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Dear Valued Customer, The majority of the large economies and countries around the world continue the positive trajectory with reopening of both private and public sectors. We only see minor changes from week to week, and subsequently we will going forward issue our COVID-19 advisory on a bi-weekly basis instead of every week, but naturally inform on ad-hoc basis if any major development occurs. Despite the overall positive development globally, a few countries such as Brazil and India are still experiencing a negative trend in terms of number of reported cases resulting in continued extensive lockdown measures. The impact from COVID-19 continues to be present, but primarily this being ripple effects on the capacity and demand side, rather than being a result of specific COVID-19 restrictions. Intense speculation on the economical mid and long-term impact continues. As seen in below illustration from OECD a significant decrease in both global GDP and and global manufacturing export orders is apparent. Ultimately this will trigger a decrease in global transport volumes across all transport modes, with our current assessment being that this will kick in as of mid Q3 and onwards. It is though uncertain what the effects of the volume decline will be on freight rate development, as carriers are expected to manage capacity tightly in order to avoid significant decreases. |
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Graph from OECD report: OECD Economic Outlook, Volume 2020 Issue1: Preliminary version. Link to graph: https://www.oecd-ilibrary.org/sites/0d1d1e2e-en/1/3/1/index.html?itemId=/content/publication/0d1d1e2e-en&_csp_=bfaa0426ac4b641531f10226ccc9a886&itemIGO=oecd&itemContentType=#figure-d1e313 |
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Airfreight has turned a corner We continue to see a steady increase in return of commercial flights around the world, and combined with the worst pressure of PPE (Personal Protective Equipment) volumes having subsided, it seems clear that we on airfreight have turned a corner. Asia to EU rates have been on a significant decline during last week, and same is evident for China to US. Zooming in on a few major lanes Shanghai to Europe average price fell by 18.7% compared to previous week and from Hong Kong to Europe average rates decreased by 23.7% compared to previous week. Europe outbound capacity situation remains stable and rate development follows this stable pattern being close to 2019 levels.
Blank sailings remains the hot topic on ocean freight We experience that the worst panic on especially the Asia-Europe trade has passed. Despite a significant number of blanked sailings across all carrier alliances space is now available for volumes, but still with schedule delays as a result of the changed sailing schedules. The same goes for lanes from Europe to Asia and from China to US where the worst period has passed, but still with a some degree of pressure on the capacity side. Carriers continues to exercise a strict pricing discipline on all trades being very cautious to fuel a potential price war. Asia-Europe rates remain stable a little higher than 2019 levels. For Europe-Asia we still experience rate levels that are significantly above 2019 levels and expect this to continue until start of Q3. Further blank sailings have been announced by carriers in an attempt to balance supply and demand, however not to the extent seen in April and May where carriers ended up in a situation where too much capacity was removed.
Rail freight continue to lead the way As in previous weeks rail freight is the safe choice from a capacity perspective and flows are moving without disruptions.
Road freight We remain fully operational although in Italy, Spain, Portugal and France with local restrictions at borders causing delays. Overall, these have though become less significant following the general trend of reopening all around Europe.
Read more information on truck border times here.
For further details on specific countries and mode of transport, see our overview here. All information in this advisory is offered to the best of our knowledge and is prone to change. If you have any specific questions, please reach out to us. Yours sincerely, |