Dear Valued Customer,

The gradual reopening of countries around the globe continues, with majority of businesses slowly, but surely kicking into gear again. During the last week we have seen volumes starting to flow again in major sourcing countries such as India, Bangladesh, Vietnam and Cambodia and we expect this trend to continue in the weeks to come.

Same is the case for Australia and New Zealand, Germany and the Scandinavian countries where a state of new normal is imminent. Some of the other major economies such as US, UK and France remain more seriously impacted and for the same reason only a very slow and careful opening is anticipated in these countries. On a positive note Italy and Spain continues on the track of recovery, marking that the worst period of the global pandemic has passed.

Ocean freight export from Europe impacted

As carriers continue with blanking of sailings capacity is tightening up, and it is expected that major space issues in the coming weeks is on the menu for shippers around Europe. We encourage a close dialogue on forecasting for the remainder of May and June including prioritization of orders. As a consequence, we also foresee that export rates could increase further during this period, with this coming on top of the increases implemented during March on the export side.

As the overall supply and demand still favors the demand side, we do however expect that export rates will drop again during Q3 returning to the levels seen prior to outbreak of COVID-19. On the import side from Asia to Europe we see a steady and stable development with a downward trend on the demand side, however rate levels remaining stable despite of this.

Below graph on average rate development illustrates clearly that carriers have maintained a very strict pricing discipline during 2020 with levels being on par with 2018 and 2019.

Graph from: Shanghai Shipping Exchange and Clarkson (Freight rate index: CCFI).

As can also be seen from the graph, bunker levels have dropped significantly following the decline in oil prices over the last months. A number of carriers have issued notice of a temporary freeze on bunker levels for the same reason, while others continue to adjust bunker prices accordingly. Overall, we expect that the effect from the drop-in oil prices will trigger a downward adjustment reflecting the lower cost carriers have.

Airfreight commercial capacity slowly returning - perfect storm hits China airports

A picture showing a slow return in commercial bellyhold capacity is emerging as airlines re-activate selected flights, however volatility remains high both in terms of rate and capacity.

Majority of cargo from Asia continues to be moved by freighter operations. This is especially driven by PPE (Personal Protective Equipment) volumes that continue to surge causing chaos like scenes in the major Chinese airports. As an example, the situation in Pudong airport, Shanghai, has been described as the perfect storm triggered by the massive influx of volumes, fueled by new and extensive customs check procedures implemented by the Chinese authorities. Chock and block customs warehouses, and queues with trucks waiting outside Pudong airport for up to 48 hours are some of the current consequences in a situation that many describe as the worst ever.

New solutions on the sea-air side as an example continue to emerge, as well as we see a significant interest in using our courier product as an alternative to pure airfreight, especially for smaller shipments.

Overall, we remain in a position to handle all volumes using an array of different solutions. We overall encourage a close dialogue with our airfreight teams to determine which solution is best for the specific shipment on hand.

The stable choice: Rail freight

Service levels remains steady and reliable on rail freight with a continued increase in volumes fuelled by high price levels on airfreight, as well as a schedule delays on ocean freight due to blanking of sailings.

Rail freight continues to play a more important role in supply chain planning for many companies. We now see volumes on rail freight to Asia from Europe booming. We encourage to have this product in mind for the coming period with the continued expected pressure on ocean freight exports from Europe to Asia.

Road freight is still running

The trucking sector overall runs basis business as usual with only a few sporadic delays. Capacity remains available as well and overall stable price development.

The biggest challenge for road freight in Europe remains cancellations of ferries including:

  • Fjord Line cancelled line Hirtshals-Stavanger-Bergen
  • Stena Line closed the route Oslo-Frederikshavn
  • Stena Line closed the route Trelleborg-Sassnitz
  • DFDS closed Copenhagen-Oslo
  • Color Line Kiel-Oslo has closed down
  • Zeebrugge - Gothenburg ferries are sailing on day-to-day schedule, departing times are updated daily

For further details on specific countries and mode of transport, see our overview here.

All information in this advisory is offered to the best of our knowledge and is prone to change.

Yours sincerely,