Ocean & Air market insights – December 2021

Ocean: capacity remains tight as port congestion and equipment shortages persist globally

• Following on from last month, delays and port congestion have continued to impact schedule reliability and capacity, though demand and freight rates have finally stabilised. Maersk AE7 and MSC Condor services are both omitting Felixstowe, UK until late Q1 2022. Though, in a bit of bright news, congestion at multiple major Chinese ports has dropped to 3-5 days (-2 days MoM) as carriers continue adjusting services to improve schedule reliability¹.
• Overall capacity remains constricted, with 12%-15% of global volumes removed due to widespread delays (with global vessel delays up 52% in Sept 21 YoY)². Space is expected to remain tight through to Chinese New Year (1st February, 2022).
• Rates have continued to soften in November with a -0.5%MoM change, bringing them to an average of $17,338 per FEU in November. This may be attributed to production delays due to power cuts in China, and reduced demand as the holidays grow near.  However, due to the uncertainty of continued supply chain disruptions we expect freight rates may rise again before Chinese New Year (1st February 2022)³.

Source: Xeneta. Rate trends do not include additional surcharges applied by carriers to guarantee space.
To guarantee space and equipment, carriers are applying additional surcharges up to $1,500-$2,500 per container.

1. Maersk, Far east asia to north europe AE7 service,  link
   2. Sea Intelligence, Schedule reliability, link
   3. Lloyds Loading List, Strong ocean demand to continue, link

Air: rising demand, congestion and labour shortages continue restricting capacity  

• Q4 2021 continues to present one of the highest peaks the industry has seen, with global air cargo volumes (based on cargo tonne kilometres, CTK) up by  9.4% YoY for Oct¹.
• Capacity: despite hopes for additional air-freight capacity being added after the holiday peak, new restrictions and quarantine measures brought about by the Omicron Covid-19 variant may result in cargo reductions worldwide². Compounding this, import congestion at London Heathrow is expected from Dec-Jan based on previous years (3-4 day delays in Dec 2020). Furthermore, driver shortages could add to these delays.
• Rates: diverging passenger traffic and cargo volumes continue to impact air rates, which increased almost 18% MoM in November (Asia-Europe). As we enter into the final weeks of peak season, we expect rates to increase into 2022³.

1. Source: IATA. % change vs same month in 2019 (pre-Covid).
2. Loadstar, Congestion and Heathrow, link
   3. Loadstar, Air cargo under pressure: rising demand, link

H2 2021 > keep pushing on last shipments in the run up to Chinese New Year

• Keep pressure on and plan early. With Chinese New Year falling earlier this year, hauliers may be harder to source in the second half of January. Improve your chances and mitigate against delays with early bookings. We recommend that routes which require trucking in China are planned with at least seven days buffer time.
• Monitor suppliers. Though power outages in China seem to be coming to a close, we advise keeping contact with local vendors and partners, as they will have the latest on electricity distribution plans, and so will be best placed to manage supply disruptions early on.
• Visibility platform. With a digitally connected supply chain, it’s easier to make informed decisions about prioritising goods and spreading shipments. A new start in 2022 and upcoming product launches could provide the perfect opportunity to review supplier performance and other historic shipment data to better plan ahead.

‍