Freight Right Industry Outlook July 2021

Ocean Freight Update

Asia to North America

Rates: Both General Rate Increases (GRI) and Peak Season Surcharges announced for July 1.

Freightos Baltic Index (FBX) indicates rates have risen to both the East and the West Coast in the last week, 1% to $9,981 and 5% to $6,905 per 40ft unit, respectively. However, the Loadstar reported that shippers are seeing quotes for shipments going from China to the West Coast for up to $25,000 when premiums are factored in. For the East Coast, rates are slightly lower, however, we think it is likely they could reach $18-$20,000 in early July.

Schedule Reliability: As carriers attempt to get back on schedule, several blanked sailings have been announced. This will crunch capacity even more and is unlikely to increase schedule reliability as the pressures of equipment shortages and congestion remain in place.

Capacity: Critical

Ports: The backlog of vessels that have been sitting outside the South China port of Yantian has finally been cleared, however, clearing the containers out could take up to a month. With Yantian up and running again, congestion is expected to hit ports on the United States West Coast.

The queue of vessels on the pacific, while lower than earlier this year, continues to be an issue at all major ports on the West Coast and it will likely get worse this month due to the build up from Yantian.

Notes: The transpacific westbound is one of the most impacted lanes and unless you are willing to pay premiums and book 4-6 weeks there is no space. We recommend planning as far in advance as possible and for an intermodal move plan for almost double the transport time due to congestion at the ports.

Europe to North America (Transatlantic Westbound)

Rates: Increasing, GRI and PSS implemented July 1 and rates are expected to continue to rise in Q3. FBX indicates a 2% rate increase in the last week with the average cost for a 40ft container at $5,296

Schedule Reliability: Massive delays in many ports have caused carriers to have to blank sailing and skip port calls resulting in significantly decreased schedule reliability

Capacity: Capacity is tight with high demand on all services. Equipment and space can only be attained through premium rates and with early bookings

Ports: Equipment supply throughout Europe, particularly at inland depots, is tight so plan for flexibility in routing.

Notes: We recommend booking at least 5 weeks prior to CRD for a chance at securing space. Delays are likely, so budget for premium charges for urgent cargo needing high reliability.

India to North America

Rates: Increased, with many carriers having implemented a GRI July 1, and another expected halfway through the month.

Schedule Reliability: Between weather closing ports, labor reduction due to COVID-19, and equipment shortages, schedule reliability for shipments leaving India remains quite low.

Capacity: Severe shortage of space and equipment to the U.S. West Coast. In particular, 40ft high cube containers are in severe shortage and some carriers are charging surcharges for high cubes.

Ports: With India exporting significantly more than exporting than is typical, equipment is out of balance in many major ports. In particular, South India is a challenge with little feeder capacity.

Notes: We highly suggest booking at least two weeks in advance or using air freight. This route is facing schedule and capacity issues.

North America to Asia

Rates: Increasing, with many carriers implementing a GRI for reefer containers. FBX reports rates are down 12% for the US East Coast to East Asia with the average cost of a 40ft container at $1,127. From the West Coast, rates are down 11% to $990 per 40ft container.

Schedule Reliability: Low

Capacity: Space is tight for the West Coast, however there may be some relief for the East Coast late in July.

Ports: Congestion remains severe at US ports with additional issues from equipment shortages at most major ports and rail ramps. We recommended factoring in extra lead time for trucking as chassis are hard to come by.

Notes: With severe vessel congestion in US ports, equipment shortages, and rising rates we recommend booking 4 weeks before CRD.

North America to Europe

Rates: Steady, with some carriers implementing a BAF surcharge. FBX reports a 11% drop with an average rate of $610 per 40ft container.

Schedule Reliability: Low for all services, as a result of equipment shortages and port congestion. Some carriers are shifting service allocations to manage the impact on schedule integrity.

Capacity: Dwindling, port congestion in the US East Coast and Europe is resulting in capacity being lost as ships struggle to make up time. Space is very tight from the US West Coast, and the East Coast lost additional space to vessel delays.

Notes:While rates are remaining steady, port congestion in the US and North Europe is resulting in delays along this route. We recommend booking 4 weeks in advance for shipments from the East Coast and 5-6 from the West Coast.

Also, prepare for tight chassis availability by allowing for more lead time once your freight reaches the destination port and is ready to be trucked.

Air Freight Update

Europe to North America: European export demand to the United State remains strong, with constrained space to the US West Coast. Some space was added due to increased passenger flights.

North America to Asia: Export demand is consistent but well managed. For larger shipments, or shipments coming from the more strained West Coast, it can take 2-3 days from booking for cargo to uplift.

There are 2-5 days of backlog for breaking down air imports at LAX and ORD.

Space to Nepal, Indonesia, Bangladesh and India is extremely limited currently, as aid and relief shipments take priority to the COVID impacted regions.

On the ground, trucking to and from airports remains scarce, particularly on the US West Coast.