Trans-Pacific ocean freight market 'constrained' as peak season looms

10:03pm 12th August 2021




The peak season on the Asia-North America (TPEB) ocean shipping trade lane is set to begin in a “constrained” market which is expected to persist or tighten further as pre-holiday demand increases and heavy congestion hits both coastal ports and inland hubs, according to the latest weekly market update issued yesterday by forwarder Flexport.

As for the outlook on pricing, a GRI will be implemented from 1 August and a PSS (Peak Season Surcharge) is expected  on 1 September.

Flexport underlined that capacity/equipment was at a “critical/severe under capacity” level.

It recommended that shippers “continue to book well in advance (at least 4-6 weeks) prior to CRD for best chance of hitting it while encouraging suppliers to support departures from different origin ports and consider terminating cargo at destination coastal ports to prevent intermodal delays.

Commenting on another major headhaul route, Asia-Europe (FEWB), Flexport noted that the

“space and equipment crunch continues. Market demand exceeds supply as rates skyrocket. The situation is worsened by blank sailings and poor equipment availability. Carriers are overcommitted and are limiting booking acceptance or rolling shipments. Schedule reliability is low.”

The update continued: “Rates remain at a record high level and have a marginal increase on 1 August 1. This is also reflected in the continued increase of the SCFI (Shanghai Container Freight Index.

It highlighted an “extremely critical space situation and a “severe equipment shortage across all Asia origins.”It advised shippers to book at least 4-5 weeks prior CRD, consider the limited premium options and adopt flexibility on equipment.”

Air freight outlook

Turning to air freight and Asia in particular, the Shanghai trans-Pacific eastbound market (TPEB), Flexport said  the market rate “grows a bit partly due to the impact from Typhoon In-Fa. Remaining lanes and other major origins like Hong Kong and Taipei, see market rates at similar levels to last week.

“Market conditions in the rest of Asia vary from country to country and even city to city. Two countries are prime examples. In Vietnam, Hanoi space is tight because of Samsung, while Saigon remains in lockdown. In India, Chennai is in lockdown while Delhi has resumed manufacturing.

Flexport added: “The outlook is for a very strong end to the year as normal airfreight demand will be supplemented with ocean to air conversions. Capacity is almost fully deployed so rates and transit times will continue to increase.”

On ex-Europe routes, volumes remain “steady” Flexport reports. “With the US being fully open, retail commodities are driving the regular volume on the transatlantic. Still, we do see larger projects/stock transfers on the market, stemming from the ongoing ocean port congestion.”

Direct routings to the US hubs are “busy” and with pax capacity now reaching other smaller hubs, road feeder service for the final leg can offer economical solutions when transit times are flexible.”

Into Latin America,, capacity is still more strained than into the US with a higher proportion of freighters than pax capacity.

Flexport also highlighted congestion for imports at Amsterdam Schiphol Airportn in the Netherlands, where handlers are taking longer to breakdown cargo due to staff shortages and higher volume. “Export congestion remains manageable. Other hubs/terminals report high but manageable volumes.”

Flexport continues to advise shippers that “early bookings and flexibility can offer innovative solutions for import/export into EU.”

By Stuart Todd

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