Shipping between Asia and Europe continues to be restricted by ongoing supply chain issues — further dragged by low demand and port congestion in some of Europe's major gateways.
In its latest analysis, Flexport said there is continued rate pressure on spot rates due to lower demand.
On the capacity side, space is available but it is impacted by additional blank sailings and delays due to the port congestion in Europe.
No peak season
"There is no peak season and demand has been slowing down," Flexport said in its freight market update on August 23, adding that supply is still "relatively tight" due to a large number of blank sailings, vessel sliding, and port omissions.
"The port congestion in Europe, particularly Hamburg and Rotterdam, has reached critical levels causing further delays and late return of vessels to Asia," it added.
Flexport also noted that there are indications of power cuts in Ningbo (Zhejiang province) which would affect production output but there is still no official information available.
For Asia-North America, the freight forwarder said rates continue their downtrend, along with volume and demand.
"The standard cyclical peak season appears to be pushed off, yet Transpacific Eastbound (TPEB) volume is projected to decline through the end of the year due to over-ordering and low demand. Despite more favourable rates, the percentage of blank sailings, port congestion and US intermodal delays continue to affect schedule reliability," Flexport said.
USEC ports handle more cargo than USWC ports
Meanwhile, for Europe-North America, the freight forwarder noted that space is "still very tight" on the USEC with some space open for direct routing to the USWC.
Rates are also stable at high levels with "no sign of steep rate decline in the near future" although some drop in FAK levels out of Turkey as some capacity is freeing up.
"In a clear reversal of trends, U.S. East Coast (USEC) ports are now handling more cargo than the U.S. West Coast (USWC) ports," Flexport said.
"Historically USWC handles 40% more volume than USEC but at the moment we are seeing the demand shifting and this is also the cause for the current congestion in some ports (Savannah, Newark, Houston)," it added.
Photo: Flexport
In its analysis, Flexport noted that in terms of air freight, in North China — which includes Shanghai — demand in the market is low, but the overall market is stable.
"TPEB rates remain the same while Far East Westbound (FEWB) rates have dropped from the week prior. With terminal handling operations in Frankfurt improving, carriers have started increasing the flight frequency to that hub," the freight forwarder said.
For South China — Shenzhen, Guangzhou, Dongguan, and Hong Kong — Flexport the market demand "remains soft" for both TPEB and FEWB lanes and rates are stable.
It added that Shenzhen - Hong Kong (SZX-HKG) cross-border operations are also improving with transit times for affected shipments expected to be prolonged by 1-3 days.
For the FEWB trade lane, the freight forwarder noted that demand is expected to increase as we head out of summer.
Air cargo peak season starts by mid-September
For Europe, Flexport said demand remains at a stable low in Europe and peak season is expected to start from mid-September.
"Sufficient transatlantic capacity ex European hubs due to high-frequency passenger flights. Rates are still low as fuel prices have decreased slightly," it added, noting, however, that ground handling disruptions may still affect the main European hubs.
It added that the impact of disruption is also more evident on the passenger rather than cargo side of the market.
For the Americas, Flexport said export demand remains steady from all markets and US airports are running at a normal pace.
"Capacity is opening up further, especially into Europe, where most carriers have increased the number of passenger flights for their summer schedules," the freight forwarder added.
"Shipments into Europe could experience additional destination dwell time due to the labour shortages in some western European hubs," Flexport said.
