AXIMA Market Newsletter - May 2021

Market Newsletter - May 2021

Welcome to the May Market Update. 

It appears 2021 continues to demonstrate the vulnerabilities of international supply chains in terms of unforeseen events affecting space, pricing and equipment. In April, shipping was front page news around the world when the Ever Given cargo ship became wedged in the Suez Canal. This caused the flow of ships through this vital trade lane to halt for close to a week and the globe held its breath while engineers worked out how to shift the stricken vessel. Negotiations are continuing on the fine for the Ever Given fiasco and may end up being over $1 billion.

It was not only the goods on the approximately 300 ships delayed by the blockage that were affected. The halt to vessel movements escalated the existing equipment shortage in Asia. The flow-on effect is equipment shortages, in particular, 40ft GP and HC containers, are expected to become worse through May and early June with ports in China and Korea among those most affected. 

We do anticipate the situation should begin to ease by late June. The same cannot be said for shipping rates, unfortunately. In May, all tradelanes are expected to see price increases due to continuing growth in demand and a shortage of space. 


We note that in general shipping lines have been steadily increasing rates since mid-2019 when we saw the balance of power shift from the shipper to the shipping line. 

Another factor to keep in mind is the COVID-19 pandemic is continuing to destabilise events. In April, key trading nations including India, Bangladesh, Japan and Thailand all saw a major increase in cases, with the situation in India particularly dire. This has impacts in terms of worker availability for ports, warehousing and land shipping. As we have also seen in Australia with snap lockdowns in Brisbane and Perth recently, it is impossible to predict where and when another COVID outbreak may affect a city or nation.

From a logistics perspective, the key lesson is to plan ahead, and also speak to your Client Success Manager or Client Service Specialist about contingency plans if or when an unexpected event overturns the apple cart.


North Asia 

In addition to equipment shortages and ongoing space limitations, overall conditions in North Asia are being affected by bad weather at the key ports of Shanghai, Ningbo, Qingdao and Shekou and this has been forcing vessels to extend their wait before docking, creating port congestion.


In April some shipping lines continued increasing rates including a GRI implemented from Goldstar ex-China from 22 April. In addition, a GRI has been announced effective 15 May of USD300 per TEU. With airfreight, we are also seeing changes by the introduction of up to 50% of the freight cost as a cancellation fee when cargo is cancelled. This varies dependent on the airline. 


Due to the Labor Day Holiday, Shenzhen and South China offices will be closed from 01/05/21 to 05/05/21. 


South East Asia

A snap lockdown imposed on Bangladesh in April due to a rapid increase in the number of COVID cases is expected to add to the pressures on exporters and have a flow-on effect on container space on vessels. 

There are some shipping lines that have advised bookings made ex-Bangladesh, India and some other ports in South East Asia with less than 14 days to ETD will be deemed as late bookings and will incur "Priority" fees for cargo to be moved as booked, so booking more than a fortnight ahead whenever feasible is critical.

In addition to this, the shipping lines are implementing cancellation fees for bookings ex-Bangladesh and ex-India that are cancelled. So, include in your planning sufficient time to cancel if necessary, before the 7-day to ETD window to avoid these new fees. 

Cancellation fees will be charged when the Priority rate has been accepted and is then subject to:

•Cancellation date: Within 7 days before ETD

•Cancellation reason: Requested by customer

•Booking un-utilised on desired vessel without cancellation request or reply

•Booking roll over requested within 7 days before ETD

These new charges will be effective 1 May 2021.

Bookings ex-India remain solid and space demand remains high with no immediate prospect of easing. The new fees are a response by the shipping lines to the ongoing high demand, as they seek to eliminate late bookings where the vessel departs with container space available that was unable to be filled due to the short timeframe for filling it.

In addition, a GRI from 1 May 2021 of USD 150 per TEU will apply. With the current market conditions, there is no doubt that it will pass.

Singapore is still experiencing port congestion. A factor adding to the congestion is a fundamental shift in manufacturing and supply chains that occurred during COVID 19. Many companies are now partially manufacturing their products in one country and then shipping semi-finished goods to a different country in Asia to be completed. From there, the finished goods are being exported to their destination. Shipping lines had not factored this into their planning so there has been a lack of shipping space intra-Asia and a shortage of space ex-India and other countries where goods are being finished. 


The shipping lines are aware of this and we expect more carriers will adjust their routes over the next few months. There are already signs of this shift occurring, with a new intra-Asia loop with competitive transit times between China and South East Asia recently launched by two shipping lines. It is hoped this will begin to help reduce the congestion.


North America

In the USA, rail has become a highly problematic sector, and given its key role in the shipping supply chain, this is having flow-on effects for imports and exports at the ports. Overall, cargo moving within the USA via rail is experiencing major delays and rail companies are urging all shippers to factor this into their planning schedules. On the East Coast, bad weather in February also aggravated the already strained shortage of rail cars due to high volumes of cargo. 


Due to the rail car shortage, trucking on the East Coast/Mid-West routes has increased, and as this is a much higher cost option, getting freight moving can be more expensive. 


Container terminals in Los Angeles and Long Beach, which were already experiencing delays due to reduced productivity from COVID-19, now have higher than normal numbers of vessels waiting in San Pedro Bay and overflowing container yards. The shortage of rail cars just adds to the level of difficulty, and ocean carriers have warned of delays of up to two weeks which is expected to last until at least mid-May.


Contact your Client Success Manager or Client Service Specialist as soon as possible to discuss your options if the situation in the USA will impact on your supply chain.


Europe and the UK 

The situation ex Europe remains the same – high demand for space, ever-shifting pandemic impacts and variabilities in relation to cargo movements between the UK and EU that are part of the fallout from Brexit. 


Rotterdam is expected to see further delays due to the Suez Canal fiasco. At the time of writing there were 15 vessels arriving and queuing behind a reported 85 vessels that were already waiting to dock.


A Peak Season Surcharge (PSS) of USD 400 per 20 and USD 800 per 40 will be implemented from 1 May for cargo ex Northern Europe to Australia and New Zealand. Due to a shortage of space, we expect this PSS will be successfully passed. 


New Zealand

There is congestion being experienced at Auckland port, and as a result, vessels are being diverted to Tauranga which itself is suffering from container yard congestion - compounding delays. The re-routing is also adding time and pushing out ETA’s in some instances by up to a fortnight. The congestion situation in Auckland is being exacerbated by a partial rollout of terminal automation. At this stage, the best course for shippers is to work closely on planning with your Client Success Manager or Client Service Specialist to fine-tune your supply chain timeframes to minimise the risk of disruption due to delays.

Australia Ports

High demand, port congestion, and high prices continue to be a feature of the Australian market also. Once again, Terminals are increasing their Terminal Access Fee, and DP World are increasing their fees effective 1 May. Transport companies are only now slowly confirming the Terminal Access Charges and these will be reflected on rate cards for the coming month.


Victoria International Container Limited (VICT) has also notified us there will be delays in Victorian Ports due to formal notification from the Maritime Union of Australia of Protected Industrial Action in the form of work stoppages on Saturday 1 May and Monday 3 May for 12 hours from 12.01am until noon on both dates. Your Client Service Specialist or Client Success Manager will be able to advise you of any further updates on these stoppages and potential impacts on specific vessels.

Business not as usual

Events of recent weeks and months remind us that the global freight and logistics sector has not yet found anything approaching a "business as usual" state of operation. Change is constant, and unexpected events can send supply chain plans off-kilter. Having effective communication between partners is essential, which is why contacting your Client Success Manager or Client Service Specialist at the earliest possible stage is advantageous. Our global links, local office presence and strong relationships with shipping lines, ports, warehousing and land transport providers enable us to innovate and customise solutions to the challenges of keeping your goods moving. We are only a phone call or email away – and our priority is helping your business continue to navigate these extremely challenging times.


Stay well,

Matt Ward

COO International – YKGA