TGL Market Update
Dear TGL Supporters,
I hope you; your family and team have remained healthy during these uncertain times. It has been some time since my last market update since international trade has remained somewhat lacklustre over the last few months. However, with global markets all slowly opening up we can see there has been an increase in activity, which has changed some of the shipping dynamics, therefore, warrant an update for you all.
Ocean freight capacity due to covid19 shutdowns was severely cut back with sailings either cancelled or consolidated. However, with the recent uptick in trade, demand for capacity has risen more than what existing capacity can handle. Carriers also have not responded by bringing back previous capacity, which is causing many bottlenecks at major transit hubs, especially Asia. The net outcome of all this is higher pricing, transit delays, and space shortage.
With our traditional peak season coming up fast in September it will be very interesting to see how the carriers will respond to further increase in demand. I guess that they will want the current market chaos to continue until such time they have achieved their desired pricing expectations. So, the coming weeks/months will be very important to watch closely to ensure any shipping planning is done with the least amount of disruptions. Currently, we are experience long transit times from European trades as well as a shortage of space and equipment.
Ex Asia, we are seeing a significant rate rise across the board at full capacity. Space is given to the highest bidder and in some instances, cargo is left waiting at the terminal for upwards of 2-3 weeks. North America, namely the USA, has been the most stable market of all the major trades recently. However, this was a mature market with limited capacity, to begin with. As such, we don’t envisage this stability to continue for long especially given their management of the covid19 pandemic.
The airfreight market has seen some dramatic cost increases, given much of the flights previously operating at a standstill. With Australian carriers, Virgin going into administration, and Qantas cancelling 90% of their services, we are left with international carriers to meet any air freight demand. Costs have risen 10-fold in some cases and are only being used for critical time-sensitive cargoes. Anything else most customers are moving the goods at a loss to simply meet contractual agreements. Airfreight will continue to be a volatile means of transport as long as international travel is restricted.
Given these realities, I urge all customers to communicate their shipping plans ahead of time to their TGL solution specialist. This is so they have ample time to plan out the right pathway that will avoid disruptions. However, please do expect disruptions in the form of delays and frequent pricing changes as we juggle the highly fluctuating market conditions.
Please rest assured we at TGL always have your best interest at heart and will always do our very best to get your goods moved in the most efficient way.