DSV Market update Air & Sea – Jan 2022

Dear all, happy 2022!
Please find attached (link) the latest market update for Air & Sea, consider this one as the January monthly overview.

The key topic at the moment is all the covid “Omicron” outbreaks that are affecting most of the world and disrupting logistics operations. We see a lot of disruption on airfreight and in the main ocean ports of China and US. DSV has reacted to this and we have expanded Airfreight offering additional capacity on the Hong Kong Star with 3 flights per week from Hong Kong – Liege – Hong Kong and a brand new service, “The movie star” From Singapore to Los Angeles with 100 tonnes of capacity and providing direct service from this route (today most of the carriers offer service via China and Hong Kong due to shorter distances to the US).

COVID Update:

The W.H.O. warned that more than half of Europe could be infected with the Omicron variant within six to eight weeks. China declared victory over an outbreak in the city of Xi’an but has left in place most lockdown measures as the country continues its zero-Covid strategy. With officials on edge over the start of the Winter Olympics next month in Beijing, more than 20 million people in at least five cities remained confined to their homes.
China update:

• Covid-19 restriction:
o Tianjin: Community lockdown in place. Efficiency of operations is impacted
o Xi’an: Community lockdown in place. A "Temporary Electronic Pass for Freight Vehicles" has been specially issued for transportation of necessities and medical supplies, and the rest of the activities and transportation will be suspended until further notice
o Re-opening border between Vietnam and China
o Yangtze river: 200 river pilots on the Yangtze River have been quarantined. This has significantly reduced river traffic connecting Shanghai
o Ningbo: Port of Ningbo: Trucking operations slowed last week after health authorities imposed testing requirements on drivers and forced factories to close, most of shipping lines have re-routed to Shanghai port.
• Power curbs: it has low impact on operations at the moment
• Winter Olympics & CNY: 1-20 February, it is still uncertain what the implications of the event.

Ocean ports situation: 11.5% of global vessel capacity is unavailable, terminal congestion in Europe seem to continue worsening and no improvements in Los Angeles We expect an improvement after Chinese new year if there are not further Covid restrictions.

Airfreight: Airfreight rates reached historical highest levels with strong demand and limited capacity. We see that “peak season” is being extender through January.

Tenders: AIR: RFQ's are still discussed on spot or quarterly basis. Our tender management desk is currently working on pricing updates or “mini” tenders from 1 to 3 months validity. OCEAN: Large ocean freight customers are tendering at the moment, it is very challenging at the moment since carriers don’t want to discuss long term rates and are moving more cargo on spot.

• Ocean freight highlights:

• Global container grew +14% (Jan-Oct 2021), China to USA was the biggest trade in terms of containers transported
• Global port congestion, 11.5% of global vessel capacity is unavailable, terminal congestion in Europe seem to continue worsening and no improvements in Los Angeles
• 105 container ships are waiting to dock at California ports, problems are still not solved.
• Imports take ‘dramatically longer’ to reach US as bottlenecks bite, Freightos calculated that it took an average of 80 days in December for trans-Pacific cargo (warehouse to warehouse) this is 27 days more than before.
• MSC and Wan Hai Lines are biggest winners of capacity 2021. MSC has recently overtaken Maersk as the largest shipping line in the world.
• Schedule reliability recorded a marginal improvement, but still no improvement in key trade lanes East and West.
• Container index: Discrepancy between FBX index and SCFI; FBX Baltic index shows real “spot” rates while SCFI shows contract levels, we see that as “high” rates stabilizes both index will follow a similar trend.

• Airfreight highlights;

• Global air trade grew +6.3% in ‘21 vs ‘19, with Transpacific Eastbound making half of the total growth (+562k tonnes)
• International air cargo capacity is -4% lower in Q4 2021 (vs 2019), due to slow recovery of passenger belly capacity
• Asia Pacific and especially China air exports account for the majority of growth in 2021 (+1.1m tonnes vs 2019)
• Air cargo yields reach all-time highs, mainly due to the demand-supply imbalance and increased fuel prices

DSV Market Update Air &Sea January 2022
• 2021 was a very strong year for Automotive (+23%) and Chemicals (+18%) in particular