Maersk issues Asia Pacific market update for July 2022
Global trade volumes declined by 2.5 percent in May compared with a year earlier and year-to-date growth is down by a similar level, although these come off last year’s elevated levels, according to the Maersk's release. Container imports into Europe were negatively impacted by the Ukraine conflict as volumes following the imposition of sanctions and a broader weakening in demand. Imports into Asia were depressed due to COVID-19 lockdowns in China and a general slowdown in China’s housing market. Imports into North America were stable at a very high level. The outlook remains highly uncertain, and Maersk mainly sees downside risks to it's base scenario.
With Shanghai gradually returning to normal after the two-month city-wide lockdown in April and May, factory production is picking up and demand rebounded in July with positive signs of a seasonal peak on many trades. Trucking in the city area has also been fully restored. Intra-provincial trucking is also back to pre-lockdown levels although truckers are subject to local testing requirements.
The situation in Shanghai is normalizing but is still both fluid and hard to predict – this combined with the strikes in Europe and the continuous congestion in the ports in North America.
Terminal congestion, especially in North America and Europe, is continuing to adversely affect schedule reliability. Strikes in Germany, especially at Bremerhaven, Hamburg and Wilhelmshaven, have exacerbated the disruption caused by vessel delays. At Rotterdam, Maersk is exploring several congestion easing options including off-dock options and redirecting cargo to facilities elsewhere including Zeebrugge and Gdansk.
North European trade demand is stable, but networks are facing severe pressure due to port congestion.
Demand is stable from long-term customers and flat for spot cargo. Vessels are being delayed by congestion at both origin and destination.
Overall, the Asia Pacific to North America overflow issue is gradually improving. Export volumes in the second half of July and August are expected to increase.
North American port congestion is worsening, increasing the likelihood of more missed sailings. USEC port congestion delays vary from port to port although the overall waiting time is 0-3 days. At Savannah congestion is 10-15 days and Houston congestion is up to 14 days.
Los Angeles and Long Beach waiting time slightly reduced to 15 days. Vancouver waiting time reduced to 7 days, however congestion is still severe with yard density increased to 113% and rail dwell time increased to a minimum of 10 days.
Prince Rupert’s waiting time is reduced to 5 days but with 122% yard density, which means Price Rupert port cannot store any more cargoes. Prince Rupert terminal still requires 100% match-back. Departed rail dwell increased from 5 days to 12 days.
Overall market demand on the Latin America trade is very strong in Q3 from the traditional peak season. Non-operated reefers (NOR) are still key for Q3. ECSA - Rates have increased quickly for July and rates are forecast to continue to increase in August with demand remaining very strong.
WCSA – Rates are trending slightly softer in July due to extra loaders in the market especially to Mexico, but rates and demand are forecast to be stable in July and August.
In Pakistan, the government has restricted the issue of Letters of Credit to automotive and technology customers. The situation is expected to remain the same until mid-August. There are expected to be increased opportunities for solar-related raw material imports in India from Q3.
In Colombo, port and terminal operations are operating normally although Customs could be affected by staffing issues.
Demand has softened compared with the last two months especially for Ghana and Nigeria, while Angola is picking up. As a result, capacity is tightening.
Market demand in South Africa is improving compared with Q2 and NOR is still the key for Q3. Overall market rate is stable. Demand in East Africa is gradually picking up. Space on the Dar Es Salaam service is quite full and customers are advised to arrange advance booking.
AUS market is expected to be soft due to increased capacity (~30%), and ASL is about to launch a new service from GCA-AUEC at the end of Aug, adding additional pressure to the existing situation.
Destination ports face severe delays impacting AUSYD/AUBNE further worsen the situation.
New Zealand market is expected to hold into Aug, however, Auckland port productivity is impacted due to labor shortage and vessel bunching, expect waiting time to be 7-10 days.
Maersk is making additional reefer containers available in Sydney and Melbourne during the August to October period.
Maersk is increasing capacity between Freemantle and South East Asian hub ports during August and September with Southern Star inducement in Freemantle on a fortnightly basis.
In New Zealand the Ocean Supply Chain remain disrupted with berthing windows remaining suspended. Maersk has launched a new service New Zealand Coastal Connect that will hit the New Zealand coast in July.
Terminals in China are operating normally as authorities manage the COVID-19 situation. Average vessel wait time at ports in Asia are 0-3 days.
Disruption caused by typhoons, especially at South China ports, could potentially cause 1-2 days’ delay. With ports in Europe and North America continuing to face congestion, cargo imports to Asia may also face delivery delays.
Freetime extension products for both Spot and contract customers are available.
The Sakura feeder service in Japan is still facing capacity shortages and the Japan team is taking measures to clear the bottleneck.
Volumes in Greater China have fallen in July due to the impact of summer holidays. There is minimal impact on airfreight from sporadic COVID-19 outbreaks in China. Carriers have cancelled several flights to Europe and North America due to lower cargo demand. Air cargo freight rates have also fallen, making air cargo more attractive to customers. In Hong Kong, capacity has increased as airlines reintroduced more flights after the government eased COVID-19 restrictions Fuel surcharges increased from July 1 from HKD5.10/kg to HKD6.10/kg on chargeable kgs.
As China slowly returns to pre-lockdown operational levels, extra airline capacity has led freight rates to fall across all origin airports into Oceania. There is still a cargo backlog at Shanghai which is lengthening the transit times between international airports. The Trans-Tasman markets remain challenging for consumers as airlines continue to hold off releasing new capacity.
Operators in Japan are coming under increasing pressure to make domestic transportation of pharma products GDP compliant following the influx of COVID-19 related vaccines into Japan with calls for the creation of a quality certification system. So far, the Japanese version of the GDP guidelines have not yet been legislated and are not enforceable. International logistics will continue to be disrupted due to lack of space and restrictions on cargo handling at airport facilities.
Congestion at Auckland caused by labour shortages and vessel bunching is leading to vessel delays of up to eight days which is impacting container availability, final delivery to end users and extended transit times. The new Stink Bug (BMSB) season starts around September 1 until May 31, 2023. Updated rates will be released in August with confirmation of China as an emerging risk market.
Thailand, Malaysia and Singapore are not seeing the same level of the recovery in volumes experienced by Greater China. They could also be hit if there is a downturn in demand from developed countries due to rising inflation and fuel prices.
