Global Update May 28, 2021

Overview

That old industry adage about how 90% of the world’s goods move by ship is due for a revision with updated passenger destinations for the summer and stagnant sea freight conditions. With new long-haul flights poised to uplift pax-belly capacity in the Americas, Europe, and the Middle East starting next month, the endemic staff shortages and terminal congestion almost seem bearable. The Asia-Pacific market slows once again on the discovery of new Covid-19 outbreaks, with enforced lockdowns curtailing production output and regional demand in some sectors.

Chartered vessel rates are expected to increase through second quarter on high demand by agricultural shippers—the result of work stoppages and protests in parts of Latin America. The containerized market will also see blanked sailings in the coming weeks for transpacific Westbound services as the ports of Singapore and Shanghai grapple with cascading vessel delays. European ports are braced for a few more weeks of post-Suez congestion, but recent news of Hapag Lloyd’s purchase of 60,000 TEU containers—and scheduled delivery in July—will assuage shippers of a summer meltdown.

Microchips are still in shortage—retail and automotive the most affected industries with more production closures announced this week, while fabricator attempts to secure more raw materials and manufacturing capacity in East Asia will not bear fruit until late-2021, say industry analysts. Under pressure to maintain production schedules, Taiwan’s lockdown extension to mid-June was expected drum up global anxiety despite announcements by fabricator giants that operations have not been affected.

By Country

Bangladesh

The Port of Chittagong suspended operations for the last work shift ahead of Eid al-Fitr—between 8 AM and 4 PM local time—rather than the customary four shifts in previous years due to severe vessel and cargo congestion in prior weeks. On word of travel suspensions by the UAE, Kuwait, and Thailand, the government has also banned domestic travel and extended its country-wide lockdown, which would have ended on May 16.

Brazil

An impending port strike was delayed after a union meeting on May 11 following concerns of unclear vaccination timelines for port workers, which have been categorized as a priority group. Union representatives stated that the work stoppage may occur if port workers are not vaccinated by June 1—cargo operations may as many of Brazil’s marine terminals are privately owned and operated.

Cambodia

With the country-wide lockdown eased on May 5, customs officials at air and sea freight terminals are playing catch-up to clear current backlogs; domestic trucking sees little hindrance apart from a few restricted zones still dealing with local outbreaks

China

Regional carrier Sichuan Airlines resumed cargo services to India on May 12. Over the past week, the Civil Aviation Authority of China cancelled over 400 inbound flights due to coronavirus concerns, impacting not only passenger and cargo services but also raw materials essential to vaccine production. Long-haul ocean freight services to the US East Coast have reportedly witnessed increasing premium service surcharges—circumventing the warning issued by Chinese regulators last October for carriers to control rising Freight-All-Kinds (FAK) rates.

EU Region

Carrier Lufthansa establishes a temporary cargo hub in Dubai
to route weekly flights between Europe and India—scheduled
services will be extended due to the layovers, which were
implemented for crew safety. Air carriers of the Middle East are
also increasing humanitarian efforts: Dubai-based airline Emirates
Cargo will transport medical aid to India on behalf of nongovernment organizations for free, as will Bahrain’s flag carrier
Gulf Air. Turkish Airlines re-opens passenger flight services to
Bangkok, Kuala Lumpur, Jakarta, and Singapore, increasing belly
capacity for Europe-Far East routes.

Hong Kong

Nine destinations submitted by Hong Kong Air Cargo received
approval from the region’s aviation regulatory body on May
9: scheduled routes for Chennai, Tokyo, Manila, Jakarta, Delhi,
Sydney, Melbourne, Liege, and Milan were greenlit by the Air
Transport Licensing Authority to start in December. While
container equipment at the Port of Hong Kong remains available
for exporters, downstream capacity from Shenzhen will be carrierdependent, according to local WWCB sources.

India

Several ports including Nhava Sheva and Mundra are hard-hit with reduced labor capacity and container imports, raising cargo congestion while individual restrictions across 28 states and eight administrative regions hamper domestic transit. Vessels are not only facing difficulty at Indian ports, though; some port authorities in Southeast Asia, Africa, and Middle Eastern countries are barring
crew changes for ships that have recently traveled to India. In the
wake of dropping passenger rates, the country’s airlines have
asked state governments and the Ministry of Civil Aviation to waive
traveler requirements for negative RT-PCR tests.

Indonesia

Outbound services to US and some intra-Asia destinations continue to suffer from backlogs and operational congestion, delaying newly scheduled shipments by up to three days from original departure date. Local WWCB sources report no changes in port conditions from the previous week

Korea

With current transpacific East Bound capacity nearly booked for the latter-half of May, WWCB local sources are attempting to expand space allocations for the following month but report no changes to port conditions from the previous weeks. Any available air freight capacity has reportedly been allotted to e-commerce shipments originating from China.

Malaysia

As a new Movement Control Order has been imposed on the country, WWCB local sources project that air freight operations will be adversely affected by staffing restrictions. No changes have been reported to sea port conditions from the previous week.

Mexico

On May 9, Aeromexico launched direct cargo flights from Wuhan to Mexico City. A government project to modernize the 300 km land corridor between Veracruz and Oaxaca will be controlled by the Mexican Navy upon completion in 2022; until then, some traffic congestion is projected, which may affect trucking operations.

 

Sri Lanka

Local WWCB sources report no changes to port conditions from the previous week, although marine terminals are currently operating with a limited workforce due to coronavirus restrictions.

Singapore

The discovery of new coronavirus cases have moved the government to conduct mass testing at air and sea ports— further instances may delay the planned May 26 relaunch of Singapore’s travel bubble with Hong Kong. The Port of Singapore projects increase of imported TEUs in the weeks ahead, although late vessel arrivals and coronavirus restrictions will continue to present challenges for shippers and cargo handlers.

Thaila€nd

Feeder services will see a slight uptick in capacity come June 5: Regional Carrier Lines and Mariana Express Lines will collaborate on a new service connecting Thailand ports of Bangkok and Laem Chabang with Chinese ports in Nansha and Shekou. Until then, Thailand’s ports still face acute container shortages, with few carriers able to meet current demand. Air freight operations fared better in the previous week with no reports of congestion; however, a string of cancelled flights by China Cargo Airlines and Air China will put pressure on intra-Asia capacity in the weeks to
come, according to local WWCB sources.

United States

United Airlines will suspend its Chicago-New Delhi passenger service on June 1 and further delay its San Francisco-Bangalore service from May 27 to August 1. CMA CGM’s air cargo division expanded its network capabilities on May 12, connecting US origins with regular flights to Dubai, Beirut, and Istanbul via its transloading hub in Liege, Belgium. Due to the onset of peak season for many agricultural exporters, origin ports in the US are doubling up on reefer capacity, although it may take some time for these efforts to bear fruit.

Vietnam

WWCB local sources report that some ocean carriers have refused to release bookings on Weeks 18 and 19 per allocation agreements, affecting outbound services from the Port of Haiphong. Major equipment shortages have also been exacerbated at Vietnam’s major ports due to cancelled sailings.