JAS RESPONSIVENESS

MARKET CONDITIONS

Find Blue World Flight Operations details under the Air tab below.

AIR

Loading an airplane

GLOBAL

  • Air cargo capacity was down 10% between Aug 23-Sep 5, compared to the same weeks in 2019.
  • Global air cargo capacity increased across freighters and wide-body belly, up 2% vs. the previous two weeks.
  • International air cargo capacity out of Shanghai PVG has dropped ~30% between weeks 30 (Jul 26-Aug 1) and 35 (Aug 30-Sep 5) due to labor constraints.
  • US monthly air trade reached an all-time high in July 2021, approaching 800k tonnes.
REGIONAL

APAC

  • Capacity to NORAM is better than the same period in 2019, but not sufficient to support strong demand.
  • Capacity to and from Europe is still at about – 10% compared to 2019, while demand is up in both directions.
  • “Ghost” flights will continue to be essential to maintain capacity to current levels as there will not be additional passenger flights until possibly the summer season.
  • Lack of space for ocean freight has forced some shippers to switch ocean shipments to air.

EMEA

  • The situation in and out of Europe is still critical, especially in the Transatlantic lanes which are still at less than 30% of 2019 capacity. European countries may be in the position to ease their lockdown soon.

AMERICAS

  • North/South capacity is similar to 2019 for south bound and better for north bound drive mostly by fresh cargo.  
  • Capacity in and out of LATAM, both on the Transpacific and Transatlantic routes, is still critical - especially between Europe and LATAM.
  • Space into Brazil is particularly scarce following multiple flights cuts operated by some     European airlines.

JAS RESPONSE

JAS FLIGHT OPERATIONS offers service on 3 major air freight corridors:

 

Blue World Atlantic

 

Now twice per week between USA and EUROPE

  • 747-400 Cargo from Chicago to Frankfurt and back to Chicago.
  • This service allows for pick-up and delivery in all continental Europe and all USA.
  • Connections to and from LATAM are available.

 

Blue World Pacific

 

  • Multiple weekly flights from Hong Kong to Los Angeles and from Shanghai to Chicago.
  • Connections to LATAM are available.

 

Blue World Orient

 

  • Weekly flight from Shanghai to Frankfurt.
  • This service allows for delivery in all continental Europe.

 

Additionally, we continue to offer our SEA-AIR solutions via Singapore and Incheon hubs which are connecting Europe, North and South America with China.

Our Airfreight team is closely watching the market regarding the latest developments and coordinating solutions based on our clients' needs.

Contact your closest JAS office for assistance.

Flight Operations Details

OCEAN

Ships on the ocean at sunset

Ocean Market Update: April 2022

Global

Covid-19 Situation

The Coronavirus continues to cause disruptions, especially in China and Hong Kong, as the governments continue their zero-tolerance policy.

China’s most-populous city has yet to give an indication of when lockdown measures will lift, fueling greater uncertainty for those involved in global logistics.

The indefinite extension of the Shanghai lockdown is causing a significant slowdown of operations at the city’s major air and ocean ports due to labor shortages as well as a drop in the availability of goods as manufacturing and warehouses close, and trucking availability is significantly disrupted

The issue is down to limited trucking availability and the shuttering of many factories and warehouses. Many of the entry and exit points on the highways between provinces are also blocked causing severe supply chain issues.

More than 90% of truck capacity is out of service. Trucks are prevented from moving in and out of the city without a special permit, which is only valid for 24 hours and only on specific routes.

To date, there have been a limited number of vessel omissions and blanked sailings for Shanghai, but as congestion builds due to the slowdown in port operations and increased yard overcrowding, more blanked sailings will be implemented. As of April 11th, Maersk Line has announced that they plan to stop calling Shanghai as of this week. Other carriers will follow.

On April 7th, Mediterranean Shipping Co., the world’s largest container vessel operator, said it will begin offloading refrigerated containers at other ports because there are no available power plugs to connect to in Shanghai.

When the lockdown is eased, expect major delays in Shanghai as production is reinstated, but equipment and vessels are out of rotation.  

Rerouting freight to avoid the extended lockdown in Shanghai, where daily confirmed COVID cases topped a record 17,000 this week, is becoming more difficult and expensive as cargo facilities in other Chinese cities become overcrowded.

In Southern China, cross-border traffic between Hong Kong and Shenzhen is still greatly affected, especially for LCL cargo, with LTL trucking between the two areas being suspended and FTL trucking resources being scarce.

Please contact your local JAS office to discuss alternative options.

Ukraine

After the Russian invasion of Ukraine, major container lines including Hapag-Lloyd, Maersk, CMA CGM, MSC, and Ocean Network Express, have made the decision to temporarily halt bookings to and from Russia, though exceptions may be made for food, medical supplies, and humanitarian supplies equipment.

Sanctions

At this time the EU, UK, and the US, along with others, have imposed sanctions on Russia, Russian banks, and specific individuals, all of which serve to heighten the tension in the region. In addition, sanctions are in place for the Crimean, Luhansk, and Donetsk regions of Ukraine currently under Russian control. Banking restrictions have also been imposed, increasing the difficulty for transportation companies. Expanded export controls are in place for many countries, especially the USA, where new requirements target commodities in the hi-tech and aerospace industries.

JAS has made the decision to decline any shipments to, from, or via Russia and Belarus. This includes rail options from China to Europe.  

Capacity

The significant increase in deployed capacity by carriers on the key trade-lanes out of Asia last year will extend at least through the first few months of 2022, maintaining pressure on the choked port gateways on the US West Coast and North Europe.

Several of the world’s largest container shipping companies expanded their capacity through 2021 with the deployment of new vessels, an armada of second-hand ships, and the addition of hundreds of thousands of new containers to the global fleet.

Congestion across ports in Asia, North America, and North Europe, and their inland logistics networks, slowed both the handling of vessels and the turnaround of containers, effectively removing more than 8 percent of global capacity.

In general, all available containerized vessels are deployed. Only 0.8% (66 vessels) of the total container fleet is idle.

The timeline for resolving the challenges, because of the severity and length of the bottlenecks, remains unknown. Once the port congestion is unclogged there will be a massive amount of retail inventory restocking goods to move. The latest U.S. Census Bureau data shows no signs that we’re seeing any slowdown in US consumer spending on durable goods, so the outlook remains that we will continue to see a high demand and a shortage of supply throughout 2022, with a possible resolution in 2023.

Carrier profitability

Final operating profits for the top 10 carriers reached $115B last year. With COSCO last week reporting an operating profit (EBIT) for its container shipping business of $19.8B, the result for the top 10 carriers is now confirmed. Including the confirmed figure for COSCO, the average operating margin for the 10 carriers in the final quarter of 2021 dropped slightly to 55.4%, similar to the previous quarter.

BAF

Bunker fuel prices continue to soar. The global low-sulphur fuel average was $881/ton on March 31st.  

Q2 2022 BAF levels are approximately 11% higher than Q1 2022.

Expect fuel prices to continue to increase.

Schedule Reliability

Global schedule reliability continues to be extremely poor but did improve last month compared to the past several months. It now stands at 34.4% globally.

Maersk Line was once again the most reliable of the top 14 carrier in January 2022, with schedule reliability of 47.8%, followed by Hamburg Süd with 42.4%.

MSC, CMA-CGM, and ZIM were in the 30 - 40% bracket, while eight other carriers had schedule reliability between 20%-30%.  Wan Hai was the only carrier below 20%, with a schedule reliability of just 18.7%

Delays on individual trade-lanes can be far worse (see details per trade-lane further below). It is important that these delays are taken into consideration when reviewing your supply chain requirements.

The global average delay for LATE vessel arrivals decreased slightly and is now at 7.11 days.

In a tightly interconnected network business, congestion kills capacity. Once you pass the congestion tipping point, productivity drops, at just the time when you need increased throughput to work down the backlog. In terminals, container stacks grow and working room becomes scarce. Empties can’t be accepted because there’s no place to put them. Precious lift machine time and manpower are consumed picking through the stacks to get at the next “hot” load.

Until the congestion improves, expect on-time performance to be extremely poor.

GLOBAL OUTLOOK by trade-lane:

Rates:

Drewry’s Global Freight Rate Index decreased by 11% or $930 between February and March to $7,601 for a 40’ container but recorded an increase of 72% YoY. Expect spot rates to remain stable or slide a bit in April owing to uncertainty because of the Ukraine-Russia conflict and Covid lockdowns in China.

Many manufacturing firms are facing the threat of closure due to restricted supplies from Ukrainian and Russian raw material exports. Ukraine supplies 50% of the world’s neon gas, which is crucial for semiconductor manufacturing, which is used in almost every electronic device. We can also expect the war to impact global food supplies in upcoming weeks since Ukraine and Russia are big exporters of grains such as wheat, corn, and barley. Russia and Ukraine together account for more than 30% of the world’s total wheat exports.

Meanwhile, rates in March on all trade-lanes remained stable or declined. There is a distinct feeling of déjà vu about the current lockdowns in China, with spot rates declining as carriers scramble for export cargo from shuttered manufacturing.

But rates will spike again when the flood gates reopen for the delayed orders.

Spot rates from Asia to Europe dropped approximately 10%. Drewry’s intra-Asia benchmark decreased by 3% or $49 between February and March to $1,819 per 40’ container. Likewise, the South China-South Africa benchmark slid by 1% or $110 to $10,410 per FEU. Similarly, the South China-Dubai benchmark slumped by a massive 19% or $1,500 to $6,510 for a 40’ container. Rates also fell on Drewry’s key South China-Brazil benchmark by 12% to $9,400 and South China-Australia benchmark by 13% to $8,430 for a 40’ container.

Asia to Med / North Europe

The situation on the Far East West Bound trade-lane is mixed and there does appear to be a slight softening in the market to the Mediterranean and Northern Europe. However, it is difficult to identify if this softening is due to the Covid situation in China or a decrease in orders.

  • Utilization is around 90% in week 14, affected by the lockdown in Shanghai + all COVID restrictions in China.
  • Export capacity has been exceeding demand owing to the Covid restriction in China/HKG and also the Russia/Ukraine Crisis.
  • There is no sign of an immediate increase on the demand/volume in the next two weeks.
  • 20 blank sailings (13xNEUR + 7xMED) from week 14 to 18 will be implemented in anticipation of a period of low demand.

Port Congestion

  • North Europe: Ongoing port congestion resulted in dropping North Europe calls which required transshipments. Schedule reliability figures remain very low and the carrier blanked sailing / sailing schedule recovery program remains in place in continued efforts to try to get vessels back into rotation.
  • Southeast Asia: Reporting congestions, carriers skip port calls there created huge pressure on space & equipment in South East Asia origins.
  • China: Ships are building up at important Chinese ports due to the lockdowns and Covid restrictions, expected there will be serious delays of vessel departure in China main ports.

Asia to Middle East

New capacity on this trade-lane has left the Middle Eastern ports underutilized. This is creating more competition between the carriers who are moving more goods through trans-shipment ports in the region. This has lead to a significant decrease in rates by approx. $1500 per 40’ in the past month. However, weather continues to be a problem in the Middle East with ports in Egypt suspending operations due to bad weather.

It is anticipated that rates will now stabilize and no decrease any further.

Asia to Oceania

Demand is back after the Chinese New Year and is expected to stay strong - therefore continued backlogs will occur. These delays will affect the market and as a result, space will remain tight.

In addition, tug masters are still holding strikes, which is causing delays at the ports of Melbourne, Sydney, Freemantle, and Brisbane.  

Having said all of this, expect freight rates to remain fairly consistent or even decrease in the coming weeks.

Asia to NORAM

Ocean carriers looking to avoid log-jams at the USA's busiest container gateways on the West Coast are now facing even longer queues out east, according to Bloomberg.  As of the week of April 4th, there were ships with more container capacity stuck outside US East Coast ports than off the busiest sea-cargo gateways in the west. This, according to data compiled by maritime-analytics firm MarineTraffic, which also showed a new trend shaping up with more waiting TEU capacity stuck outside the US East coast ports than off the West coast.  Fifteen container ships are waiting off port limits at the San Pedro Bay ports of Los Angeles and Long Beach, carrying a total of 95,000 TEUs, while there are 18 vessels awaiting at Charleston, South Carolina, and a further 12 at Norfolk, Virginia, carrying 209,000 TEUs.  

Many of America's biggest seaports have been overwhelmed by a combination of strong demand for foreign-made products, shortages of truckers and dockworkers, and pandemic-related disruptions affecting shipping lines.  US-bound mega vessels have increasingly turned to the East Coast since the second half of 2021, when supply-chain disruptions peaked on major transpacific routes and contributed to historic delays at the country's busiest ports of Los Angeles and Long Beach in California.  Carriers have added a significant amount of capacity to the East Coast and ports in the Gulf of Mexico, especially as West Coast operations gear up for contract-renewal talks for about 15,000 port workers.  

Disagreements saw the last bout of negotiations in 2014 drag on for nine months, creating an economic headwind across the country, a long line of waiting vessels and shortages for some consumer goods.

Long-term contract rates in the eastbound trans-Pacific will increase dramatically in 2022 from service contracts that were signed in previous years as retailers and other importers place vessel capacity and service above price.

Spot rates on the trade-lane were reduced by 8% in March, to reach an average of $11,129 per 40’. This is an increase of 122% compared to same period in 2021.

It is expected that the spot rate market has already peaked and despite the Covid situation in China, will not increase significantly unless the lock-down continues for an extended period of time.

Cargo volumes from Asia to the US East Coast and West Coast increased by 20% and 14% YoY and there is no indication that momentum will drop off in 2022.

The announced “emergency fee” by the ports of Los Angeles and Long Beach continues to be pushed back week-after-week as the number of older containers at the port continues to decrease. To also help ease some of the congestion, terminals in LA/LB are increasing the hours that containers can be picked up and/or delivered by truck. You can assist by scheduling your container pick up as soon as possible. Expect delays on Intermodal points in the US as rail carriers are struggling to reposition their rail cars back to where the cargo is. Chassis’ are also in short supply. Allow at least an additional 12+ days for cargo availability once vessels arrive. Carriers advise that they are fully booked through April, so the booking window is 6 weeks in advance.

NORAM to Asia

Erratic vessel schedules continue to create blank sailings and delays, creating significant challenges for export cargo to Asia.  

The hinterland network continues to feel the strain with trucking and rail having a major impact to services across North America. Inclement weather is also creating additional delays and problems.

Export volumes dropped by 11% in 2021 over 2020 volumes, but despite the reduction in cargo, spot rates are expected to remain stable in April.

With the recent sign off of the Ocean Shipping Reform Act, which includes mandatory action to be taken to promote US exports, expect export volumes to increase over the long term.

Asia to Latin America

There continues to appear to be a slight softening of the market to both the East and West Coasts of South America as carriers have less than 95% utilization. This may be because of the number of extra loaders that had been implemented on these trade-lanes, but the recovery after the Chinese New Year and Carnival is not as strong as anticipated. That being said, there is a lot of cargo waiting at trans-shipment ports (especially for non-base port Asia cargo such as JP/TH/VN), which has been trans-shipped and needs to wait extra 1, 2, or 3 weeks to catch the next mother vessel.

Carriers are now removing the extra-loaders from service and continue implementing ad hoc port omissions and schedule recovery measures.

Rates continue to decline week-over-week to both coasts as carriers try to reach 100% utilization and are now averaging approximately $7000 per 40’ to the east coast and $7500 to the west coast.

Carriers are encouraging the use of Non-Operating Reefers (NORs) as a substitute to regular equipment. The use of NORs can provide a solution for equipment challenges and may also provide a lower freight cost.

Intra-Asia

The Intra-Asia market is very uncertain at the moment due to the Covid situation in China and the ongoing Ukraine war. However, we do expect the market to remain stable in April or even decrease slightly.  

Some Intra-Asia carriers are revising and consolidating their Intra-Asia networks and introducing some new services to China, Vietnam, and India.

Europe to Asia

Port congestion in the European ports is still a factor as productivity is greatly reduced. Recent severe weather has also created additional congestion as terminals had to close for several days.

Overall volumes declined on this lane compared to previous months, but the Europe - Asia rates did increase slightly in February to $2561 per 40’, but this is still way above the five year average of $1579. It is expected that rates will now remain stable in April despite the blank sailings and schedule recovery plans carriers have announced.

Europe / Med to NORAM

This traditionally stable trade-lane continues to see the highest levels of disruption with multiple blanked sailings and significantly higher rate levels.

Congestion is now a major factor for the ports on the East Coast of the USA, as well as heavy congestion in Northern Europe and Mediterranean.

Rates have increased considerably in March and will continue to do so in the coming months, with the Westbound index reaching an average of $7292 per 40’ container.

Carriers are implementing several service changes in the April and May as well as introducing new services from the Mediterranean to USA, allowing for an increase in capacity.

The Alliance (Hapag Lloyd, ONE, HMM, and YML) have also announced service changes from Northern Europe, whereby they will stop having direct calls to the US West Coast, which will now be serviced via rail from Norfolk.

JAS RESPONSE

The JAS World Ocean Team continues to work diligently with all core partners to meet customer requirements. It is imperative forecasts are provided to our local offices to allocate our space properly. Please consider utilizing our LCL services which will allow to ship at lower costs and alleviate equipment problems.


Contact your closest JAS office for assistance.

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