It’s hard to believe that we are already steaming into Q3 with a challenging Q2 behind us.
The war in Ukraine has triggered not only a costly humanitarian crisis that demands a peaceful resolution in Europe, but at the same time economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest including South Africa.
Global growth by economists is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023.
That said, it’s not all doom and gloom and with the lifting of the State Of Emergency and the dropping of the mask-mandate, life seems to be normalising a lot in the workplace although we are not our of the woods yet.
In our articles below we take a bird’s eye view of our industry and where things stand right now, both locally and internationally.
AIRLINK & QATAR AIRWAYS HAVE SIGNED A CODESHARE AGREEMENT
Airlink and Qatar Airways have signed a codeshare agreement, enabling a comprehensive expanded network that offers more choice, enhanced services and greater connectivity between 45 destinations in 13 countries.
The agreement also increases Qatar Airways’ footprint in southern Africa, with improved access to destinations such as Gqeberha (Port Elizabeth) and George in South Africa, and beyond to Botswana, Namibia, Zambia, Zimbabwe and Mozambique.
The codeshare agreement is another feather in the cap for Qatar’s post-pandemic expansion ambitions.
48% RECOVERY IN ANNUAL PASSENGER TRAFFIC FOR SA
IATA’s recent industry update highlighted the problems for the region’s recovery. The lower vaccination rate on the continent has dampened the trajectory of aviation resurgence to date, although it also notes that some ‘catching up’ is likely this year. At present, IATA expects demand to reach almost 80% of pre-crisis levels by the end of 2022, while capacity is expected to rise to roughly the same.
Data published by the Airports Company of South Africa (ACSA) shows a 48% recovery in annual passenger traffic by March 2022. Indeed, in May 2022, ACSA signalled that CPT had processed over 624,000 passengers, down just 19% on pre-COVID statistics.
NOTICE: EU TERMINAL CONGESTION – LONG STAY CONTAINERS MEASURES
Please note that due to increasing congestion on European terminals, as well as overall dwell times continuing to increase, more terminals are trying to address long-stay container problems by various measures. Those include shifting containers to separate storage areas and/or introducing additional one-off or daily charges for laden long-stay boxes.
As long as NATCO is negotiating charges acceptance with our partners, please be aware that should we be forced to accept any charges, unfortunately they will be charged back to the cargo owner. As the nature of many of the charges are of emergency nature it may unfortunately come at short notice.
AIRFREIGHT RATES ON KEY LANES FALL IN JUNE
Airfreight rates on key east-west trade lanes fell in June as the air cargo market enters the quieter summer period.
The latest figures from the Baltic Exchange Airfreight Index (BAI) show that airfreight rates from Hong Kong to North America dropped by 10.1% in June compared with May to $8.72 per kg.
From Hong Kong to Europe average prices were down 1.4% month on month in June to $6.26 per kg.
The declines out of Hong Kong come despite a gradual easing of Covid restrictions in the special administrative region and Shanghai.
Prices from Frankfurt to North America in June declined by 3.7% on a month earlier to $4.08 per kg.
The fall comes as air cargo faces up to a weaker demand environment, with volumes declining in March, April and May as the war in Ukraine continues and inflation puts the breaks on consumer spending.
However, the declines aren’t too much of a surprise as rate performance over the summer months does tend to weaken as demand slows and passenger capacity is added for the summer holidays.
Meanwhile, it should also be noted that prices remain far above pre-pandemic levels and are up against last year as well.
FREIGHT MARKET UPDATE: JUNE 28, 2022
Asia → Europe (FEWB)
Volumes are picking up as we enter Q3, a trend that is expected to continue. Overall the market is still relatively stable without a major surge in volumes as of yet.
There is still a lot of economic and political uncertainty in the European market which is influencing consumer confidence and demand for goods.
AIR FREIGHT MARKET UPDATE
- China: Capacity ex-PVG has almost returned to pre-lockdown levels. With the month and quarter ends around the corner, both demand and rate levels have increased, particularly for far east westbound (FEWB) lanes.
- China: Ex-South China the TPEB market is getting stronger with rates increasing compared to the week prior. FEWB demand remains stable with rate levels similar to last week. Long haul fuel rates will increase by 1 HKD in July.
- Demand is maintaining a stable level.
- Capacity has further increased and rate levels are starting to reduce—especially on the transatlantic (TA) trade lane.
- Jet fuel price has started to increase and is expected to be reflected in the fuel surcharge charged by carriers in July.
- Freighter capacity is improving with better rates and lead times, booking to uplift window is approximately 5-10 days.
MARINE INSURANCE – WHY IT’S THE SMART THING TO HAVE
In these uncertain times Marine insurance is the responsible thing to do. You can insure your shipment for its total value under our Open Marine Policy, so if any or all of your shipment is lost, you’ll be reimbursed.
With as many as 6,000,000 shipping containers on the ocean at any given time, it’s no surprise that an estimated 10,000 containers are lost at sea every year.
In addition truck hijacking and theft has been on the increase since the beginning of the pandemic and has become a very real threat. Let us help you ensure that you’re covered. Speak to one of our team for more details.
THE GOOD NEWS STORY
– PORT OF DURBAN TO BECOME A MAJOR CONTAINER HUB
Transnet National Ports Authority (TNPA) has announced that it is just 30 days away from concluding the validation process for its Eastern Region Ports Master Plans, which will position the Port of Durban as a major container hub and Richards Bay as the port handling dry bulk.
The plan includes massive port expansion and the relocation of the SA National Defence Force naval base from Salisbury Island to Richards Bay, as well as increased container capacity of 11.4 million TEUs and boosted automotive capacity exceeding 900 000 units per annum at Durban port.
The Durban Logistics Hub reconfigures the port master plans of Durban and Richards Bay to increase their capacity to handle container, automotive and liquid bulk commodities.
The Durban Logistics Hub will include increased container capacity of 11.4m TEUs and automotive capacity exceeding 900 000 units. The expansion programme will be realised through the construction of new container terminals at the Durban Point and Maydon Wharf port precincts, which will derive new capacity of 1.8m and 1.6m TEUs respectively.
The Salisbury infill at Pier 1 Container Terminal will expand the terminal’s capacity to 3.6m TEUs, coupled with the berth deepening project in Pier 2 Container Terminal that will enhance terminal capacity to 4.4m TEUs.
The current footprint of the Point Automotive Terminal (ro-ro) will be optimised to enable the handling of an additional 380 000 automotive units, a quantum leap from the current capacity of 520 000 units.
In 2020 and 2021, we faced many difficulties in logistics like limited storage space, jaw-dropping freight rates, port congestion, and truck shortages. The fact that freight rates are dropping this year is good news, especially for importers. However, it is highly unlikely that they will drop back to the 2019 level.
In 2022, the global fleet will expand by many units and is expected to increase by 4.5%. However, the biggest increase is forecast for 2023 – 7.5%. In 2022, at least 22 large container ships (COSCO Shipping, CMA, OOCL, and MSC) are set to debut.
New players will appear on the shipping market: Taiwan and Thailand. Taiwan plans to launch 46 containers, and the Taiwanese carrier Wan Hai Lines intends to expand its Trans-Pacific range. On the other hand, Thailand wants to launch new container lines; therefore, by 2025, it will order several container ships.
The situation globally is still very fluid and economists are not painting the rosiest picture for the economy going forward into 2023, but we are seeing pockets of improvements, and with our strong network of global partners NATCO is in a strong position to provide stable and ongoing support, no matter what your freighting requirements are.
Our experiences team always have their finger on the pulse and we always have the best interest of our customers in mind and will keep you updated on any news or changes as soon as we have verified them as accurate.
We value your support and are here to support you during these challenging times.
Should you have any queries or concerns regarding the above, please do not hesitate to contact our team of experts.
Please stay safe and stay healthy.
Patrick & Mike Dürig