Air Freight News

] Corona outbreaks and natural disasters add to logistics disruptions as rates keep climbing

Jul 21, 2021

Just as the industry bounces back from Yantian, natural disasters are disrupting inland logistics in Canada and Europe, civil unrest is causing problems in Durban terminals, and new COVID outbreaks are impacting operations in South East Asia.

Existing backlogs of US imports led Union Pacific to suspend West Coast-Chicago service for a week to catch up. And demand just keeps coming, pushing Asia-US West Coast rates up 10% this week and keeping East Coast rates above $10k/FEU, even as carriers announce new substantial surcharges on top of spot prices.

China-US rates:

  • Asia-US West Coast prices (FBX01 Daily) climbed 10% to $6,540/FEU. This rate is 138% higher than the same time last year.
  • Asia-US East Coast prices (FBX03 Daily) increased 2% to $10,567/FEU, and are 215% higher than rates for this week last year.

Analysis

In 2020 and 2021 global logistics just can’t seem to catch a break.

As the industry recovers from the latest crisis in Yantian, fire and floods are disrupting inland logistics in Canada and Europe, civil unrest is affecting terminals in South Africa, and COVID outbreaks in South East Asia are impacting manufacturing and freight in Vietnam and elsewhere. And as with other recent disruptions, with no extra capacity available to address the problems, the effect can get amplified.

In the US, existing backlogs caused by year-long peak volumes continue to be a challenge: Union Pacific Railroad announced a one-week suspension of service from West Coast ports to its inland rail hub in Chicago to allow time to address congestion.

As containers continue to pour in, ocean rates continue to climb. Asia-US West Coast prices climbed 10% this week, while most other lanes stayed stable but extremely elevated, with Asia-North Europe rates, for example, still above $13k/FEU and 666% higher than a year ago.

For months now spot shipments on many lanes will only get moved if substantial premium surcharges are added on top of the spot rate, and it looks like that trend will continue. Hapag-Lloyd, for example, announced a $5k/FEU transpac Value Added Surcharge starting in mid-August, while other carriers are also already formalizing charges like these.

- Judah Levine, Research Lead, FBX Weekly

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