Shipping Market Update - Air & Sea Freight
The Covid epidemic continues to spread in China. Shanghai's two-phase lockdown, which was due to end on April 5, will be extended as China doubles down on its zero-coronavirus policy and puts Shanghai into lockdown. The prolonged shutdown in Shanghai has led to a larger-than-anticipated disruption, severely restricting transportation to and from the airport and container terminal.
While Shanghai's airport and maritime ports remain open, labor shortages are slowing operations. In addition, the supply of goods has plummeted due to manufacturing and warehouse closures. Trucking is increasingly unavailable due to quarantine rules and travel restrictions.
Cross-border HKG cargo capacity to and from SZX/CAN is still very limited, with manpower shortages at the terminals. For seaborne cargo in the coming days, most of the cargo will be rerouted to alternate ports such as Ningbo, especially for LCL cargoes that need to pass through CFS, and there are reports of carriers omitting Shanghai port calls. These developments have resulted in a growing backlog of ships not only in Shanghai but also in Ningbo.
Shanghai Port is operating normally, but inland transportation, warehouses, and some production sites have slowed down.
Freight services in Shanghai should be cut by 30%,
Traffic started to be redirected, especially to Ningbo,
Delivery times are expected to be longer and shipping costs may increase,
Sanctions imposed on the Russian fleet have further compressed air cargo capacity in an already constrained market.
Airspace bans imposed on Russian aircraft by the EU, US and other countries add to the existing pressure on airfreight capacity caused by the Covid-19 pandemic and ongoing maritime congestion.
We've seen an increase in interest in air freight following past delays in ocean services, such as last year's Suez Canal blockage. In addition, there has been a significant shift from ocean to air freight due to ongoing ocean freight issues due to pandemic-related disruptions.
This trend is expected to continue as air freight continues to be a more attractive option for exporters. The good news is that things are improving in Shenzhen, Guangzhou and Hong Kong.
There, the border crossing with Shenzhen returned to normal, although many flights were still cancelled.
Due to the war in Russia and Ukraine, the BAF (Bunker Adjustment Factor) has increased by 15% to 20% depending on the country. Truck drivers are charged a weekly fuel surcharge, which means the quotes don't always match the amount charged.