The inflationary impact of higher freight costs is expected to continue to grow until the end of this year, the International Monetary Fund (IMF) has said. According to IMF economists, the cost of shipping a container on the world’s transoceanic trade routes increased seven-fold in the 18 months following March 2020. The analysis predates the war in Ukraine but isn’t isolated from it with IMF officials suggesting the conflict will likely exacerbate global inflation.
Studying data from 143 countries over the past 30 years, the IMF found that shipping costs are an important driver of inflation worldwide. Specifically, when freight rates double, inflation picks up by about 0.7%. More importantly, the effects are persistent, peaking after a year and lasting up to 18 months. “This implies that the increase in shipping costs observed in 2021 could increase inflation by about 1.5 percentage points in 2022,” the IMF stated.
The IMF study has been published at a time when regulators and politicians, especially in the U.S., are increasing scrutiny on liner pricing. With all major box indices on the downtrend, many analysts are also questioning if the container boom has peaked. Economists have also suggested Western demand could dampen due to higher inflation which the IMF study partially attributes to high shipping costs.
Source: Splash247.com
Carriers’ schedule reliability has improved by 4% in February 2022, reaching 34.4%. This marks the first significant month-on-month improvement since March 2020. February’s reliability is only slightly lower than performance a year ago which recorded reliability at 34.9%, Sea-Intelligence said.
The average delay for LATE vessel arrivals also improved month-over-month, decreasing by -0.77 days to 7.11 days in February 2022. However, Sea-Intelligence notes, “The delays have now been over 7 days since August 2021, and continue to be the highest across each month when compared historically, as the delay figure for February 2022 was 0.16 days higher Y/Y [year-over-year].”
Of the top 14 carriers, Maersk had the greatest schedule reliability with on-time performance at 47.8% followed by Hamburg Süd with 42.4%. Only MSC, CMA CGM, and ZIM had schedule reliability between 30%-40%. 8 carriers recorded schedule reliability of 20%-30% while Wan Hai was the least reliable top-14 carrier in February 2022, with schedule reliability at 18.7%.
Source: Sea-Intelligence
Import volumes in Europe are climbing as importers place bigger orders to build up buffer stock against lead time delays and market uncertainty. In the month of January, China-Europe volumes saw a year-over-year increase of 3.1% which was preceded by a 11% growth in the last quarter of 2021, said Container Trade Statistics (CTS). The increased volumes have led to a shortage of capacity in container yards and warehouses.
The increase in demand and ongoing congestion across North Europe hubs is paired with low schedule reliability. Sea-Intelligence reported that on the Asia-North Europe route, vessel on-time performance dropped to 15% in February. Month-over-month, it decreased by -2.6 percentage points and year-over-year, a -12 percentage-point decline was recorded.
Raw material shortages, longer production lead times and longer transit times of an extra 15 to 30 days compared to pre-pandemic have led to higher order volumes by importers, a global forwarder in Europe said. The increased volumes have in turn filled up warehouses. “U.K., Germany, Netherlands, and France are hit the most. There is practically no free warehouse space available anymore and containers are still coming,” the forwarder added.
Meanwhile, data from visibility provider FourKites shows transshipment dwell times in Europe increased and were now 36% higher than in mid-February. Around 10,000 TEU of Russian containers are estimated to be stuck in terminals or inland container stations in North Europe hubs, using space needed for import cargo.
Source: Journal of Commerce
COVID surges in Shanghai has the city locked down in two-stages over nine days from 28 March until 5 April while authorities conduct COVID-testing. Although Shanghai’s airports and deepwater port are open, stringent movement curbs have been imposed. Transport to-and-from Shanghai Pudong Airport (PVG), container terminals and surrounding warehouses have been severely limited.
Up to 30% of trucking service in and out of Shanghai is impacted Maersk said in a customer advisory, adding that the closure of warehouses would cause longer delivery time and a possible rise in transport costs in the form of a detour fee and highway fee.
Vessel delays and blank sailings have also been announced for Shanghai by carriers. A global forwarder said carriers have started to allocate more space to Ningbo which is fully operational. Longer wait times at Shanghai should also be expected, the forwarder warns. The shortage of manpower at the port has impacted loading and unloading productivity and both Waigaoqiao and Yangshan ports are congested, the forwarder added.
There is limited airfreight moving from Shanghai following numerous flight cancellations from PVG. The South China Morning Post reported that only 28 flights had taken off from Shanghai by 5pm on Tuesday, compared with 892 on a typical day last year.
Source: gCaptain, Loadstar
The U.S. West Coast labor contract negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) which represents West Coast employers, are set to begin on May 12. The current contract expires on July 1.
Amid the backdrop of severe vessel backlogs, congested marine terminals, and inland supply chains struggling to
In recent years, the union has spoken out against the spread of automation on the West Coast. Meanwhile, employers have pointed out that automation allows terminals to handle almost twice as much cargo on land-locked ports compared to operating manually.
Source: Journal of Commerce
