Global Freight Market Insights

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Global Market Overview

Top Story: Trans-Pacific Trade Recovery Experiences Shaky Start to New Year Amid Surges in COVID-19 Omicron Variant

“As COVID-19 surges in multiple countries, factories may be forced to shut down and airport and ports may impose restrictions that handicap operations,” said Airfreight Director, Vincent Wong.

Strict measures were implemented to control Omicron’s spread. In China and Hong Kong, stringent quarantine requirements will have an impact to supply chain operations and further reduce flight capacities. Buyers in the U.S. should plan ahead to mitigate interruptions to their supply chains.

Following a brief decline in early January, air freight rates are expected to increase into the Lunar New Year (LNY). Capacity will continue to remain tight, especially as standard, routine cargo is planned, and prioritized, in advance of upcoming holidays.

Flight cancellations with carriers like Cathay Pacific have already pushed Hong Kong rates up by 10-15% in the first week of January.

Trans-Pacific air cargo rates climb above previous records

Weekly average air freight spot rate per kilogram (2.2 pounds) from Shanghai to North Europe and North America

transpacific air cargo rates climb

Source: Baltic Air Freight Indices powered by TAC

In Asia, shippers will attempt to load ocean-bound cargo in advance of the LNY. Therefore, the month of January will show strong demand and increasing rate levels on the Transpacific and Asia-Europe trades.

COVID-19 outbreaks have amplified the existing challenges in the ocean market, as seen in Ningbo, China. Equipment movement is going to become more difficult locally as travel restrictions shape truck movements.

  • Beilun district lockdown has heavily impacted loading Less Container Load (LCL) cargo
  • Warehouse operations suspended
  • Space and sailings pushed post LNY
  • Delivering directly to Shanghai is an option via alternate trucking options

Port congestion in the United States continues to strand vessels and limit equipment availability.

  • Los Angeles/Long Beach has more than 100 vessels offshore with average 20–30-day dwell
  • Seattle and Tacoma average 15 days to berth
  • Oakland congestion continues to increase

The implementation of additional dwell fees at Los Angeles/Long Beach has been postponed nine times but will be reviewed January 17, 2022.

Southeast Asia transshipment ports are impacted, causing delays on non-direct services via Asia. Outport capacity is being constrained by limited feeder capacity. Carriers have suspended feeder space from Indonesia and Manila because of high charter costs for smaller feeder ships.

North American Freight Market Insights | C.H. Robinson

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Air Freight Update

Global

Demand for air freight will remain strong in 2022 amid a congested ocean market, but capacity will remain tight. The Omicron variant concerns remain high, as is the impact of LNY. Airline staffing worldwide will have ramifications to flight schedules and availability, as increased quarantine duration for crew members is adopted by many carriers.

Air freight demand

Industry CTKs (billions per month)

air freight demand

Source: IATA Economics, IATA Monthly Statistics

While global demand has dipped in the early part of 2022, this appears to be a temporary event. Many manufacturers are behind in production for a variety of reasons (COVID-19 protocols limiting efficiency, lack of raw materials, etc.) and have full order books for the foreseeable future.

  • Primary driver is low inventory levels
  • Air freight can help to fill orders quickly and re-establish some level of safety stock
  • Continued conversion of ocean to air freight expected

Air freight capacity

air freight capacity 

Europe

Softer demand and a decline in spot market rates from December are good signs, even though COVID-19 concerns remain high.

Southeast Asia

Cargo demand in India is outstripping capacity. Since travel restrictions were lifted, passenger demand has soared, reducing cargo capacity on a per flight basis to accommodate baggage and additional fuel.

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Ocean Freight Update

Global

Overall capacity is affected by ongoing port congestion in many trade lanes. Vessels are frequently delayed back to origin, missing scheduled port calls to unload empty equipment and pick up new laden exports to the United States.

  • Estimated since the second half of 2021, at least 10% of the global fleet is absorbed by the delays
  • Some shipping lanes are seeing even greater impact, such as Asia to the U.S. West Coast, where capacity is reduced by 20-30% due to port congestion

Shipping lines are also constraining base port loads to Los Angeles/Long Beach to reduce the number of long dwell containers in the port in favor of inland Interior Point Intermodal (IPI) loads.

Global Schedule Reliability

global schedule reliability 

Shipping schedule reliability plunges to historic lows

Schedule inconsistency and operational constraints are projected to continue. Additional considerations to remember:

  • Forecast 6–8 weeks minimum
  • Prioritization
  • Variability in SKUs/parts
  • Smooth volumes week-to-week
  • Regular communication with C.H. Robinson

Europe

With an estimated 25% of the workforce absent because of COVID-19, sustained interruptions endure.

  • Port congestion persists, especially in Rotterdam and Antwerp
  • Inland traffic is snarled with inadequate number of drivers

South America

Trade lanes in and out of South America are actively seeking new bookings. However, the delays associated with moving cargo inland, by truck or rail, persist. Getting cargo to the coastal ports is the dominant factor in whether cargo will sail as originally booked.

  • East coast continues to experience delays
  • West coast is facing greater interruptions throughout Peru and Chile

Oceania

All markets to and from Oceania have limited space and equipment. It is advantageous to plan 4–6 weeks in advance. Vessels have been re-routed to other ports to minimize delays because of congestion in Melbourne.

Several carriers have suspended transshipment service from the West Coast of North America to Australia and New Zealand because of significant congestion and challenges with feeder connections from Asia to Oceania. New bookings from U.S. East Coast have also been discontinued by a few carriers until the backlog is cleared.

Asia to Oceania grapples with space—rates on the rise

Space is continuing to be a major concern, especially in Adelaide and Fremantle, Australia, where it is only available under space protection or a freight premium online procurement. Carriers may implement large GRIs mid-February after a prolonged rate freeze to level out their FAK rate with others in the market.

Biggest factor to help reduce impacts to your supply chain—continue to book early.

U.S. Inland Drayage Update

Winter weather is having a big influence in many parts of the United States. In a supply chain already burdened with labor and equipment shortages, wintry conditions will exacerbate the situation in the upcoming weeks.

Wait times in Savannah have improved, reduced to 2 days. While this is great news for Georgia Ports Authority, it is:

  • Largely due to SSLs omitting the port
  • Deciding to call Charleston or Jacksonville port

An increased backlog of vessels in Charleston and long dwell times have amplified the capacity constraints in this market.

Warehouse space in New York/New Jersey has become more readily available. Customers should still consider:

  • Moving freight closer to inland door locations to avoid high labor costs
  • Transloading for lanes more than 150 miles each direction

Chassis shortages are a major challenge across the Ohio Valley, Memphis, and Nashville regions. Backlog at the ports, combined with some new carriers in the market, has allowed Memphis to unlock more capacity.

Imports to Los Angeles/Long Beach are predicted to rise more than 40% at the start of January from this time last year. Local capacity remains extremely tight causing long dwells at all terminals. C.H. Robinson is working with local providers to out-gate containers based on longest dwell time first and mitigate the time containers are sitting at the ports. It will continue to be a collaborative effort.

For West and Gulf markets, delivery locations should:

  • Remain flexible
  • Extend hours to accommodate loading/unloading when possible

Be aware of additional per diem fees and connect with our experts early in the shipment cycle if looking to mitigate these charges.

Capacity lead time requirements and equipment by region


capacity lead time requirements and equipment by region

Customs Update

President Biden signed the Uyghur Forced Labor Prevention Act into law on December 23, 2021. As a result, U.S. Customs and Border Protection (CBP) will have the ability to ban importation of all articles in the Xinjiang Uyghur Autonomous Region (XUAR) or by entities that source materials from a XUAR forced labor situation. The ban will take effect June 21, 2022.

As of January 1, 2022, imported aluminum and steel articles from the EU are subject to a tariff-rate quota (TRQ).

  • An additional 10 percent on aluminum and 25 percent on steel duty rates will be imposed for imports in excess of the TRQ
  • Section 232 steel and aluminum products from the EU that are in-quota will enter free of any Section 232 duty

President Biden signed a Presidential Proclamation to modify the Harmonized Tariff Schedule of the United States (HTSUS). As the updates take effect January 27, 2022, be aware of their impact to avoid costly compliance issues or inconvenient supply chain delays.

Amendments have been made to the African Growth and Opportunity Act (AGOA) Free Trade Agreement which will:

  • Remove Ethiopia owing to human rights violations
  • Eliminate Mali and Guinea because of recent coups by military leaders

Stay informed on the latest news, insights, and resources from our customs and trade policy experts by subscribing to our North American Trade & Tariff Insights.

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Trade lane updates

Stay up to date with market changes that impact air and ocean capacity at the trade lane level—everything your business needs to navigate global shipping.

Market insight videos

Watch these short videos to gain a better understanding of the market dynamics affecting global supply chains and the movement of goods around the globe.

Wheeled v. grounded U.S. inland terminals

Explore the difference between wheeled and grounded U.S. inland terminals with Jenna Kuehn, Director of Global Forwarding Inland at C.H. Robinson.

The chassis shortage

Learn about the dynamics behind equipment shortages in the U.S. inland market with Jenna Kuehn, Director of Global Forwarding Inland at C.H. Robinson.

Air freight and Shanghai labor market

Learn how labor challenges in China are affecting air freight in Shanghai with Keith Nehring, Senior Air Product Development Manager.

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