As lockdowns in China persists, the ripple effects of them are spreading out like high fever. High fuel prices are dictating the rules forcing the rise in surcharges.
● Ships are queueing and the wait time keeps growing. Moreover, trucking restrictions are pouring fuel on the fire: no cargo from outside the restricted area can enter Shenzhen. Issues regarding staff availability are also growing due to the fact that people have been ordered to work from home. This results in delays in communication and operations. Warehouses and container freight stations will be closed until at least Sunday. Luckily, the latest updates have reported that the Chinese government will partially lift lockdown in the wake of the collective fear of supply chain disruption.
● However, big companies are still concerned and worried that the impact of the measures will be painful. Hapag-Lloyd is closely monitoring Yantian vessels and expects the COVID crisis to significantly damage its operations in the region.
● All these restrictions are taking a toll on spot rates. The uncertainty about how the situation will unfold has resulted in a rate decline. China - Northern Europe rates have dropped by 4% to 5% with an average price of $12,783. North European exporters have their fingers crossed that rates will fall back to their pre-crisis $2 000 per 40ft. Anticipating the decrease in demand, the 2M alliance is planning more void sailings in the coming month.
● Rates for the US west coast down 7%, to $10,154 per 40ft, and to east coast ports falling by 5%, to $12,276. As for transatlantic, rates were stable at an average of $6 626 per 40ft.
● The trucking industry is under the pressure not only in China. The economic pressure including fuel prices sets it for more turbulence in the US. In the UK, smaller hauliers are calling for the government to take measures and enforce a fixed surcharge rate on customers. Their costs for March are destined to climb 35%. The government's help could ease some of the strain on them. UK haulage companies are implementing emergency fuel surcharges of up to 10% to cover escalating fuel costs.
● One of the factors contributing to the growing prices is a conflict in Ukraine. All modes are under pressure. Seaborne trade with Russia has dropped by 58% resulting in empty store shelves. Rail freight from Russia and Belarus has been halted. Re-routed air cargo is influencing traffic between Europe and Asia. Rail companies have started applying energy surcharges as they can no longer cover the costs due to the risen prices.
● Sustainability comes in handy when it is needed to collect additional surcharges. Ports of LA and Long Beach will begin collecting a rate of $10 per TEU on loaded import and export containers hauled by drayage trucks to encourage the changeover to cleaner trucks.
● While the suspension of operations in Russia and Belarus has hit the industry, carries still have found the alternatives to redeploy intra-Europe tonnage to the region with low capacity, transatlantic routes. For example, MSC launched a new weekly service from the Baltic Sea to US east coast ports. Other companies followed suit. The tension also does not prevent ambitious carriers from ordering new vessels and forwarding fixed long-term charters. CMA CGM has ordered four 7,300 teu LNG-powered ships. Hapag-Lloyd, the 5th ranked by capacity, will take over six 13,806 teu neo panamax ships. Expansion in the number of reefer containers is also taking place. ONE will add 6,500 new reefers to meet the demand for containerized reefer trade, which is expected to continue to grow in 2022.
● Alongside ocean carriers, rail freight forwarders are looking for alternative ways for the China-Europe route that has seen a 40% drop in bookings and its frequency reduced. The Silk Road freight train from Vietnam has been suspended. Among the considered destinations in the southern corridors largely through Kazakhstan, Azerbaijan, Georgia, and Turkey via the Caspian Sea, or Romania via the Black Sea. However, they have long transit times which may result in congestion. Mediterranean ports can be an option, for them, the current situation is the opportunity to come into the spotlight.
● The growing barge delays are forcing some of the ports to call for a task force. The one at the Port of Antwerp will work on ensuring better use of the limited quay capacity.
● New service alert: MSC will operate a new direct service connecting the Port of Gothenburg in the Baltic Sea to the US with a shorter transit time.
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