Week 2 Freight Updates

From early trans-Pac contract negotiations, to container-ship order spikes, to a rise in 2021 shipping rates, to a decline in 2021 airfreight rates, to the transition toward LCL services … we’re covering all of the latest headlines for you in this week’s international freight updates. Short on time? Check out our summary of the shipping industry’s top stories.

Also, please be aware that exceptional circumstances continue to persist at the Ports of LA/Long Beach.

The following updates were provided to Kesco by a major carrier in regards to the situation, as well as advanced notice of the anticipated impact due to the Chinese New Year:

There are 30-40 ships at berths or awaiting unloading at LA/LB.
In order to get the necessary labor to complete vessel operations last week, wait times lasted up to 10 full days.
Ships waiting this long in port likely cannot get back to Asia in time for CNY which will result in blank sailings.
What would normally be a pre-CNY departure will not be a post-CNY departure for many carriers/alliances for ships arriving in SoCal this week.
Equipment shortages and congestion exacerbating empty returns throughout many ports still present major issues for a lot of carriers.

More US importers signing trans-Pac contracts earlier

More US importers are signing trans-Pacific contracts earlier than usual to guarantee space both in the short term and over the next 12 to 16 months, carriers, forwarders, and analysts tell JOC.com. Signing some “early bird” contracts in January, rather than in April or May when most annual contracts are finalized, is not a new phenomenon in the eastbound trans-Pacific.

Don’t expect rate relief from container-ship order spike

In virtually any ocean shipping market, a big jump in newbuilding orders is a headwind for future freight rates. More capacity spread among competing owners strengthens the negotiating hand of cargo shippers. According to Alphaliner, container-ship orders spiked in Q4 2020. Orders totaled to 673,500 twenty-foot equivalent units (TEUs), the highest quarterly tally since Q3 2015.

2021 Rate Outlook: Higher rates dead ahead

In its latest “World Flash” intelligence report, IHS Markit economists note that as the dreaded second and third waves of COVID-19 arrived in late 2020, they crushed any illusion that the world could quickly and easily control the spread of the virus. The resurgence was especially pronounced in Europe and parts of the United States, where “pandemic fatigue” has become a formidable challenge for governments.

Airfreight rates start 2021 on a decline following mediocre peak

Airfreight volume fell 5% YoY in December, but demand did see its first sign of YoY growth in weekly figures. Freight was up 8% YoY between Dec. 21 and Jan. 3, according to the latest data from Clive.
Airfreight capacity was down 21% YoY in December, despite experiencing a 2% increase from November.

Covid, costly airfreight and box shortages pushing forwarders to LCL options

Sky-high airfreight rates and the global container shortage are driving demand for less-than-container load (LCL) shipping services. Jan Philipp Harnisch, global COO and Far East Asia CEO at Rhenus Logistics, says the Covid-crisis has also accelerated some logistics trends, including the need for more flexible shipping options.

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