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Market Update for the week of 30th Mar – 3rd Apr

Dear Valued Customer,

In the last few weeks, the Covid-19 cases globally have increased tremendously, leading to severe disruption of supply chains. Please read below for the latest regarding impact on logistics:

Air Freight:

Similar situation with last week on the export demand that air export demand (masks / medical supplies) ex SHA continues to be extremely strong whereas it is relatively stable ex South China, Hong Kong and Taiwan. There is new regulation from the China Customs imposed on 10Apr that the customs would carry out export commodity inspection for medical products (as per attached) in order to strengthen the quality control over the medical products to be exported. We would closely communicate with overseas and shippers on the changing regulations for the medical products. Please find below the current rate indications for your reference:

  • SHA to BKK/SIN/TPE: rmb24-29/kg
  • SHA to EU main airports: rmb70-72/kg
  • SHA to U.S.: rmb78-100/kg
  • CAN/SZX to BKK/SIN/SGN: rmb28-32/kg
  • SZX to TPE: rmb25-27/kg
  • CAN/SZX to EU main airports: rmb65-68/kg
  • HKG to BKK/SIN: hkd23-25/kg ++
  • HKG to TPE/SGN/HAN/NRT/KIX: hkd19-21/kg ++
  • HKG to EU main airports: hkd38-45/kg ++
  • HKG to U.S.: hkd48-52/kg ++
  • TPE to EU main airports: ntd140-290/kg ++
  • TPE to BKK: ntd28-32/kg ++
  • TPE/SIN/KUL/SGN: ntd50-60/kg ++

As previously stated, the rates for mask shipments are rmb5-10/kg higher than normal cargo. Due to heavy backlog to EU with the reduced capacity, there would be longer transit time of 5-7days and we would try to put priority with our regular customers. New businesses and spot shipments would be subject to market rates and space confirmation. Please contact the respective offices on the space and rate situation as the market keeps changing every day. We would monitor closely on the market development if there are substantial changes on the rates and space.

Ocean Freight

Plummeting fuel costs is expected to trigger the cancellation of carrier low-sulphur surcharges as well as significant reductions in standard bunker surcharges. This week, CMA CGM announced it was cancelling its low-sulphur surcharge, while Maersk acknowledged that its Environmental Fuel Fee (EFF) would be zero from 1 May (Source: theloadstar.com) Ocean carrier fleet expansion is on hold as the liner industry fights for survival amid Covid-19 lockdowns around the world. Carriers will likely seek to invoke delay clauses in their contracts with shipyards, pushing back delivery for a year or more (Source: theloadstar.com)

As consumer demand in Europe and North America drops significantly, plus the widespread of social lockdowns, for the shipments en-route to the destinations may encounter problems of high warehousing storage costs at destination, demurrage, port congestion. In response, MSC has introduced a suspension of transit (SOT) programme to help shippers and their freight service providers prevent container exports out of Asia building up at ports, by offering terminal yard storage capacity. CMA has the similar approach which is called DIT (Delay In Transit). Here attached the details of these program (Source: msc.com & cma-cgm.com)

RATE DEVELOPMENT/ UPDATE PER TRADE:
FEWB (Far East Westbound)

  • FEWB MBL is rated as per “Sailing Date”
  • CNMP to NCMP rate is USD1100-1250/40’ includes BAF & IMO 2020 for Q2
  • Short-term/ Spot rate in April will be more competitive than NAC
  • Please make use of the ocean carriers web rate tool to find short-term rate (I have sent all the links to Local Procurement)

TPEB (Transpacific Eastbound)

  • MBL is rated as per “Gate-in Date”
  • Hapag-Lloyd announced May 1 GRI at USD560/700/700
  • COSCO announced May 1 GRI at USD640/800/900
  • USWC O/F rate at USD1320/1650/1650 & USEC O/F rate at USD2200/2750/2750, valid from April 15-30, 2020
  • Expect this FAK will drop
  • Now is the contractual period for contract (Rate validity: May 1, 2020 to April 30, 2021). Once BCO (Beneficial Cargo Owner) contract is finalized, it will be NVO’s turn. This year the negotiation has been postponed for a few weeks due to the market uncertainty
  • If you have potential business with yearly volume of 200 TEU or above, APAC will try to file NAC for you. Please provide the account details on/before April 15 (Wednesday)

Ex Europe to China

  • Space constraint is severe to the point where carriers are rejecting spot booking till April and giving space to only long-term clients. Those with space are charging astronomical rates to move cargo.

  • Capacity/congestion issues are expected at all ocean ports due to potential rollover pool for export.

  • Most trucking services have resumed but only with delays and longer transit times due to blockages and driver shortages

Ex-CHINA to South East Asia (SEA)

  • All services will resume from Week 12 onwards. Future blank sailings will be used to accommodate scrubber installation.

  • Space to SEA will be tight from Week 12 due to regular Peak Season and Ramadan until end of March. Cargo rush due to Ramadan is from Week 11, cargo slack will begin from Week 16.

Ex-CHINA to Europe

  • In general, there is a tendency that blank sailings would be decreasing from week 12

  • There is also no serious space issue for the upcoming sailings.

Warehousing

  • Our own warehouses are operating as normal in Greater China, having incorporated the necessary measures advised by the Government.

  • Distribution and Domestic Trucking are operating smoothly as well. Please reach out to your contact window for further details.

General

  • Hong Kong is continuing partial working from home, with the operations working in shifts. All employees will be available through emails and phones in the normal office hours.
  • Wuhan has resumed work from office from 10th Apr, with the appropriate safety regulations in place.

Rhenus Advice

  •  Landbridge railway service FCL & LCL ex CN to EU & vice versa is still working well and this can always be a backup / contingency plan in case you have any difficulties in the other services

  • Rhenus own LCL consol boxes ex CN to EU and vice versa are a steady and stable option – 5-6 times weekly

  • Rhenus air freight consol services are available with daily connections for both Ex-CN to EU and vice versa. We have different products available (express vs longer lead times) as per the urgency of the cargo

  • To avoid high additional charges due to terminal congestion, it is advised to apply for combined 14 days detention and demurrage at the destination terminal in Europe

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Contact Details

Rhenus Logistics China Ltd.
8th Floor
Zhonghuan Modern Building
No. 468 Xinhui Road, Putuo District
Shanghai 200060
P.R. China
Fon + 86 21 6330 8590
Fax + 86 21 6330 8525
E-Mail: info@cn.rhenus.com