DSV Market update Air & Sea – June 2022

Dear all,

Please find attached the latest market update for Air & Sea.

DSV Market update AS June 15th 2022

Local update

The workers’ committee of Israel Railways announced that they are going to shut down the freight division . As a result heavy traffic jams are expected due to 4000 trucks will have to deliver containers by roads daily.

Global news

Cargo truck driver strike in Korea: A Truck Union strike was rolled out mid night last Monday (Jun 6th) with concerns over soaring fuel price and demand for minimum pay guarantee. The unionized cargo truck drivers on Tuesday (Jun 14th) have decided to end their walkout that caused nationwide logistic disruptions and delays after reaching an agreement with the government over a freight rate system. Primarily the impact applies for OCEAN shipments, it will take 1 to 2 weeks to clear out the backlog. – DSV Korea suggest shippers to consider other options than ocean freight for the time being

Russia/Ukraine war: Central to the new EU sanctions is a prohibition of imports and transfers of Russian crude oil and petroleum products, A ban on the export and transfer of additional advanced technology goods, in particular chemicals, to Russia
Target’s stores inventory miss: The large US retailer, Target confirmed recently that their inventory was up by 43% in the April month as demand for some categories declined faster than expected and supply-chain snarls delayed other goods past their ideal selling window, this is adding pressure to the US retail sector.

China update

China is reverting back to impose restrictions weeks after reopening After the re-opening in Shanghai in June 1st, China is starting to re-impose Covid-19 restrictions just weeks after major easing in key cities,

Latest Shanghai quarantines add more pressure to supply chains: The mass quarantine measures imposed this past weekend in Shanghai (June 10th), including highway closures, severely affected trucks carrying exports bound for the city’s port Trucks loaded with cargoes and containers were unable to enter the Shanghai terminal. In some cases there is no choice but to change the loading ports to Ningbo or other small ports along the Yangtze River.

Global Ocean ports situation: Global port congestion continues to fluctuate around 11% to 13%. Congestion is moving from China into North America and Europe. In North America congestion numbers are leading in the East Coast while in Europe port strikes in Germany and large number of containers at the port are affecting port productivities.

Ocean freight highlights:

Transit time performance, improvements seen in the Los Angeles  and US East Coast ports and worsening in Vancouver and Europe.

• Los Angeles / Long Beach port labour negotiation: The dispute at the docks is part of a continuing debate over the growing use of automation in U.S. industrial facilities,
• Bunker price development: The VLSFO-HSFO spread is going to record levels reaching $471/mt in Singapore. This is adding extra pressure to carriers to install scrubbers in their vessels.

Airfreight highlights:

• Wide-body belly capacity is far from 2019 levels, The future market will depend more on freighters
• Jet fuel price developments – largest levels of the last 7 years, This has a direct impact on airfreight cost and we can expect more volatility with the summer flights schedules
• Despite stagnating growth (at +2%), March 2022 ranked as the third-highest month for air cargo ever, Air trade to/from USA continued to blossom

Yahalomit Barzilay

Senior Director, Import, DSV Israel