Freight Market Update: Air & Ocean [October 2021]

Freight Market Updates October 2021

The Topic of the Month

China’s October Golden Week, Christmas, and Chinese New Year will keep a stronghold on the demand for container shipping for the last quarter of 2021. Although port congestion, service delays are expected to create challenging conditions for service schedules and their reliability.

Another theme we noticed, was the redeployment of capacity to more profitable East-West trade by the top 14 Carriers on the Far East – Middle East trade route.

Shipping lines have been repositioning empty containers like never before; 215,000 containers were repositioned in the first 8 months of 2021 into India to support economic growth

New Containers Production – In-fleeted 660,000 new containers since July 2020 which is partly helping in overcoming the shortage of containers and filling in for containers that are stuck in the ecosystem due to Port Congestions and Drivers Shortages.

Keys

Sign	Meaning
++	Strong Increase
+	Moderate Increase
=	No Changes
–	Moderate Decline
—	Strong Decline

Ocean Freight Market Updates October 2021 United Arab Emirates

Outbound Ocean

ME – North America

One line Status: The port congestion remains high, with around 60 ships queued up at Los Angeles and Long Beach ports  Congestion also exists at all major rail terminals, including UP and BNSF rail ramps in Chicago, Columbus, and Los Angeles.  
Local Rates – PSS/GRI implemented by most carriers. (+) 
Local Space – Extremely Critical (–)   
Local Capacity/Equipment –  Limited but available on selected carrier (-) 
Notes– Bookings need to be placed 3-4 weeks in advance.   

ME – Europe

One line Status:  The market remains strong, despite a restricted supply of equipment. The port congestion resulted in more vessel delays and canceled sailings.  
Local Rates  –Prices remain at a record high but have been steady since September 2021, with a slight uptick in October. Most carriers have increased their premium prices. (+) 
Local Space – Extremely critical space situation (–) 
Local CapacityEquipment – Equipment shortage  (-) 

Notes–  Reservations must be made 3-4 weeks ahead to secure.  

ME – Africa

One line status – In West and South Africa, rates, GRIs, and premium surcharges are all rising. Only bookings made at least 3-4 weeks in advance are acceptable for this space. On most lanes, carriers are releasing bookings against “Sea Priority/Shipping Guarantee.” Carriers’ allocation for outbound ex GCC is still limited. On most lanes, carriers are releasing bookings based on “Sea Priority/Shipping Guarantee.” in East Africa.
Local Rates – Prices are on a general increase (+)
Local Space – Critical and low for West Africa, while relevantly at ease for East Africa (-)
Local Capacity/Equipment – available (-)
Notes– Only bookings made at least 2-3 weeks in advance will be considered and Priority is given to cargo utilizing “Shipping Guarantee” cargo

ME- Mediterranean MED    

One line Status – Rates are still rising. Space is limited and only offered at high rates. Lightweight cargo is preferred by carriers.  
Local Rates – Prices are on a general increase (+)     
Local Space – Limited but at a premium (-)   
Local Capacity/ Equipment  – Available    

ME – ISC (Indian sub-continent)  

One line Status — There is a shortage of 20′ equipment at Red Sea ports. In comparison to September 2021, rates have risen.  
Local Rates – Price is on a general increase (+)   
Local space –  available (-/=)   
Local capacity/ Equipment – available   
Notes–  Reservations must be made 2-3 weeks ahead to secure

ME – Far East Asia

One line status– Rates are on the rise, and there is a lack of equipment for Asia-bound freight. To decrease turnaround time, carriers prefer to relocate empty boxes rather than full boxes. Reduced free time at Middle East Port.
Local Rates – Price is on a general increase (++)
Local Space – Limited Space (-)
Local Capacity/Equipment – available (-/=)
Notes– Reservations must be made 2-3 weeks ahead to secure

ME – China

One line status – The October Golden Week, Christmas, and Chinese New Year in China will drive significant demand for container shipping in the 4th quarter of 2021. Costs have risen, owing to a lack of equipment for goods heading for Asia. To decrease turnaround time, carriers prefer to relocate empty boxes rather than loaded boxes. Free time at the destination has been reduced.   
Local Rates – Price are on a general increase (++)   
Local Space – Tight Space (-)   
Local Capacity/Equipment – available (-/=)   
Notes– Reservations must be made 2-3 weeks ahead to secure  

ME – Oceanic  

One line status –Port congestion in Asia and Oceania continues to put a strain on vessel scheduling, resulting in port cancellations and missed sailings, further limiting capacity available. Demand in the market is projected to be robust in the coming months, while capacity is limited.  
Local Rates – (+)   
Local Space – (-)    
Local Capacity/Equipment – (–)    
Notes–   Reservations must be made  at least 4 weeks ahead to secure 

ME – Latin America    

One line status – Due to insufficient capacity, the majority of carriers are not accepting bookings. The current situation is anticipated to continue in October.  
Local Rates- Prices are on a general increase (++)    
Local Space – Very tight (–)   
Local Capacity/Equipment – (-)    
Notes– Reservations must be made  at least 4 weeks ahead to secure

Inbound Ocean market update United Arab Emirates  

North America

One line status –Capacity is declining as carriers continue to restrict space back to Asia. Rates rise dramatically every 15 days as a result of the GRI.  
Local Rates – Multiple GRIs announced on October 1 and October 15 for dry and reefer cargoes are anticipated to be enforced.   
Local Space – Tight from US West Coast. The US East Coast is showing signs of improvements in available spaces. In the US Gulf space has increased with capacity more readily available
Local Capacity/Equipment – Capacity tightest from the US West Coast. Container and chassis shortages continue to plague IPI origins. Standard equipment is readily available at ports, but any unique equipment is difficult to obtain. 
Notes– Book 4+ weeks out, Trucking Shortage 

AsiaPacific

One line Status – Space in the Far East/Gulf is very limited, with more than 40% of sailings has been canceled in September. Space and equipment at Asia ports remain tight for October. Local Rates –  increase (++)   
Local Space – Super Critical (–)   
Local Capacity/Equipment – Under capacity (-)   
Notes– Book a week before, Trucking shortage 

Europe 

One line status – The situation in terms of equipment is comparable to that of Asia. Space will remain extremely limited, owing in part to the fact that FE3 will continue to exclude Jebel Ali until at least November. Rates have mainly been prolonged or slightly raised.   
Local Rates – Rate slight increase (+)    
Local Space-– Limited  (-)    
Local Capacity/Equipment- (-)   
Notes– Book a week before, Trucking Shortage 

Latin America   

One line status – Rates continue to rise month over month, especially from South America East Coast. Despite diminishing service due to many port exclusions, Mexico is a bright spot where export volumes remain constant.
Local Rates – Rate increase (+)    
Local Space – Super tight (–)    
Local Capacity/Equipment – (-/=)     

Indian SubContinent (ISC)   

One line status– Carriers are adding blank sailing to re-align schedules. Equipment is an issue across India as inland container depots are also facing critical shortages   

Local Rates– Rate increase (+)  
Local Space— Moderate (-/=)   
Local Capacity/Equipment – (-/=)   
Notes– Book 2 week ago 

Air Freight Market Updates for United Arab Emirates  

Air Freight Demand  – Demand growth remained high for all regions; overall growth ~+33%  YoY in July 21. Moreover, congested ocean ports are still adding to air volumes. Middle East outbound volumes have improved.  Peak shipping season approaches and PMIs above 50mark for key markets indicate high volumes in coming months. Covid situation may affect demand in Canada and South Esat Asia in coming months. Asia pacific export cargo movement grew and North America eCommerce remained very strong.

Carrier Capacity –  As compared to August 19, global capacity is still affected and down. Canada, South East Asia, and Europe are likely to affect belly recovery because of the resurgence of the Delta variant. North and Latin America has influenced capacity growth by a strong influx of vaccines. A sudden spike in Intra-America perishable trade due to low 2020 baseline. However, capacity is still insufficient to support current demand.

Local Rates –  As we continue to see huge demand growth against limited capacity so the rate will remain high and the upcoming peak season will push demand higher. Due to ongoing constraints rates to/from the Asia Pacific are likely to remain high. Airlines’ extra capacity is still available at a premium and continues to manage yields aggressively.

The Middle East and Air Carriers ME    

The airline industry is experiencing an uneven recovery from the epidemic. The Middle Eastern airlines’ reliance on connecting international flights, along with a lack of major local markets, has slowed the region’s revival. Middle Eastern airlines are anticipated to incur losses of $6.8 billion in 2021 and $4.6 billion in 2022, respectively.

Asia   

South Asia’s situation is worse as the Christmas season and year-end in the United States approach, and more ocean-to-air conversions saturate the market. Rate levels are projected to either remain unchanged or rise in October. 

In North China, with the approaching national holiday in mainland China (10/1-10/7) just around the horizon, the market remains brisk as shippers race to move goods. TPEB prices are still high, and capacity is limited, but after the Golden Week, some supply is likely to return to the market, and rates may begin to fall. While in South China, capacity in the market remains constrained, and some airlines have canceled flights as a result of multiple aircraft re-routings to HKG as a result of increasing Covid cases in China. Rates for TPEB and FEWB continue to rise in the run-up to Golden Week, and shippers are hurrying to get their goods out before the holiday.

In Taiwan, USEC capacity is extremely limited, and many ORD flights remain canceled till further notice. Because of the high market demand, certain carriers are promoting their express and priority services. Conversions from ocean to air are also increasing on FEWB routes, which may lead to tighter capacity in the future. 

Space ex-Southern Vietnam is still exceedingly limited, and rates are rising. Interest rates are anticipated to rise much more next month. Because the Vietnamese government has permitted certain firms in Southern Vietnam to restart production, demand is expected to rise.

Europe  

Demand is steady WoW, different cargo projects from AMS, MXP, and OPO airports are on the market. Rates have held steady since there is sufficient capacity to fulfill demand. There were some bottlenecks for import and export cargo owing to the high volume at ground handling ports. FRA and AMS are particularly impacted. 

Far East Eastbound is still recuperating, although it is nearly back to full operational capacity. As Golden Week approaches, be prepared for potential consignee warehouse closures. EU airlines continue to provide appealing alternatives into US hubs via subsidiary hubs. This stabilizes the rate levels.

North America & Latin America    

North American airlines flew 18.0 percent more CTKs in August compared to pre-crisis levels. Manufacturing PMI indicators indicate that production and new export orders in the United States are continuing to increase strongly. This bodes favorably for the region’s freight demand forecast in the short run. Among the region’s main international markets, the smaller North-Central America made the work, growing by over 39% compared to pre-pandemic August 2019. 

Latin American airlines remained at the bottom of the CTK growth list for another month, recording a 14.0 percent decrease in international CTK compared to August 2019. The international transport capacity shortfall is the most severe across all areas (-27.1 percent vs. August 2019).

Local Updates United Arab Emirates, October 2021  

Logistics News October 2021 

Maersk has updated APMM Global operations, Maersk vessel in real-time and gain access to AI-powered predictive analysis and estimated times of arrival (ETA) via their Hub. Read More Here 

Hapag Lloyd has a new fresh look and new feature in their Quick Quotes Tool, available for use at their website.  

CMA CGM, with immediate effect sea priority Go (SPGO) will be applicable to all bookings made to East Africa from UAE. There will be an increase in quantum effective immediately. To know more about the quantum reach out to us  Read More Here 

DP World, along with Ports, Customs and Free Zone Corporation (PCFC) from Dubai Government has issued a new safety requirements for IMDG Glass 5 Cargo for Port of Jebel ali, effective October 1, 2021. Read More Here 

FlyDubai Cargo has updated Routes and Capacity, effective from October 2021. For further detail Read More Here  

Hapag-Lloyd has stopped booking acceptance from all origins to Port Sudan, effective September 28, 2021, Due to an unforeseeable civil unrest situation resulted in the suspension of port operations at the Port of Sudan. Read More Here 

Maersk has declared Customer Advisory Advance Cargo Information (ACI) from October 1, 2021, for the cargo arriving in Egypt, and it is becoming mandatory for all Egypt import shipments. Read More Here 

MSC, Mediterranean Shipping Company has reduced their transactions in cash/cheque effective from October 2, 2021. Read More Here 

ONE has implemented new surcharges effective from October 1, 2021, and also revised the Switch BL charges (SBL) for UAE. Read More Here 

Hapag Llyod has increased Local Charges / Service Fees and Detention & Demurrage Effective 01 Oct 2021 Read More Here   

Hapag Llyod has updated Regional Terminal Handling – Effective 01 Oct 2021. Read More Here  

Hapag Llyod has announced Heavy Lift Charges (HCL) applicable from October 1, 2021, for all Middle East Trade for inbound trade routes. Read More Here  

Hapag Llyod has announced Marine Fuel Recovery Surcharge (MFR), effective from October 1, 2021, It is valid for both directions and shown as a separate surcharge on your invoice and freighted Bill of Lading. Read More Here  

Hapag Llyod has launched a payment option in the ODEX platform which will offer an immediate payment confirmation after paying Hapag Llyod invoices. Read More Here  

CMA CGM has decided to stop all spot rate increases effective immediately from September 9, 2021, and until February 1, 2022. Read More Here  

Tariff Rates by Hapag Llyod   

Effective October 1, 2021,  Hapag Llyod announced Tariff Rates for all dry cargo transported in 20’ and 40’ general purpose containers (including high cube containers) from Turkey to the Middle East & Indian Subcontinent. Read More Here  

GRI (General Rate Increase) to/from the Middle East   

Hapag Lloyd has increased General Rate Increase (GRI) applicable from October 1, 2021, from the Indian Subcontinent and Middle East to the USA and Canada. Read More Here  

PSS (Peak Season Surcharge) to/from the Middle East  

Hapag Lloyd has announced Peak Season Surcharges(PSS) applicable from October 1, 2021, from Pakistan to ports in the Arabian Gulf. Read More Here  

Factory Output News October 2021  

Middle East   

Asia  

Virus containment measures in India, Taiwan, Indonesia, and Japan have been the most successful. Manufacturing production will eventually return, benefiting in the resolution of global supply chain issues. According to IHS Markit analysts, real GDP decreased q/q in Indonesia, Malaysia, Philippines, Thailand, and Vietnam during the third quarter. With vaccination campaigns ramping up and new COVID-19 infections falling from previous highs.  

In Sri Lanka, over 1000 containers are stranded at the Colombo port as importers struggle to fulfill their US dollar import charge. This is due to a lack of US dollars in local banks, preventing them from clearing their products. 

On the other hand, Mainland China’s economy has slowed significantly. Industrial output growth slowed to 5.3 percent year on year (y/y) in August, restrained by semiconductor shortages and production limits aimed at meeting the government’s decarbonization objectives. Even though the COVID-19 outbreaks are on a limited scale, the Chinese government’s zero-tolerance stance will result in poor economic development through the end of 2021. 

Europe  

In Italy, to prevent a new wave of cases, the government is asking for Covid passports for all employees. The consumer-led expansion in Western Europe is growing rapidly. The relaxation of COVID-19 containment restrictions, robust labor markets, and pandemic-era household savings are recovering consumer spending. 

Eurozone real GDP increased 2.2 percent q/q (9.2 percent annualized) in the second quarter and is on track to post a similar gain in the third quarter. Under the European Central Ban’s new policy framework, monetary policy will stay highly accommodative for several years. Yet, growth will slow as the boost from reopening diminishes and fiscal policies tighten significantly.

America   

The change in US growth from 2021 to 2022 is due to COVID- 19 concerns and supply constraints. The projection for real GDP growth in 2021 has been reduced by 0.4 percentage points to 5.7 percent, owing to more cautious consumer expenditure on services, fewer light vehicle assembly, and lower inventory investment. 

The goods trade deficit increased from $86.82 billion in July to $87.60 billion in August, maintaining a higher year to date, with an average deficit of $89 billion. Goods exports climbed from $147.94 billion to a new all-time high of $149.04 billion. Durable goods shipments fell 0.5 percent in August, owing largely to a 2.7 percent drop in shipments of motor vehicles and components. Durable goods shipments climbed 0.2 percent in August to a new all-time high of $182.6 billion, excluding transportation equipment.  

This Month’s Eye-catching News   

Delivery delays and shortages are fueling German inflation, It’s even dramatically cutting vehicle production. [Read More]

Shippers that have not been sufficiently prepared are now running out of time to execute some of the game-changing changes in peak season 2021. [Read More]

Amazon has grown to become one of the largest delivery companies in the United States, marking the company’s first attempt to become a stand-alone carrier in the mould of UPS and FedEx. [Read More]

Long Beach and Los Angeles ports in the United States have added night and weekend hours to alleviate congestion. [Read More]

UPS consumers demand local same-day delivery alternatives for all sorts of items, not traditional packages. [Read More]

Amazon Air has emphasized filling gaps in its US network, adding regular service to seven locations. [Read More]

American Eagle is able to reduce supply chain time by a week and a half, and Walmart has invested directly in shipping. [Read More]

Shipping bottlenecks at US ports are expected to last far into 2022. [Read More]

Global supply networks are beginning to sag as two years of stress on transportation employees takes its toll. [Read More]

HUUB is Maersk’s third acquisition of the year. The acquisition of HUUB improves Maersk’s technological capabilities by introducing the finest qualities of a contemporary entrepreneurial agile workplace. [Read More]

FedEx and UPS rate increases are driving up the cost of online shopping. [Read More]

Transportation costs are making their way across global supply chains, from Michelin tyres to Pampers diapers. [Read More]

Maersk sells reefer business to CIMC for $1bn [Read More]

Coca-Cola Switches to Bulk Freight Due to Container Crisis [Read More]

A Walmart-Home Depot Merger Makes Shiploads of Sense – Bloomberg [Read More]

During the first half of 2021, Dubai’s foreign trade increased by 31%, reaching AED722 billion. [Read More]

Thailand to Start Shipping Line to Boost Status as Logistics Hub [Read More]

Allcargo Logistics Ltd. of India is considering selling a share in its container transport company, ECU Worldwide. [Read More]

CMA CGM SA expects to receive two Boeing Co. 777 freighters for its embryonic air-cargo operation early next year, indicating the French maritime giant’s rapid expansion into logistics. [Read More]

The United States’ trade deficit has reached an all-time high, putting a strain on consumers. [Read More]

Cotton Prices Surge to Highest Level in a Decade [Read More]

Why It’s Easier to Find Expensive Appliances Than Cheaper Ones – [Read More]

What if Inflation Is Here to Stay? [Read More]

Freight surcharges will remain even after rates ease :: Lloyd’s List [Read More]