DSV Market update Air & Sea – May 2022

Dear all,

Please find attached the latest market update for Air & Sea, including to this update and due to the current Air, Ocean and Rail disruptions caused by the Covid in China and the war of Ukraine-Russia

MAY 2022 – DSV Market Update

The key topics:

China update

As Covid cases continue to decline to most recently below 1,000 cases a day, the authorities are preparing for a gradual reopening of the city. From a business perspective, nearly two-thirds of key foreign trade enterprises have or will receive approval to resume operations over the coming days. The government targets a “return to normal” for the 23rd of June

A high degree of uncertainty The lockdown situation in China in general and Shanghai in particular continue to create problems in the supply chains, not just for transportation but also for manufacturing, with the reopening we can expect an increase of ocean and airfreight rates which will affect any contract discussions or negotiations.

Trucking and CFS (terminals) services for exports and imports remain inefficient, the throughput of cargo is very slow

Shanghai Pudong International Airport handled more than 500 cargo flights during the Labor Day holiday, a month-on-month increase of 20%.The situation at Shanghai airport is slowly improving .

General Ocean freight highlights:

• Global Ocean ports situation: Global port congestion continues to fluctuate around 12% to 13%. China is now taking the lead of port congestion over North America. We see now a shift of volumes from Asia to US East Coast, while the volumes from Asia to US West Coast are going down.
• North Asian congestion currently accounts for 34% of congestion globally, overtaking North America.
• Contract negotiations are underway for workers at the Port of Los Angeles and the Port of Long Beach
• Schedule reliability was up at 35,9% and 7 days of delay (small improvement).

  General Airfreight highlights:

• After China lockdowns we expect increases, due to a recovery in the demand
• Capacity: Passenger airlines adding frequencies and services to accommodate the holiday travel and relaxation of global Covid travel restrictions
• Jet Fuel prices continue to climb; Western European refiners are unable to fill the gap in supply to US East coast airports due to their own constraints
• Concerns about inflation might drive down consumer demand in the near future, however we see also a lot of supply chain bottle necks where Airfreight will be needed (ocean to airfreight conversions)

Yahalomit Barzilay
Senior Director, Import

DSV Israel