Covid-19: Global attention shifts to recovery.
June 5th 2020
Dear Valued Customer,
In recent weeks we have reported how the Covid-19 pandemic has disrupted international supply chains and seen governments implement lockdown measures to try and contain the spread of the virus.
As lockdowns start to ease, governments and organizations across the globe are shifting their attention and discussion to the recovery stage. The supply chain and logistics sector, one of the pillars of economic recovery on a global level, has been kept operational, but challenges remain in aviation, maritime and ground transportation sectors.
For our clients we continue to monitor the rapidly evolving situation and have compiled a brief assessment of notable industry developments.
Air freight rates continue to decline on key routes, with some trade lanes faring better.
The latest TAC Index show rates on the trans-Pacific and China-Europe trades have fallen in the past week, reports Loadstar. The China to the US saw a sharp rate decline, down 22.4% in just one week – ending at $7.12 – driven by a $3.25 drop out of Shanghai. China to Europe fell just under 7%. Statistics from Accenture’s Seabury Consulting show that overall global cargo capacity is 26% down on a year ago. The stark contrast between trade lanes remains, trade lanes to and from Asia fare better than the global average. Eastbound Transpacific capacity grows 4% compared to last year and remains as the only trade lane to show air cargo capacity growth. Europe – Asia capacity declines by only -6%.
Blank sailings set to continue into Q3 peak season.
Container carriers are set to extend capacity reduction programs deeper into the third quarter as part of an ongoing strategy to protect rates and match capacity with demand. THE Alliance of Hapag-Lloyd, Ocean Network Express, Yang Ming, and HMM, and the 2M Alliance of Maersk Line and Mediterranean Shipping Co., this week said 75 sailings will be cancelled through September in a bid to match capacity with weak anticipated volume levels. No announcement has been made by the Ocean Alliance on its network plans for the third quarter, but industry analysts expect members Cosco Shipping/OOCL, CMA CGM/APL, and Evergreen Line to announce a blank sailing program soon reports. THE Alliance will adjust the schedules for July, August and September for the Asia – North Europe trade and July for the remaining trades, in order to match market demand. The details of the blank sailings and network adjustments can be found here.
China-Europe railfreight surges as virus grounds airlines.
The number of freight trains running between China and Europe surged 72% in the first five months of 2020 compared with the same period last year, according to figures from the China Railway Shanghai Group. As of May 31, 16,672 twenty-foot-equivalent unit (TEU) containers have been sent on the route, with 200 trains sent this year, according to the reports from state news agency Xinhua.
Rise in rail shipments a sign of rebound in Canada.
In Canada volumes rose 4% at Canadian National Railway Co. in the last week of May as manufacturing and construction sectors reopened according to Bloomberg. Rail volumes fell sharply during the height of the pandemic as manufacturers cut production amid shutdowns to contain the outbreak. Things started to pivot during the last week of May when lumber shipments rose 20% and automotive volumes climbed 60% from the previous week.
Demand for Asia-Europe road freight services is picking up.
Against a backdrop of steep increases in air freight rates and a squeeze on air freight capacity, has brought increased demand for China-Europe trucking services as a viable alternative to air, sea and rail. Transit times between China and Western Europe average 16 days, compared to current Air freight transit time of 8 days between China and Western Europe airports. Operators are reporting no issues at land borders with customs documentation pre-checked before crossing.
Ports and shipping representatives urge faster digitalisation to cope with a post-Covid ‘new normal’.
Ports and shipping representatives have issued an “urgent call to action” to accelerate the pace of industry digitalisation and for the wide-ranging adoption of secure electronic data exchange, to cope with a post-Covid-19 ‘new normal’ reports Lloyds Loading List.
The grouping of 10 major ports, shipping associations and interest groups highlighted that only 49 of the 174 Member States of the International Maritime Organization (IMO) currently possess functioning Port Community Systems, calling for “wide-ranging adoption of secure electronic data exchange”. In the call to action, the co-signees include priorities ranging from harmonised data standards to the overdue introduction of the electronic bill of lading.
Keeping your supply chains moving
Despite the industry-wide logistics challenges, Trade Link have remained on the frontline since the very beginning of the Covid-19 crisis, keeping critical production lines running and your supply chains moving.
In recent weeks Trade Link moved over 1,000 tonnes of essential PPE supplies, automotive production components and manufacturing parts between Asia, Americas and Europe. The pandemic has further emphasised the importance of close collaboration with our customers, carrier partners as well as within our global agent-partner network.
Trade Link teams across our network continue to monitor the situation on the ground to support our clients to keep critical freight moving and develop strategies for long-term supply chain resilience.
We continue to keep a close watch on the market and remain in constant contact with customers, agents, carriers and partners.
If you have questions on any of the topic raised, please reach out to your Trade Link contact, or send an e-mail to: email@example.com
Thank you for your continued support,