Our September freight market report highlights key developments in air, sea and road freight review, together with supply chain insights that will aid your decision making in challenging times.

Situation summary
Since the coronavirus outbreak began in 2020 supply chains have been under pressure, with massive price hikes, disruption, congestion and shipment delays, across every mode, but things may be changing, as the impact of the global economic downturn softens demand.

Ocean

September’s outlook from Asia is expected to be flat, with concern remaining on the port congestion in Europe which delays schedules, increases blank sailings and adds port omissions, but there are indications that the situation may improve.

Transatlantic demand remains strong, with rates stable, albeit at a high level, with container ports on the US east and west coasts highly congested. Inland capacity and labour shortfall reduces capability, which lead to pick-up and delivery delays, with extended container dwell times.

The slow peak season build-up from Asia, ahead of Golden Week in the first week of October has led the container shipping lines to reduce capacity, by blanking sailings, as they seek to to support rates, that are under downwards pressure, particularly on Asia-Europe routes. 

Almost 9% of capacity on Asia-Europe rotations will be blanked by carriers across the three shipping alliances: 2M, Ocean Alliance and THE Alliance.

CMA CGM will pull five sailings, decreasing capacity by 100 000 TEUs, while MSC and Maersk will remove 10% of scheduled allocation, amounting to seven sailings, in the run-up to the 1st October and the start of Golden Week.

THE Alliance, is to blank 10 sailings, or 18% of its combined TEU capacity, with the capacity constraints reportedly to be sustained over 12 weeks.

Air

Global demand has remained largely stable, down just 3% vs last year, but has continued to slow, with a pronounced drop in July. 

On many routes space on aircraft is freely available, but we expect this will change in the coming months, even though Peak season is unlikely to trigger any volume surge, with inventories at high levels.

European bottlenecks are still ongoing at many hubs and now with fresh strikes on the cards for Lufthansa, we could see further delays

Rates show signs of softening on a few trade-lanes, but globally were still 21% higher than the same pre-pandemic period in 2019.

Aggressive spot markets can be expected on certain trade-lanes; with surcharges likely to fluctuate as fuel prices move.

Overall global capacity was down 11% in August, compared to 2019, with belly capacity 19% below pre-COVID levels and while this has improved since last year, capacity recovery has slowed due to service disruptions and backlogs.

The gradual improvement of cargo capacity is encouraging but jet fuel price hikes remain a key obstacle to softening of rates, with oil inventories expected to increase.

Peak season is unlikely to trigger a surge in volumes, particularly with lower sales and many retail and manufacturing inventories at record highs, while eCommerce movements remain stable, but at lower levels.

Overland

The fuel price rises that followed the invasion of Ukraine have held and produced a much more costly environment for European road carriers, whilst industrial action across the continent and persistent driver shortage keep capacity tight. Primary economic indicators suggest that a slowdown in consumption and production will ease demand, while high costs will keep rates elevated.

European road freight rates hit an all-time high in Q1 2022 as rising cost pressures, supply and capacity disruptions, regulatory change and war in Ukraine created a potent mix of rate drivers, with smaller carriers likely to suffer disproportionately from the increase in operating costs.

With the global economic and political landscape so difficult to predict, it is difficult to interpret the outlook for development in the road transport market. The rising cost of living and associated fears of inflation are certainly leading to decreasing demand and ultimately to a weakening of the economy, which is being fuelled by the increases in key interest rates by the ECB and Bank of England. 

Businesses, particularly those operating in energy-intensive sectors are likely to curb their production and time will show to what extent this will ultimately be reflected in the road transport market.

Although experts agree that air and sea freight rates will normalise in time, no such trend can be agreed for road transport, because market constraints ware unlikely to ease in the short term, which means that transport costs will likely remain at a high level.

Our teams in the UK and across Asia continuously scan the evolving global multimodal operating environment, to identify potential issues and adapt operations, to avoid pitfalls that may challenge our customers’ supply chains.

We share the most important news and developments, so that you can make informed decisions that protect your supply chain.

To discuss any questions or concerns you might have, about the issues highlighted here, please EMAIL us for our immediate attention.