Shanghai container port has been operating but the lack of trucking capacity has resulted in chaos in supply chains. According to a global forwarder, trucking and entry problems are creating pressure at some yards in Shanghai port. Additionally, some carriers which include Maersk and ONE, have “started to cancel calls at Shanghai to instead provide intermodal services, such as land-to-water or rail.”
As more export volumes have been redirected to Ningbo, supply chain conditions were also worsening there, another forwarder said. “The situation at China’s second biggest port has worsened, with more COVID cases and measures introduced. This has combined with a lot of shippers trying to re-route cargo from Shanghai through Ningbo, especially those in Jiangsu, Anhui and Sichuan provinces.”
As China continues to adhere to its zero-COVID strategy, Sunny Ho, executive director of the Hong Kong Shippers’ Council, speculated whether there may be a renewed push towards sourcing in Southeast Asia.
“Shanghai’s hinterland extends much further into the East China delta, and the lockdown consequences extend into these vast areas as well. In the short run, overseas buyers may switch some procurement to alternative manufacturing areas, like ASEAN [Association of Southeast Asian Nations] and Mexico.”
However, Mr. Ho said production capacity in these areas may be insufficient, given their reliance on China for raw materials and intermediary goods. He added, “But in the longer run, the diversification process – which began before the pandemic – is expected to resume, and may gain some momentum.”
Source: The Loadstar
The World Trade Organization (WTO) has said the logistics sector could be operating in less favorable market conditions in 2022.
In its latest analysis on the outlook for world trade over the next two years, the WTO forecasts a decline in merchandise trade volume from 4.7% to 3.0% in 2022, and 3.4% in 2023 (see Table 1). The WTO said that the war in Ukraine is having a major impact on global commodity prices.
The volume of trade rose 9.8% in 2021 after dropping by 5% in 2020. The WTO is also forecasting lower export growth in nearly all regions of the world this year.
The WTO noted that China’s COVID-19 lockdowns were impacting global trade, specifically seaborne trade, which the organization said could lead to even higher inflation and manufacturing input shortages. “Lockdowns in China to prevent the spread of COVID-19 are again disrupting seaborne trade at a time when supply chain pressures appeared to be easing. This could lead to renewed shortages of manufacturing inputs and higher inflation,” the WTO said.
Source: The Loadstar
Speakers at the Nordic Air Cargo Symposium have said disruption in the industry is set to continue. The supply-demand balance in the air cargo market is expected to return to pre-COVID levels in 2025 although the prediction is complicated by several conditions.
Cargo capacity is projected to reach 2019 levels around 2023 but demand will continue to rise while the imbalance in supply and demand will persist until around 2025, said Lufthansa Cargo chief commercial officer Ashwin Bhat.
Bhat said the air cargo market would continue to benefit from ongoing container port congestions, rise in e-commerce demand and disruption in supply chains. Nearshoring is not expected to impact the market he said, because “business is global, not local – we have to accept it”.
Kales Group chief executive Sebastiaan Scholte said the cost-of-living crisis could restrain consumer spending on products. This will have a negative effect on demand which could affect the industry.
TIACA director-general Glyn Hughes pointed out that higher interest rates could benefit the air cargo market. “As interest rates go up, the cost of capital and the cost of the cargo sitting on ships for 60-80 days is very expensive to finance which will increase demand for air cargo,” he said.
Air cargo demand was up 7.1% in 2021 compared against 2019. In 2022, capacity is 5% lower versus 2019 levels, Seabury Cargo commercial director Jonathan Mellink said. When asked when an equilibrium could be reached between demand and capacity, Mellink said it was very hard to predict given the current uncertainties in the market.
“When exactly air cargo will be in sync, it could be 2025ish but nobody really knows, especially nowadays because the world is changing every other week. There is also big difference per region. Trans-Atlantic will look very different compared with intra-Asia, or Trans-Pacific, or intra-Americas. It will look very different depending on the trade portfolio and the commodities being traded and on the return of passenger demand,” Mellink said.
Source: Air Cargo News
Executives at key ports along the Southeastern U.S. are warning of a coming import surge and vessel backlogs. Ports in the mid-Atlantic and Southeast are dealing with an influx of Asian cargo, adding to operational pressures. Meanwhile, importers continue to move cargo toward East and Gulf Coast ports to avoid potential delays related to the West Coast labor negotiations.
“We fully anticipate vessels to backlog on the East Coast this summer and I don’t think Savannah is going to escape that,” said Griff Lynch, CEO of the Georgia Ports Authority. Charleston, Savannah, and Virginia saw a 16% increase of imports from Asia year-over-year (y/y), in the first quarter of 2022. Eastbound Trans-Pacific to the East Coast and Westbound Trans-Atlantic reliability was at 15.5% and 14.7%, respectively, according to Sea-Intelligence Maritime Analysis.
The South Carolina Ports Authority noted that higher-than-normal volumes through the second and third quarters will make it hard to overcome gridlock. “These issues are not quickly solvable as they require more distribution center space to handle goods, a larger truck driver workforce and more available chassis to move cargo, and more capacity with ports and port-related infrastructure,” said Jim Newsome, CEO of SC Ports.
The Virginia Ports Authority said there are no issues related to the driver workforce, available chassis, or distribution centers like Charleston despite a dozen vessels anchored in Virginia last week. Its chief issue is late-arriving vessels, a problem port officials believe will last through June. “It’s hard to know what the next three months is going to be like unless we know what it’s going to be like outside Chinese ports like Shanghai, Ningbo, and Yantian,” Stephen Edwards, CEO of the VPA said.
Source: Journal of Commerce
