Carriers Temporarily Suspend Services to and from Russia

Major container lines including Hapag-Lloyd, Maersk, CMA CGM, MSC and Ocean Network Express, have made the decision to temporarily halt bookings to and from Russia though exceptions were made for food, medical supplies, and humanitarian supplies equipment.

Shipping analyst and CEO of Vespucci Maritime, Lars Jensen said this decision taken by carriers was a way to mitigate risks in the wider supply chain. “Carriers are handling the risk they see is there. There’s a risk that, at some point, a sanction will come and ban voyages to Russia. As such, it’s reasonable not to stuff any more into their pipelines until they know more exactly what’s going to happen.”

The largest potential ripple effect would be if the overland rail link from China to Europe was stopped, Jensen pointed out. With the flow on the rail link from China to Europe approximating 500,000 TEU, it would push close to 10,000 TEU of weekly demand onto the Asia-Europe services which are dealing with severe space shortages on vessels.

Jensen said lower-value cargo on ocean services might be priced out. "Cargo sent by railroad is usually of high value, so those customers will pay what’s necessary to have their cargoes moved to ships. That will put further pressure on spot rates."

Source: ShippingWatch

February Air Cargo Recovery Nears Pre-pandemic Levels but Uncertainty Ahead

The latest industry analysis from CLIVE Data Services said global air cargo market recovery is headed toward pre-pandemic levels in February. However, the market is entering a period of significant uncertainty due to the Ukraine-Russia conflict and rates will likely become elevated.

General air cargo volumes in February 2022 recorded a 2.6% increase in chargeable weight compared to February 2021 and down -0.7% compared to pre-COVID 2019. Cargo capacity in February 2022 increased 6.9% versus February 2021 and down -5.4% compared to February 2019. As capacity returned to the market, a month-over-month comparison showed February 2022 rate levels easing to 137% from 156% in January 2022. However, rates are still elevated compared to February 2019 (see Figure 1).

“Whilst we were seeing some clear signs of normality returning, there is still so little slack in the global air cargo system. It is quite unlikely that the trend of slowly declining rates will continue in March,” said Niall van de Wouw, managing director of CLIVE Data Service.

The abrupt capacity plunge on Europe-Asia routes and overflight issues were already having an effect into North East Asia routes in the closing days of February, van de Wouw said. Rates will likely face an upward pressure, especially for these markets. Rising oil prices are also expected to significantly impact global airfreight rates.

Source: Air Cargo News

Global Schedule Reliability Sinks to 30.9% in January 2022

Global schedule reliability has reached the lowest level on record in January 2022 at 30.9%, dropping -3.8% compared to last year (see Figure 1).

The global average delay for LATE vessel arrivals improved by -0.30 days to 7.38 days sequentially. Although, comparing year-over-year, the January 2022 figure is 0.86 days higher. Vessel delays have registered over seven days since August 2021 (see Figure 2).

Of the top 14 carriers, Maersk had the greatest schedule reliability with on-time performance at 46.9%. Hamburg Süd recorded reliability at 42.8%, the only other carrier performing above 40%. MSC and HMM recorded reliability at 30-40%, six carriers at 20-30% and four carriers were at under 20%. Evergreen recorded the lowest performance at 15% (see Figure 3).

In a statement, Sea-Intelligence said, “Now that we are comparing with 2021, a year with awful schedule reliability in all months, unless something drastic happens in 2022, the Y/Y [year-over-year] difference in schedule reliability will be minimal.”

Source: Sea-Intelligence

U.S. West Coast Labor Negotiations Expected to be Difficult

Speaking at the TPM22 Conference in Long Beach, California, Vincent Clerc, CEO for ocean and logistics at A.P. Møller-Maersk said the upcoming U.S. West Coast labor negotiations would be a “bumpy process” and advised shippers to “hope for the best but prepare for the worst”. Clerc urged shippers to make contingency plans, ahead of possible disruptions related to contract negotiations. “It [LA-Long Beach] is the main gateway in the U.S. and is very congested to start with, so it will take very little to have a very big impact on dwell times and lead times,” he added.

ONE CEO Jeremy Nixon said the possibility of prolonged negotiations would be disruptive, leading to “lower productivity or something more serious”. He called the talks another “curve ball” for West Coast ports.

Both executives do not expect the LA-Long Beach port congestion to ease anytime soon. Clerc said demand needed to let up in the near term before there could be any normalization and even at the point, it would still require time to work through the congestion. Nixon said West Coast terminals had a long way to go before fluidity and a smooth flow of containers could return to the port and logistics system.

The International Longshore and Warehouse Union and the Pacific Maritime Association are scheduled to start contract negotiations in April. Maritime analyst Sea-Intelligence said it took the shipping industry eight to nine months to return to normal service after a deal was reached in the previous 2014-2015 labor negotiations.

Source: Journal of Commerce

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