Shipping Market Update - Air & Sea Freight

China

The Covid epidemic continues to spread in China, especially in Shanghai. With China doubling down on its zero-coronavirus policy and putting Shanghai into lockdown, manufacturing and freight in Shanghai are expected to come to a screeching halt.

Cross-border HKG cargo capacity to and from SZX/CAN is still very limited, with manpower shortages at the terminals. For sea freight shipments in the next few days, most of the shipments will be rescheduled to Ningbo Port, especially LCL shipments that need to go through CFS.

Shanghai

Even if authorities wanted to preserve international traffic, Shanghai was locked down for at least ten days in two phases: Pudong and areas east of the Huangpu River from March 28 to April 1, and then starting Friday, five areas west of the Huangpu River sky. Transportation to and from airports and container terminals is severely restricted.

Situation update

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,

Containment could be extended beyond April 5, depending on how the pandemic evolves,

Port congestion at major Chinese ports hit a five-month high last week.

PVG Airport is still operating normally. PVG and most combined loaders have recalled some employees to remain at the airport. However, magnetic testing services will be discontinued until April 1st.

Air transport

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.

Ocean freight

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.