It seems like the only “normal” in today’s global supply chains are surprises and constant disruptions. Europe is battling with increasing energy costs and supply constraints while China faces similar constraints and to make matters worse, a fresh outbreak of Covid in multiple cities will further hamper their manufacturing output.
Volumes have been declining on major trades such as Asia to Europe, but there is at least a positive – it allows ports an opportunity to clear backlogs and reduce port congestion. It will be interesting to observe how carriers react to the shifts in demand. We can expect blank sailings to be implemented as a counter to dwindling demand and reduced vessel utilisation.
Sea freight update
The relatively subdued demand for space for this period of the year is reflecting in the continued freight rate reductions, most notably on the Far East to South Africa trade. This is positive news for importers on the one hand, but we are cognizant that the total landed cost reduction benefit is being negated due to the USD/ZAR exchange rate.
Manufacturing output has also been impacted by reported energy crunches, droughts, and a lack of trucking capacity in countries such as China, Germany and the UK to name a few.
Cities such as Shenzhen, Tianjin, Chengdu and Dalian recently experienced another outbreak of Covid resulting in lockdowns placing pressure on suppliers, trucking operations and terminal operations in some cases.
The UK market faces yet another challenge with the pending strike planned by Liverpool port workers from 19 September to 3 October. This follows the recent strike at Felixstowe port. These port strikes add further pressure to supply chains and shipping line schedules across various trades.
In general, the situation has somewhat improved compared to last year, especially on the Far East trade.
We are also seeing spot capacity open on the Europe trade and a slight improvement on the India trade. Capacity on the South America trade remains very tight with limited carrier options available. North America also remains tight with limited spot capacity available.
We encourage bookings to be made well in advance of the required shipment dates and factor in longer lead times.
Despite the challenging environment, we have, in general, managed to consistently secure space through our extensive global network. With our expanded global network, we have gained access to additional capacity which strengthens our service offering to our clients.
Equipment availability remains relatively stable, though there a few cases of equipment shortages due to the affects of trucking constraints and port congestion.
There has been a slight improvement in general. Port congestion has eased off to some degree at major ports such as Antwerp and Rotterdam which is encouraging as this improves the carriers on-time performance and predictability. Hamburg port is still recovering from the August strikes and vessels have been delayed as a result. The congestion also forced some carriers to omit some EU ports to avoid further delays to their sailing schedules.
Transshipment delays have also eased off to some degree, most notably in Las Palmas. Some carriers are experiencing up to 4 weeks in transshipment delays in Singapore. This has partly been driven by blank sailings on various trades resulting in a lack of capacity to load transshipment cargo in Singapore. Some carriers continue to frequently bypass Cape Town resulting in longer lead times for imports.
Typhoon Hinnamor has forced the temporary closure to the ports of Shanghai, Ningbo and Kwangyang and Busan. Port and vessel operations will be impacted, and we can expect vessel departures to be delayed by a few days.
Rate levels remain at elevated levels when compared to pre-Covid, but they continue to trend downwards from last year’s historical highs. The biggest decreases have been on the Far East trade and this trend has continued into September. We have also seen spot rates from Europe and India start softening. The USA rates remain relatively stable.
SCFI (Shanghai Container Freight Index)
The below graph demonstrates the freight rate movement per TEU ex-China to South Africa
Due to our long-standing strategic relationships throughout our global network, we continue to secure very competitive pricing relative to market.
Air freight update
The market remained stable with relatively few disruptions experienced such as the Lufthansa pilot strike and flight cancellations in Shanghai caused by Typhoon Hinnamor. Challenges with moving hazardous cargo remain.
We have not experienced any significant capacity challenges in securing capacity across the various trades. A few carriers have increased passenger capacity into South Africa ahead of the tourist season which also means potential increase for cargo capacity. We do expect demand to pick up as we approach the Chinese Golden Week and there is likely to be some cargo converted from sea freight to air freight on the back of the production delays experienced in Europe and China.
Our airfreight network enables us to continue offering flexible solutions that meet our clients’ import requirements.
Transit times have been relatively stable with the a few exceptions of cargo being bumped. Total lead times for hazardous cargo are more susceptible to longer lead times and delays. Severe weather conditions are common for this time of the year across areas such as Asia which could impact lead times from time to time and create temporary backlogs of cargo.
We encourage you to provide your required arrival dates in advance for us to offer you optimal routings and rates to meet your requirements.
We have seen some relief in rate levels across most trades. The lower fuel surcharges have partly contributed to the lower rate levels. We can expect increases to come through as we approach the Chinese Golden Week.
With our expanded network we are well positioned to offer a variety of options to meet our clients' airfreight requirements.
Durban port free storage change
Transnet Port Terminals (TPT) will be implementing a change in the free storage rules for Pier 1 and Pier 2 to improve the transport flow of containers and the overall terminal efficiencies. Below is the quoted statement from TPT’s official notification dated 19 August 2022. Free time will be calculated from the time of container discharge instead of from the time when the vessel completes discharge
TPT’s Tariff Book clarifies the storage of containers in the container terminals under item 11 of section 1. On page 13, item 11.1.1 the tariff book prescribes the current application of the free period as follows, “First 3,25 days (78 hours) free, the free period is applied from 00h01 on the day the vessel completes discharge until the container leaves the gate.” With effect from 01 October 2022 the rule will change to the “First 3,25 days (78 hours), the free period being applied from 00h01 on the day following the container being discharged until the container leaves the gate.”
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