Newsletter – January 11, 2021
AIR FREIGHT UPDATES
With air cargo rates set to remain sky high, shippers need to plan carefully
Accurate forecasting by shippers will be crucial to manage their shipping requirements – and costs – efficiently, as air freight rates look set to remain high this year.
The Baltic Air Freight Index saw a 100% year-on-year increase this week, while the past few weeks have seen the highest readings since the Q2 capacity shortage. Read more here.
The insurance implications for airlines carrying Covid-19 vaccine cargo
Covid-19 vaccine distribution may be an exciting opportunity for cash-strapped airlines, but carriers will need to work with their insurers to ensure any policies are suited to the new risks, even if they are experienced in the transport of pharmaceuticals.
The sheer size of the logistics operation now required to deliver the vaccines across the globe and into its most remote regions is daunting. Indeed, the scale of the challenge is unprecedented. Read more here.
Freighter aircraft conversion market warming up – but it could overheat
The first A321 freighter conversion has been delivered to Titan Airways, but one consultant has warned that the market could overheat and the large number of conversions is “not without risk” for aircraft owners.
The A321 conversion is the first of “several” aircraft lessor BBAM has contracted with Elbe Flugzeugwerke (EFW). Read more here.
OCEAN FREIGHT UPDATES
Boxship Space in Asia Now Going, Going, Gone – to the Highest Bidder
Major forwarders are engaged in fierce bidding wars in China, in order to secure equipment and space to North Europe.
And several carriers are reported to have opened first- and second-round tenders with the highest bidders for guaranteed shipment this month.
According to Chinese forwarder contacts, carriers are inviting offers for available slots on end-January sailings from Shanghai, Ningbo, Qingdao and Yantian, with all-in bids below $16,000 per 40ft H/C for the UK and $10,500 for Rotterdam, Antwerp and Le Havre unlikely to be successful. Read more here.
Don’t expect rate relief from container-ship order spike
In virtually any ocean shipping market, a big jump in newbuilding orders is a headwind for future freight rates. More capacity spread among competing owners strengthens the negotiating hand of cargo shippers.
According to Alphaliner, container-ship orders spiked in Q4 2020. Orders totaled to 673,500 twenty-foot equivalent units (TEUs), the highest quarterly tally since Q3 2015. Read more here.
More misery for shippers with return of bunker surcharges on the radar
As oil prices head north again, ocean carriers are preparing to ramp up low-sulphur fuel surcharges to add to the misery of shippers struggling with sky-high freight rates, surcharges and premium fees.
Since early September, the price of Brent crude has increased by 41%, to $55 a barrel, with an 8% spike alone last week driven by Saudi Arabia’s pledge to cut output. Read more here.
GROUND AND RAIL FREIGHT UPDATES
Strong US surface transport market augurs more cost pain for shippers
Pundits as well as truckers are bullish on the outlook for surface transport in the US, at least for the first half of 2021.
They point to a combination of tight capacity and strong demand, which leads to full loads, and so shippers must brace for further increases in freight costs. Read more here.