The latest news in the logistics industry 06/07/2023
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This newsletter's summary
Figure of the week
-41%
According to the Baltic Airfreight Index (BAI), the average airfreight rate between Hong Kong and Europe has decreased year-on-year. Rates are still slightly higher than they were in 2019.
Outside the Transatlantic, it is time to stabilize the maritime sector
The major maritime indexes, such as the World Container Index and the Shanghai Container Freight Index, confirm stability on the Asia-Europe and Asia-North America axes. Analysis company Platts has stated that the situation is likely to persist for some time. Hapag-Lloyd, the most upbeat company at the moment, maintains that bookings have been “a little stronger in recent weeks” and that prices have “definitely stabilized.” Maersk, for one, has stated that the customary peak season will not occur because of the low demand.
However, according to Hapag-Lloyd CEO Rolf Habben Jensen, the firms' operating costs have risen significantly since the outbreak. As a result, restoring spot rates to pre-pandemic levels “would simply not be sustainable.” They are, nevertheless, perilously near. However, as shipping companies' profits plummet in 2023, they are more interested than ever in ensuring that rates on the major East-West trades do not fall anymore…
New strikes in the United States and Canada disturb Pacific ports
For at least five days, fresh work stoppages have affected container traffic in several major Pacific coast ports in the United States and Canada. Contract talks between the International Longshore and Warehouse Union (ILWU) and port owners, which have been underway for a year, have reached a new high point. The ports of Los Angeles and Long Beach remained closed at the start of the week, although business had resumed in Oakland. In Canada, the ILWU chapter threatened to strike on Monday in the ports of Vancouver and Prince Rupert, the country's first and third-largest container ports, respectively.
Work stoppages along the Pacific coast are unprecedented. Experts warn that if the movement continues, the implications on maritime freight in North America and, by extension, the world might be significant: major congestion and bottlenecks, as well as a delay of flows, notably to the East Coast. Furthermore, “freight rates to the United States may rise quite sharply,” cautions Lars Jensen.
Air freight rates at their lowest for 3 years
A glance at the trajectory of spot air freight prices over the last six months indicates a gradual reduction, characteristic of normalization, but which has recently become a “yo-yo”. According to an air freight specialist at OVRSEA, “rates follow the same 2-3 week cycle”: When confronted with low demand, airlines decrease their rates, causing an influx of commodities, which forces them to raise their prices, causing a contraction in demand.
According to some experts, air freight costs might reach rock bottom in the next two months. The IATA (International Air Transport Association) acknowledges that the flood of capacity associated with the return of passenger flights and summer schedules will continue to pull fares down. According to the Baltic Air Index (BAI), average spot costs between Shanghai and Northern Europe recently plummeted to 2.94 USD/kg, their lowest level in three years. However, they are still 20% higher than in May of this year.
The Transatlantic, like the rest of the ocean, is seeing an increase in freight prices.
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🖐️ Until Next Week
DocShipper Team
Sources
- https://www.drewry.co.uk/supply-chain-advisors/world-container-index-weekly-update/world-container-index-assessed-by-drewry
- https://www.aircargonews.net/data/air-cargo-demand-decline-levels-off-in-april/
- https://theloadstar.com/hapag-lloyd-ceo-stays-bullish-on-prospects-for-peak-season/
- https://theloadstar.com/container-shipping-rates-collapse-is-the-word-says-xeneta/
- https://www.ajot.com/news/worldacd-weekly-air-cargo-trends-week-21
- https://www.joc.com/article/iata-upgrades-global-airline-outlook-recovery-gathers-momentum_20230605.html
- https://www.joc.com/article/slow-demand-rising-capacity-drags-air-cargo-rates-three-year-low_20230602.html
- https://theloadstar.com/alarming-signals-as-air-cargo-capacity-rises-and-rates-fall/
- https://www.aircargonews.net/business/rates-down-again-in-may-as-outlook-weakens/
- https://www.linkedin.com/in/larsjensenvespuccimaritime/recent-activity/all/