Friday, January 28, 2022
HomeAviationStrong Far East volumes, high freight rates expected in early 2022

Strong Far East volumes, high freight rates expected in early 2022

  • On the transpacific lane, the slight softening in rates and opening up of space that were seen post-Golden Week have reversed, as demand is high, capacity and pre-Chinese New Year sailings are limited, and rate increases are expected
  • Rate levels remain elevated and potentially large increases are expected for January due to strong pre-Chinese New Year demand, with more shippers and importers converting bookings from standard to premium
  • On the Asia-Europe trade lane, space and equipment crunches continue as market demand consistently exceeds supply, as rates have stayed very high for a long period

Import volumes from Asia to North America are expected to be strong in the first half of 2022, according to the latest ocean freight market update from Flexport.

The US-based freight forwarder said the slight softening in rates and opening up of space that were seen post-Golden Week on the transpacific east bound (TPEB) lane have reversed, as demand is high, capacity and pre-Chinese New Year (CNY) sailings are limited, and rate increases are expected.

Rate levels remain elevated and potentially large increases are expected for January due to strong pre-Chinese New Year (CNY) demand, and more shippers and importers are converting bookings from standard to premium.

Vessel space on the TPEB is at a critical level while capacity/equipment is at critical/severe undercapacity levels, added Flexport.

The update recommended booking at least four to five weeks prior to cargo ready date (CRD) and to consider premium options, which may be limited.

Meanwhile, on the Asia-Europe (Far East westbound or FEWB) trade lane, space and equipment crunches continue as market demand consistently exceeds supply, as rates have stayed very high for a long period.

Space and equipment remain very tight due to frequent blank sailings and port omissions. Carriers are overcommitted and are limiting booking acceptance or rolling shipments. With continuous vessel delays and shifts, schedule reliability is very low and delays for pre-CNY sailings will have a significant impact on the post-CNY period.

Flexport said rates on the FEWB remain stable at a high level. Most carriers extended their rates going into December. “As we will be entering the traditional pre-CNY peak season soon, we anticipate that there will likely be rate increases in January,” it added.

Vessel space is at an extremely critical situation, while there is severe equipment shortage across all Asia origins, the update noted.

It recommended booking at least four to five weeks prior to CRD, and suggested considering premium options, which may be limited, while being flexible in regard to equipment.

On the other hand, for the airfreight market, the Northern China market is trending downwards this week due to the Christmas and New Year holidays.

However this is likely to be a temporary dip and the market is expected to bounce back in the new year, Flexport said.

Like Northern China, the Southern China market is also trending downwards due to the approaching holidays but is anticipated to increase again in the new year.

The Taiwanese market continues to be very tight and space is sold out for pre-Christmas departures. For TPEB US west coast and east coast, San Francisco International Airport and John F. Kennedy International Airport are the most congested destinations, respectively. Overall market capacity is also very limited for the rest of the month.

In Southeast Asia, space ex-Northern Vietnam remains tight but is trending slightly better than Southern Vietnam. Demand to the US has decreased slightly but capacity continues to be constrained at all transit hubs. This trend is expected to continue until New Year’s; however rates are maintained at the same levels.

Ex-Southern Vietnam backlogs and delays are anticipated for the next two weeks. Heavy congestion at transit hubs continues to be problematic.

Photo by Rinson Chory on Unsplash

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