Covid-19 outbreaks, variants, and extreme weather slows recovery
Port closures caused by Covid-19 outbreaks and new variants continue posing the greatest risk to global supply chains. Whilst backlogs caused by Yantian port closures have started to ease (average delays improved from 16 days to 7 MoM) optimism for recovery remains low. Lockdowns in southern Vietnam, a reemergence of Covid-19 cases in Wuhan, and disruptions at Shanghai and Ningbo caused by China’s In-Fa typhoon have exacerbated problems1. Operations are being affected in many ways, with port congestion, schedule delays and equipment shortages amongst the first to be impacted2.
Capacity: upcoming peak season is set to compound disruptions, causing capacity to struggle against rising demand. Blank sailings may continue as a means to manage this3.
Rates: increases peaked close to $18,000 per FEU at the start of July, before retracting to $16,000 at the end of the month. Rates are expected to remain elevated through the peak season to Chinese New Year, 20224.
Air: cargo rates continue becoming more competitive as ocean rates increase
Air vs. ocean: air cargo is currently 3x more expensive than ocean freight, compared with a normal spread of 12x*.
Capacity: following the levelling of available capacity starting last month, cargo remained constrained with a modest increase (+ 0.3% MoM). Demand for space is set to stay high as shippers continue shifting mode from ocean to air, to keep up with inventory demands1. Average waiting times from Hong Kong to Europe are currently 5 days.
Rates: air index rates on the Asia-Europe westbound increased by 5% MoM in July. This can be attributed to the rising demand caused by expensive, unreliable ocean freight, and inventory restocks ahead of the upcoming peak season2. Factory closures caused by Covid-19 outbreaks have further impacted the flow of goods into airports, causing tight constraints that are likely to keep rates elevated throughout the coming months.
H2 2021 > plan ahead before seasonal peaks start
Reconsider mode of shipping: Be flexible where you can, and consider which mode of shipping is best right now. Though ocean is typically less expensive, current market conditions continue making air more competitive.
Plan for seasonal peaks: Review planned buffer times and inventory stock before traditional peak seasons begin (ocean: September/October, air: October/ November). Visibility platforms can help enable prioritisation, spreading shipments, and converting modes.
Book ahead: Expectations are that peaks could start earlier this year, with importers rushing to make sure their holiday inventories arrive in good time. Book ahead where possible, to avoid missing out.
IE Support
This site doesn't support Internet Explorer, so some pages might not look correct and some functionality might not work as expected.
Request a demo
"*" indicates required fields
This website uses cookies to improve your experience. To accept these cookies enable 'Non-Necessary' cookies in the Cookie Settings or click 'Accept’.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checkbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checkbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.