one direction, with Shanghai to North Europe up 98% year over year.

The COVID-19 pandemic continues to disrupt air cargo logistics chains, with measures to curb the infection rates affecting the availability of airline crew and ground staff.

New 14-day quarantine measures for pilots and crew in Hong Kong is having a significant knock-on effect by limiting crew availability, with Cathay Pacific calculating that the new quarantine rules may result in a reduction of current passenger capacity of around 60% and a reduction of current cargo capacity of around 25%.

Sea
With the severe equipment shortage expected to last through the rest of this quarter, shippers are advised to be flexible on equipment substitution is advised. There are 8 CNY blank sailings announced so far (four by Ocean Alliance, three by 2M and one by The Alliance). Widespread restrictions for UK cargo mostly remain.

Over the past few months, shipping lines have increasingly refused to quote direct shipments to UK ports, loaded UK freight rates, or imposed congestion surcharges. And even when vessels have been scheduled to call at UK ports, they have frequently cut-and-run or omitted scheduled calls entirely, unloading UK-bound cargo at continental European ports.

In 2020 Felixstowe took 46% longer than the average port to move a container, with vessels typically spending more than 32 hours in port, compared to 18.5 hours for the quickest port.

Until lockdown measures are finally lifted UK ports will continue to suffer from the impact of COVID-safe working practices on their operational capability and the continuing high volumes of traffic, driven by lockdown driven demand and the shift to working and consuming more from home.

Road
Seven full weeks since the start of our new trading relationship with the EU and issues with paperwork continue to impede operations, creating delays and avoidable costs for unprepared traders.

Following the post-Brexit drop in channel traffic during January, road freight exports appear to have recovered to around 80% of their normal levels for this time of year, although figures suggest that one in five UK road-borne exports are still not taking place, as traders continue to struggle with post-Brexit trade complications.

While freight movements across the Channel appear to show signs of recovering, with some more continental capacity returning, almost half of these foreign-owned trucks are returning to the continent empty, because of the cost, complexity and delays associated with new export paperwork. It is questionable whether this ‘capacity increase’ will last, which would be more bad news for exporters.