Recommended Actions

• Planning and forecasting volumes have never been more important than it is now. Both to avoid overages and to secure the appropriate level of carrier capacity.
• Your regional logistics teams are working on Block Space Agreement (BSA’s) with our carrier partners to secure capacity to reduce costs on air and ocean lanes. Please reach out to inquire about specific lanes to your regional logistics team. Some of these options may require a change in your normal operational processes.
• Continue to review calculated lead times to confirm it includes the most up-to-date transit times for your specific trade lane.

AIR FREIGHT UPDATE

Air Freight - Asia

The market remains much the same as previous weeks, seeing strong demand from North Asia for the month/year-end rush, with no extra capacity available in the market for demand surges. Despite PAX charter/freighters inject back to the market after China International Import Expo (CIIE), there is still a significant amount of total market capacity shortages ahead with about 35% of total market capacity being trimmed still week.

Charters resources are extremely limited. In order to meet market demand,  although some airlines are converting commercial flights to charter, both BR and CI have been canceling scheduled flights due to such charter activity. Additionally, China Airlines is experiencing several Freighter AOG as well, which has disrupted their scheduled operations.

Outbound from Asia remains still strong due to ongoing disruptions in Ocean freight, whilst PAX capacity is still not at pre-COVID levels (at best 40%),  with the expectation of further capacity reductions and flight schedule changes. This will most likely not improve and capacity will remain tight until the end of the year. The market is going into a super peak with rates across Asia at unseen levels.  and this trend will continue as carriers are also facing crew rotation problems and need to cancel flights emanating from CN's zero-tolerance on COVID cases policy,  implementing stringent measures for handling/sanitizing/and crew exchanges resulting in severe impacts on the inbound to CN capacity. HKG, CAN CGO, and SXZ airports are mostly used as alternate airports to fly PVG volumes

These erratic lockdown measures and COVID-related restrictions in China and in Southeast Asia have led to rates going up and down on the spot markets in an unprecedented way. Terminal backlogs are also evident across all key hubs. These market dynamics are putting pressure on rate levels and stretching transit times, both for the Q4 ‘super peak’ period and into 2022. The outlook of this current super peak season is expected to last until Chinese New Year at the end of January 2022

The latest news is that Civil Aviation Administration China (CAAC) plans to put a limit on PAX Charter from January 1, 2022. This new regulation requests China-based carriers to resume cabin seats. With such, there are around 1200T/week for long haul and 800T/week for short-haul cargo capacity would be removed from the market once this regulation gets implemented.

China – PVG Airport PACTL terminal and ramp service providers are still constrained by manpower

issues. The 14 x 7 x 7 government regulation is still applicable and hence the manpower shortage still continuous. Capacity has improved after the CIIE event in Shanghai, as more charters are being approved from multiple origins. however, it is still difficult to book for large consignments, especially volumetric cargo.

Overall market capacity in SHA has not recovered fully since the second COVID outbreak in September.

Status of Flights at PVG

 

HKG –Heavy backlog with no near-term outlook of improvement. Also, as we are entering into the Christmas season, there is increasing demand.  Together with the ocean shifting to air orders, the market congestion is envisaged to continue in the coming weeks. There is a huge tonnage forecast in late November and early December,  resulting in a long queue under the current backlog situation. Transit times cannot be guaranteed and market costs stay at a high level.  Also, there is increasing demand for FLASH or Priority service, when space becomes constrained.

The airport terminal and CFS warehouse are almost fully utilized, and a long queue for cargo hand-over remains. Additionally, due to new COVID cases that are traced back to some aircrew, HK is mulling more restrictive measures. Limitations and/or cutbacks in December 2021 on flight frequencies are progressively being implemented as a result. 

Breaking news: HKG Government has announced effective December 2 and 3, 2021 to add 12 countries to the Group A (High-risk) list.  Under the exemption, pilots and crews are required to quarantine for 3 days upon returning to HKG (if no exemption, they would have to quarantine for 21 days after serving Group A countries). Since more countries were added to the list, it adds even more pressure on the current crew rotation. While airlines are trying their best to maintain as many flights as they can, these new additions will possibly force them to announce more cancellations in the coming days. 

Hong Kong authorities are also demanding airlines to use separate crews for mainland China flights as the COVID-19 Omicron variant prompts tough new safety measures. The decision to separate China aircrew from those working international routes was made in light of the emerging Omicron variant, sources said, as officials weighed even tougher rules and fewer exemptions for flight personnel. The new measures, which come as Hong Kong rushes to meet Beijing’s requirements for reopening the mainland border, will add yet more cost and operational complexity, and constraints to the market. 

Overall exports from China/Hong Kong remain tight and rates have increased. Rates are anticipated to remain at high levels through December if there are no improvements to capacity and terminal rules continue to be strict. Exports from JP, KR; BKK, and South Asia remain similar to the previous week. Most airlines can only accept small shipments.

South Asia - Capacity remains scarce due to the heavy reliance on PAX networks. There are flight cancellations and/or reductions due to travel restrictions imposed on travel to/from India, North and South Asia.  Although several countries have announced vaccinated travel lanes (VTL), capacity is still constrained. In addition, intra-Asia competes with long-haul demand which relies on the same first leg capacity. Intra-Asia capacity is still in shortage as new waves of  COVID cases have led to flight cancellations and weakened air travel prospects. Vietnam’s exports have bounced back quickly after months of lockdown, boosting freight rates and leaving forwarders fighting for space. Big demand for airfreight ex-Vietnam and planes are fully booked weeks in advance. Rates remain high and are expected to stay at that level until after TET (Chinese New Year). Charter costs ex VN are now exceeding $2 million. Demand from North China to Europe was “increasing rapidly”, due to high demand for PPE, which has pushed up freight rates. Oversized shipments have less priority for ground handling agents\airlines and shippers are struggling with booking, experiencing constant rescheduling and cancellations of any odd-sized shipments. Rates are skyrocketing for shipping such cargo with very limited and expensive options available on the market, so equipment shipments are a real challenge nowadays from both cost and transit time perspectives.

India Subcontinent - Demand is steady, and capacity is limited as the market rely on historical PAX market/belly freight. There are still flight cancellations and/or reductions due to travel restrictions imposed on travel to/from India.

UAE - A huge backlog to all major European and US destinations is seen in UAE,  due to sudden demand and the inflow of volume of transit cargo into Dubai.

Air Freight - Americas 

• See Asia Air updates
• US air import terminals remain congested
  • Airport terminal operations remain a challenge across the US, though the extreme delays experienced during the summer months have eased to some degree
  • We have seen gradual improvements on the labor front, but airport terminals remain understaffed
• North America southbound capacity to South America still tight, but demand has eased slightly and pockets of capacity have freed up in recent weeks
  • Freighter operators already utilizing their full fleets
  • Limited additional passenger flights entering the market as COVID restrictions remain in place
  • Spot market rates remain high

 

Air Freight - Europe

Still very heavy strain on AMS and FRA ground handling terminals. No notable improvement at FRA for import cargo. In AMS some progress in clearing of a backlog has been reported. Meanwhile, there are also reports of ULD-pallet shortages as containers get tied up in the system.

 

COURIER UPDATES

DHLE updates WK#48:  The temporary weight limitation for all outbound shipments from CN & HK; with a maximum of 300 kgs per customer per day pick up remains in place till December 12, 2021 (subject to be updated again thereafter). 

DHL Express has added more than 2,000 tons to its weekly airfreight capacity to cater to the rising demand for express shipments within Asia and between the Asia-Pacific and the US.

The express operator will serve the route between Hong Kong and Bangkok six times each week and add 200 tons of capacity on the route using a B737-400SF operated by K-Mile Asia. Meanwhile, 

Air Hong Kong has added a sixth flight rotation to the two existing routes powered by the airline’s A300-600: Beijing-Hong Kong-Beijing and Hong Kong-Cebu-Manila-Hong Kong. This will offer 1,200 tons payload each week. 

For intercontinental shipments, DHL Express will draft AeroLogic’s B777F jet to fly six times a week to connect the hubs in Hong Kong and Cincinnati in the US. This will add another 610 tons of weekly capacity on this route.

All in all, the company has added over 2,000 tons of capacity in total for the mentioned routes each week.

Road Freight - Asia

All channels and networks are operating.

Road Freight - Europe

No change since the last update

Road Freight - Americas

There is still a large truck driver retention issue within the industry which is causing backlogs and delayed pickup as well as pushing truckload rates up in the US and Mexico markets. The whole Americas region is still experiencing equipment issues and a shortage of Chassis to pull containers from the Ocean/Rail ports.

In Mexico we are seeing proposed increases of 8-10% on Truckload and LTL rates.
 

OCEAN UPDATE

Ocean - Asia

North Asia - Space and equipment continue to be a challenge due to increased demand. Bookings are 6 to 8 weeks out as an example on North Asia to North America lane.

South Asia - All trades Equipment availability continues to be a concern in South Asia, in addition to the congestion in main transshipment hubs. Space remains tight.

Intra-Asia- Port congestion are occurring at most Asian ports, advanced booking of a minimum of  3 to 4 weeks ahead is critical. Rates have been under extreme pressure going up due to the shortage of space/equipment and port congestion. Schedule reliability has reached an all-time record low.  The global cascading effect of port congestion is heavily impacting the intra-Asia trade lanes, with large amounts of cargo stuck at trans-shipment hubs in southeast Asia ports. It is not a port productivity problem, rather,  feeder vessels are discharging cargo at the main transshipment ports with no mainline connecting vessels coming in on time to load the containers onwards

India Sub-Continent - Imports remain strong out of all major ports, and constraints in capacity remain as well as shortages of equipment especially 40’HC containers. The supply of space continues to be very tight. All Trade lanes equipment constraints remain

Both Middle East & ISC rates are seeing an increase. Routes relying on T/S via Singapore/Port Kelang continue to face serious capacity constraints as recently many vessels are also skipping calls, causing a backlog and dwell time averaging between 2 to 3 weeks. Some carriers like COSCO have temporarily suspended accepting new bookings to clear the backlog in Singapore. Equipment shortages remain across most locations especially 40’HC, which most carriers prioritize for long-haul trades. Encourage to use more 20’GP where possible. 

Overall the market is expected to remain full and rolling at least till CNY 2022, while the space situation is expected to seriously intensify by mid-December onwards till the end of January 2022.  Singapore and other Southeast Asia hubs are reporting extreme congestion, with large amounts of cargo stuck at transshipment hubs. Feeders and mainline vessels are discharging cargo with no mainline connecting vessels coming in on time to load the containers. Since carriers are extremely full, strongly recommend pre-booking 3 to 4 weeks in advance. Equipment is still having a huge impact on the overall availability of equipment in Asia. It is expected for 40HQ/ST/NOR to remain scarce.

Ocean - Europe

Strong liftings on Europe to Americas to continue, the Transatlantic (ex: North Europe to North America) suffers from a 10,000 TEU roll pool in Europe. Capacity/Equipment Capacity remains tight for both North Europe and Mediterranean services. Better equipment availability at port; shortages remain at inland depots.

There is available capacity on the TAEB trade from the US East and Gulf Coasts. US West Coast service to Europe is extremely tight due to void sailings caused by systematic delays.

Please place bookings 3 to 4 weeks in advance for East Coast/Gulf sailings and 6 weeks for Pacific Coast sailings.

Exports to Australia and New Zealand: prebooking of 2-3 weeks is required

European ports: due to some rail disruption and strong wind around Koper, some congestion has built up in the port of Koper. It has an impact on both in and outbound flow.

Ocean - Americas

Congestion in the US continues, some examples:

• LAX/LGB: 57+ ships at anchor or in drift area // Average dwell to berth 18-22 days. Chassis shortage port wide, terminals are congested at 80-90+% utilization.
• SEA :  8-10 ships at anchor // Avg. dwell to berth 12+ days. Major Gridlock in the terminals
• VCR:  6 vessels anchored due to congestion at the port as last week landslides & flooding in BC have slowed movement of cargo.  CN/CP closed operations & will start again on 11/24.
• SAV: 15+ vessels at anchor on average // Average dwell to berth 5-8 days.   The Port Authority of GA is looking to set up off-dock CYs via rail to ease congestion at the port.
• Hapag has announced that the Indamex service will be omitting the port of Savannah for several vessels in a row, due to chronic port congestion from week 42 through to week 47.
• Due to the upcoming traditional peak season, carriers have announced rate increases in December 2021 and Jan 2022 covering all Central America and Caribbean ports.
• Ports of Long Beach and Los Angeles postpone “super demurrage fee”. 
• Port of Vancouver: Vessel delays, increased yard congestion, and heightened anchorage demand are expected to continue. Full recovery is expected to take a couple of weeks.

 
RAIL UPDATE

Rail Freight - Europe

Rail from Asia into Europe has stabilized, rates have decreased for the month of December.

Congestion at origin and at the Poland-Belarus border has softened, delays are still happening, but not as extreme. Pre-booking is required.

Rail Freight - Americas

• BNSF has canceled Long Beach Rail Services from Chicago, Cincinnati, Columbus, Detroit, Louisville, and Minneapolis origins. It continues into November.
• The industry is still experiencing equipment shortages and delays in transit times. This is causing rail rates to increase.

Please do not hesitate to contact us directly with any questions, (ruth_maciver@jabil.com, jeannie_carpenter@jabil.com, francis_loh@jabil.com). 

Ruth Maciver, Director European Logistics 

Jeannie Carpenter, Director Americas Logistics 

Francis Loh, Director Asia Logistics