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JAS RESPONSIVENESS

MARKET CONDITIONS

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

AIR

GLOBAL

  • Air cargo capacity decreased 9% in the period between April 19th and May 2nd compared to the same period in 2019.
  • Transatlantic corridor continues to be the most problematic.
  • Belly capacity is stable at minus 54% compared with the same period in 2019. Demand is outpacing capacity in most markets.
  • Airports are still congested. It may take extra time to deliver or retrieve shipments from the airport handling agents.
  • New quarantine regulations for airlines crews are impacting certain areas of the world.
  • China is still imposing restrictions (circuit breaker) to airlines carrying Covid-19 positive passengers with sudden restriction or cancellation of passenger flights to China.
  • Because of problems with the ocean freight market, shippers are converting large lots of ocean freight cargo into air freight, increasing demand for capacity in the spot market.
  • India, Brazil and now Taiwan are imposing new very strict measures to contain the virus which will surely impact passenger flights.
  • US based carriers are repositioning some wide-body aircraft from supporting ghost flights on international routes to domestic routes to support the increase of passenger traffic within the USA.
  • Vaccines are now moving via air freight - change in the approval process of some vaccines have altered the supply chain scenario.

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 has expanded to 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

Ocean Market Update: July 2021

Global

First a bit of good news. The Egyptian Suez Canal Authority and Japanese shipowner, Shoei Kisen Kaisha formalized the compensation agreement in a ceremony ending months-long negotiations after the grounding of the containership, Ever Given.

The Ever Given had been anchored in the Great Bitter Lakes since March 29th, 2021, following seizure by Egyptian authorities. The vessel will now head toward its original next port of call, Rotterdam in the Netherlands. It is expected to arrive by July 22nd.

General average has been declared and customers will have to put up security to receive their cargo. Insurance executives warned at a webinar last week that the Ever Given will likely be the largest general average casualty in history.

Government intervention on rates?

The Biden administration is readying a wide-ranging executive order to strongly encourage maritime regulators to use their enforcement power to crack down on unreasonable shipping costs, and work with the US Department of Justice to investigate anticompetitive behavior.

During a press briefing on July 8th, White House Press Secretary Jen Psaki said the executive order centers on “saving American businesses money on shipping costs,” thus helping US consumers. In noting that container shipping has become more concentrated in recent years, she said “many freight routes are monopolized,” with “three foreign-owned shipping alliances controlling more than 80 percent of the market.” That’s led to higher shipping costs, Psaki said.

“For example, the index price to ship one container has gone up eightfold, and shipping container companies have charged companies massive fees while their goods sit at ports,” she said.

Psaki didn’t elaborate on how the FMC would “work with the Justice Department to investigate and punish anti-competitive conduct.”

Second half 2021 outlook

With sales already outpacing how fast US retailers can get goods into the country, European forwarders are warning of a similar wave of demand building for Asian goods on the Asia-Europe trade-lane. IHS Markit on June 8 upgraded its US GDP outlook from 6.7 percent expansion, to 7.1 percent, and a June 23 reading of the Flash Eurozone PMI® Composite Output Index, a measure of economic activity, rose from 57.1 in May to 59.2, a 180-month or 15-year high.

“We have been in peak season since June/July last year, and it’s never ending,” Narin Phol, regional managing director, Maersk North America, said during a July 1 media briefing.

Things show no signs of calming down in the second half. The traditional peak season looms with importers facing a rising risk of not getting goods on shelves by Christmas.

Record-low US retail inventory levels indicate further signs that shippers still have plenty of ordering left. The latest data for the US Census Bureau show that the seasonally adjusted ratio of sales to inventories was at 1.07 in April, down from 1.67 a year prior.

That means US importers are selling products as fast — or faster — than they are importing them. Amid this rush for freight capacity, which is beginning to envelop European importers of Asian-made goods as well.

And as the second half begins, the Delta variant is sweeping across Asia, meaning there could be even more supply chain disruptions ahead, akin to the Ever Given and Yantian incidents.

Everyone had said that carrier capacity management was a pipe dream but we saw in 2020, at the very start of the pandemic when demand fell, carriers pulled sailings out of the loops. It’s now a tried and tested measure. If carriers understand how to employ void sailings, we will eventually see rates come down but never back down to the levels we saw in 2019.

This is a cyclical industry but shipping lines now finally know how to make massive amounts of money. They will not allow over-capacity to happen again.

Rates

All the experts said spot ocean rates would pull back in the second half. The second half has now begun but there is no indication that spot rates or charter rates will fall materially before next year. Not only are spot rates not falling, but they’re still rising. Much higher H2 spot rates than expected, combined with double-digit gains for contract rates, will equate to liner profits on an unprecedented scale. Carrier alliances can limit future rate downside by canceling sailings, known in the industry as “blanking” or “voiding” sailings.

On Monday, U.K. consultancy Drewry predicted that container shipping lines will post aggregate earnings before interest and taxes (EBIT) of $80 billion this year, and if freight rates surpass expectations in the remainder of the year, it would not be surprising to see an annual profit line in the region of $100 billion.

Spot rates are vastly exceeding any previous records. Trans-Pacific spot rates, including equipment charges and space priority premiums, have risen to between $11,000 and $16,000 per FEU from Asia to the US West Coast and between $11,000 and $20,000 per FEU to the US East Coast.

On the Asia–Europe trade-lane, various spot rate indices are anywhere between $11,000 and $16,000 per FEU, and this is before paying add-ons for equipment and capacity assurance.

BAF

Due to increased demand, there is now a greater demand for fuel. BAF levels are starting to rise and there will be more increases in BAF in the coming months. Q3 BAF levels will be approximately 20% higher than Q2 2021.

Schedule Reliability

Global schedule reliability continues to be extremely poor and deteriorated again in May compared to the past several months, with a poor reliability of only 38.8%. Statistically, Maersk is the most reliable carrier (46.2%) and Evergreen taking over as the carrier showing the poorest schedule integrity of 25.5%.

None of the top 14 carriers recorded a Y/Y improvement in schedule reliability, with all carriers recording double-digit declines of over 33 percentage points. Evergreen recorded the largest Y/Y decline of a staggering 52 percentage points.

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

The global average delay for LATE vessel arrivals also increased as well and is now at 5.86 days.

Congestion continues to be a major factor at many ports globally, including ports in the USA, Canada, South Korea, China, Singapore, Northern Europe, and the United Kingdom.  Congestion challenges will continue for months to come due in part to the increased volumes.

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

Yantian Port

The situation at the port of Yantian continues to improve with all terminals now working.

Yard density continues to improve and carriers are re-implementing their original pro-forma schedules.

Expect another week or so for processes to be returned to ‘normal’.

By trade-lane:

Asia to Med / North Europe  

The cargo volumes from Asia to the Mediterranean and North Europe grew 10% and 22% respectively.

Huge market demand, paired with blank sailings, had led the spot rates on this trade-lane to reach new heights, smashing all previous record highs. The average spot rate from Shanghai to Rotterdam and Felixstowe have reached US$12,000 to $14,000 per 40’ box in June and higher. Despite paying premium prices, many shippers find it challenging to find slots on vessels as cargo is being rolled. Do not be surprised to see spot rates in excess of US$20,000 per 40’ in the coming months, driven by the upcoming peak season.

We are seeing that many shippers are cancelling their orders from China, as shipping rates reach unsustainable highs. Near sourcing and switches in production are being considered by many shippers.

Carriers will continue to implement “structural” blank sailings on the Asia-Europe trade-lane and skip ports at least until late June as they struggle to get ships back on schedule.

Asia to Middle East

In order to manage capacity, carriers on this trade-lane slashed approximately 10% of the deployed capacity by cancelling 13 sailings in the dedicated loops in June. This blanked sailing program increased utilization to approx. 70%, up from 50% in previous months.

Due to this control in capacity, expect rates to increase in July and August.

Asia to Oceania  

The ongoing labor dispute in Sydney continues to hamper congestion-recovery plans, hence expect spot rates to continue to increase in July.

Asia to NORAM

Although some carriers are implementing extra loaders, and a new service starting in July will provide some additional capacity, the Transpacific container shipping system is sagging under a seemingly unending deluge of imports from Asia into North America. Blank sailings/schedule recovery programs taken by the carrier continue in Q3 2021 as carriers struggle to get vessels back into proper rotation, leading to reductions in capacity. FAK rate levels continue to rise and importers are often shelling out more than double the posted rates to secure ship and container equipment capacity.

Marine terminals at the Los Angeles and Long Beach port complex do not expect the congestion that has been building since last summer to clear until this summer, while other major ports grapple with the surge that has slowed but not stopped operations. Container lines and marine terminals continue to battle vessel delays and congestion, and this looks set to continue for the foreseeable future as orders remain strong through Q3 2021 to both the East and West coasts of the USA.

There is still massive port congestion on the US West Coast, with Oakland joining the list of ports that have numerous vessels at anchor. There is now congestion on the East Coast, with Savannah being severely affected with vessels at anchor for up to 9 days before getting a berth. 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 June, so the booking window is 6 weeks in advance..

NORAM to Asia  

Cargo volumes from the West Coast of North America decreased by 6% compared to the first four months of 2020. General trade tensions created by previous administrations and China’s strict environmental policy on scrap material from the U.S.

However, that being said, equipment shortages continue as carriers are prioritizing the empty repositioning of containers over full export loads.  

Schedule integrity remains poor due to port congestion and omitted sailings. The hinterland network continues to feel the strain with the rail having a major impact to services across North America.  

Rates in July will increase due to the tight capacity and equipment restrictions.

Asia to Latin America, including Mexico

Most carriers report to be “full with rollovers” in July as volumes to both the ECSA and WCSA remain very strong. Expect the situation to continue for the foreseeable future.

Rates continue to be very high and increasing and equipment release critical. Spot rates are now above US$10,000 per 40’ to both East and West Coasts of Latin America.

A 4-6 week booking window is a must. 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.

After several weeks of disruption, fortunately the situation in Buenaventura, Colombia is improving, and cargo is once again being accepted to this port. There may be some residual delays.

Intra-Asia

Equipment continues to be a major issue; carriers are prioritizing containers for revenue earning long haul legs. Expect rates to increase slightly on Intra-Asia lanes due to the strong demand, as well as congestion at Chinese ports, leading carriers to omit ports-of-call to improve the schedule reliability

The services themselves are not changing dramatically. There have been a couple of vessels shifted to create more capacity on mid-haul trade-lanes but no significant impact. Congestion at major ports or trans-shipment points such as Singapore and Hong Kong are worsening. Connections to mother vessels from Intra-Asia feeders is becoming harder to commit to.

Europe to Asia

Equipment is still in short supply but slowly improving. Many carriers are choosing to decline laden shipments in favor of moving containers empty back to Asia. Space is tight, but not critical. However, pre-booking is essential for securing the needed capacity. Delays on all routes as all vessels are arriving with significant delays and facing further challenges at already congested ports. Rates are starting to increase marginally and the trend is expected to continue in the coming weeks due to equipment and schedule challenges. Volumes from Northern Europe to Asia increased 2% over prior year, whilst volumes from the Med increased by 9%.

Europe / Med to NORAM

The situation from the Med and North Europe to North America remains critical. Volumes continue to surge in this trade-lane leading to 100% vessel utilization and heavy rollings. Substantial rate increases have been implemented in recent weeks and more to follow in the coming weeks.

All carriers are full through the entire month of July and there are still a number of blank sailing programs continuing into the summer as carriers try to adjust for vessel delays caused by port congestion. The alliances are omitting ports in North America, creating delays and multiple schedule changes.

Trans-Atlantic container carriers, encouraged by sustained US demand through the second quarter, are warning of hefty peak season surcharges and rate increases. In June, the Transatlantic rate index increased by 13% to US$4,931 / 40’ and more increases were announced in July and through Q3 2021.

JAS RESPONSE

The JAS World Ocean Team is working 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 by clicking the "Contact Us" button below for assistance.


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