Situation in the logistics market in December 2020

Spring review 

In the spring of this year, the global economy was thrown out of balance due to the beginning coronavirus pandemic. The pandemic showed everyone how closely the individual countries are economically linked and how fragile supply chains can be. Economic bottlenecks were caused by government-imposed shutdowns, lack of material as well as cases of illness and quarantine within the workforce. This in turn led to congestion at container terminals, lack of container equipment and the reduction of vessel capacities, for example due to blank sailings. Air traffic almost came to a complete standstill.

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What are Blank Sailings?

This term is used to describe the cancellation of a vessel departure. This does not mean that the entire vessel service is always cancelled, but can also mean that only individual ports on the route are not called, for example. For steamship lines, this is an instrument to compensate for fluctuations in demand for vessel space. During certain public holidays such as Chinese New Year, this is a popular means of counteracting reduced demand. 

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Current situation in North America | Sea freight

In the meantime the situation in the world markets has changed. Market participants had the tendency to underestimate the rapid recovery of Asia, and China in particular. The procurement needs and thus the import volume of the United States have additionally increased in recent weeks; especially the trade volume between Asia and the USA has surged. Adequate material stocks remain a priority for companies and private consumers in order to be able to cope with further shutdowns. This increased demand means that sea container availability and vessel space for the routes between Asia and the United States are at full capacity. Incoming containers are stuck at the port terminals due to the large volume and cannot be processed quickly enough. However, containers on all routes are affected by the backlog at the terminals. This means that container equipment is released much more slowly for subsequent sea freight transports. Illness-related absences of employees are an additional burden in this situation. 

On the other end of the supply chain, North American trucking companies are under pressure. In general, there are not enough truck drivers in the United States who can deliver the goods. Personnel shortage has increased significantly in recent months due to corona-related absences, a lack of equipment and stricter government regulations due to the pandemic. As a result, in recent weeks there have been increasing delays in truck deliveries in some areas of the United States – particularly often in New York, Los Angeles and Chicago areas.  

Other sea routes, such as the routes between Europe and North America, are still affected by blank sailings despite the economic upswing. This leads to a further shortage of container equipment and vessel capacities.

These individual factors lead to the following developments in the international logistics market:

• Container demurrage charges at US container terminals cannot be ruled out.
• Excessive demand for container equipment and vessel capacities are driving up freight rates.
• Steamship lines are charging additional fees due to the supply shortfalls.
• Blank sailings will further reduce equipment availability, increase lack of vessel space and cause further rate increases.
• Delays in truck deliveries throughout North America must be factored in.
• The situation will be exacerbated by the Christmas holidays 2020 and Chinese New Year in February 2021.

While some steamship lines are making a profit from the increased rates and implemented surcharges, freight forwarders are under pressure to react appropriately in favor of their customers. New fees, surcharges, rebookings, high freight rates, lack of equipment and vessel space demand a high degree of flexibility from freight forwarders, rapid reactions and offer hardly any planning security.

Situation in the air freight market

The situation in the air freight market remains tense. Most airlines have reduced their fleets considerably. A particularly large number of passenger planes remain on the ground, although these are usually used to transport around 80 % of air freight. In addition, winter flight schedules further restrict capacities. This trend will continue for the time being, so that a further increase in freight rates can be expected.

What can we do for you?
We support our customers even in this tense market environment – we act proactively, anticipate developments and adapt our service to the logistics situation with greatest flexibility. Of course, we are also there for you during difficult times. 

Do you have any questions? Please contact us. We would like to find a suitable solution together with you.