DSV-Panalpina Market update - March 2021

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DSV-Panalpina Market update - March 2021
DSV-Panalpina
                                                      Market update
                                                              March 2021

1 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
Content

    1           COVID-19 Overview

    2           Ocean freight update

    3           Airfreight update

2 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
More than 359.4 million vaccine doses have been administered
 worldwide, equal to 4.7 doses for every 100 people
 There is already a stark gap between vaccination programs in different countries, with many yet to report a single
 dose.
                                                                                                 Per 100     Total doses                      Fully
                                                                                                                         % Vaccinated
                                                                                                 people    administered                 vaccinated
Dosis administered per 100 people                                                World               5.0   381,270,135             –             –

                                                                                 Israel            107       9,491,511          59%          48%

                                                                                 Seychelles         91          88,106          63%          28%

                                                                                 U.A.E.             68       6,578,881             –             –

                                                                                 Maldives           41        212,711              –             –

                                                                                 U.K.               39      26,063,501          37%          2.4%

                                                                                 Chile              37       6,994,820          26%          11%

                                                                                 Bahrain            36        566,796           22%          14%

                                                                                 United States      33     109,081,860          21%          12%

                                                                                 Serbia             29       2,040,313          18%          11%

                                                                                 Malta              25        122,366           17%          8.2%

                                                                                 Denmark             14        834,041           10%          4.3%
https://www.nytimes.com/interactive/2021/world/covid-vaccinations-tracker.html

 3 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
Global COVID-19 Freight Restrictions Overview
With new mutation of “British COVID” travel restrictions have increased with more passenger flights cancelled.
                                                      COVID-19 Travel Regulations Map as per IATA
   EUROPE
                                                                                                                                                                ASIA PACIFIC
   Europe lockdown: Travelers are subject
   to a 7-day isolation period and take                                                                                                                         China: China has restricted entry and
   another COVID-19 PCR test at the end                                                                                                                         transit to all travelers except Chinese
   of this period.                                                                                                                                              nationals, Hong Kong, Macau, or Taiwan
                                                                                                                                                                passport holders, and travelers with
   Restrictions will be revised on March.                                                                                                                       diplomatic, service, courtesy, or C visas,
                                                                                                                                                                or visas issued after March 28, 2020.
   UK: From March 8, passenger traveling
   abroad will need to carry a new travel                                                                                                                       South East Asia: Most countries have
   declaration form stating that their trip is                                                                                                                  banned the entry until end of January
   permitted under UK national lockdown                                                                                                                         with potential extension
   rules..
                                                                                                                                                                INDIAN SUB-CONTINENT.

   NORTH AMERICA                                                                                                                                                India:.Re-opening soon.
                                                                                                            Source:https://www.iatatravelcentre.com/world.php
                                                                                                                                                                Cargo planes are allowed to enter the
   People who has been in EU and UK                                                                                                                             country.
   during last 14 days or residents from
   those countries are banned the entry to                                                                                                                      Sri Lanka: Flights has been suspended.
   USA, this does not apply to nationals or
   permanent residents in USA                         AFRICA and MIDDLE EAST                                                                                    Bangladesh and Pakistan: Passengers
                                                                                                                                                                must present a negative PCR before
   LATIN AMERICA                                      South Africa All passengers must present a negative corona virus test and they are only                   entering
                                                      allowed to travel to 3 airports, Cape Town, Durban and Johannesburg.
   Uruguay; Passengers are not allow to
   enter
   All flights from UK are suspended to               Saudi Arabia Restrictions to travellers coming from Argentina ,Brazil, India South Africa
   Argentina, Brazil, Chile etc                       and United Kingdom

4 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
Ocean freight
                                                      Update

5 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
Port Congestion is now a critical issue in USA and EUROPE
    Long berthing delays and a lack of available ships fleet limit options for further capacity growth

                                                                               US Port congestion (New York, Savannah, Houston and Los Angeles
             Average port congestion (days) Europe Main ports

•     Port congestion is becoming an issue in Europe having some weeks with over 3 days of delay, this is affecting the Transatlantic trade where
      bookings needs to be place 30 days before

•     The various vessels anchorage waiting to get access to the ports of discharging are one of the drivers for the ongoing equipment constraints in
      the global trades.

•     Carriers are still announcing void sailings to avoid more congestion on the ports (both Asia, US and Europe)
                                                                                                                               Source: Alphaliner and Seabury

    6 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
Trade container imbalances remains high

               Global growth split on headhaul and
               backhaul
                                                                         •   The pandemic has caused a higher than usual level of trade
                                                                             imbalance between head haul and back haul trades, which
                                                                             will continue to put pressure on the ability of carriers to
                                                                             reposition equipment in the coming months.

                                                                         •   The shortage of equipment being generated on a monthly basis
                                                                             compared to the annual average continues at a historically high
                                                                             level. This is fundamentally driven by large demand increases on
                                                                             the Transpacific trade.

                                                                         •   But given that equipment issues are relevant to all trades, this
                                                                             means that the imbalance issues predominantly stemming from
                                                                             the Transpacific continues to impact all trades globally. Should
                                                                             demand be normalised rapidly, we would still need to re-
                                                                             balance the effect seen in chart local Shenzhen volunteers and
                                                                             police

                                                      Source: Seaintel

7 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
Trade Update
                                                                                 Container shortage & Poor schedule reliability
Asia Pacific Equipment Situation
                                                                                 •   All equipment types remain tight across Asia.
                                                                                 •   Capacity discipline among carriers is expected to
                                                                                     continue.

                                                                                 •   Shipper should consider booking as early as
                                                                                     possible 3-4 weeks in advance.Schedule reliability
                                                                                     may not see improvement until second quarter of
                                                                                     2021.

                                                      S= SURPLUS OF CONTAINERS
                                                      D= DEFICIT OF CONTAINERS

8 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
Worst vessel performance ever recorded: 34,9%
Global Port congestion is increasing transit time to now almost 7 days

                          Schedule Reliability                                                                      Average delay of late vessels
                                                                                           7.00
90.0%

80.0%                                                                                      6.00

70.0%
                                                                                           5.00
60.0%
                                                                                           4.00
50.0%                                                                                                                                                                     2020
                                                                                    2020
40.0%                                                                                      3.00                                                                           2021
                                                                                    2021

30.0%
                                                                                           2.00
20.0%
                                                                                           1.00
10.0%

0.0%                                                                                       0.00
        JAN   FEB   MAR    APR   MAY    JUN     JUL   AUG   SEP   OCT   NOV   DEC                 JAN   FEB   MAR   APR   MAY   JUN   JUL   AUG   SEP   OCT   NOV   DEC

   Source: Sea-Intelligence Maritime Analysis

9 | DSV – Market update Air & Sea March 16th , 2021
DSV-Panalpina Market update - March 2021
Bunker price development start to increase also the gap of
VLSFO
    800

    700                                                VLSFO
                                                       IFO380
    600
                                                                •   Following a sharp drop in bunker fuel
    500                                                             prices in Mar-Apr 2020 due to the
                                                                    pandemic, prices then have started to
    400                                                             rebound and stabilize

    300
                                                                •   Fuel price have begun to increase
                                                                    significantly Jun – early Nov 2020
    200
                                                                •   Can anticipate for BAF increase in line
                                                                    with the continuing upward trend in
    100
                                                                    VLSFO price
      0

   Source: Ship&Bunker

10 | DSV – Market update Air & Sea March 16th , 2021
Ocean Freight Asia - Europe
Small drecrease but near all time high

                  SCFI – North Europe WB Rate Index
                               (US$/40ft)
                                                                              Rates reducing at slow pace
  $9.300
                                                                              SCFI Levels Week 10-2021:
  $8.300
                                                                              • Shanghai – North Europe: USD 8,040/ FEU
  $7.300                                                                      • Shanghai – Mediterranean: USD 8,664/ FEU
  $6.300
                                                                              Rates remain at high but stable levels which are
  $5.300                                                                      expected to persist into March
  $4.300
                                                                              •   Equipment shortage remains a challenge in the coming
  $3.300                                                                          weeks.
  $2.300
                                                                              •   Some carriers are also accepting limited UK cargo
  $1.300
                                                                                  again.

                                                       Source: SCFI Week 10

11 | DSV – Market update Air & Sea March 16th , 2021
Ocean Freight Asia - North America
Rates remain at all time high levels

             SCFI Transpacific EB Rate Index (US$/40ft)

 $4.300
                                                                                 Space and equipment is opening up
 $3.800
                                                                                 SCFI Levels Week 10-2021:
                                                                                 • Shanghai – US West Coast: USD 3,999/ FEU
 $3.300                                                                          • Shanghai – US East Coast: USD 4,786/ FEU

 $2.800                                                                          Booking time stills 21 days before

                                                                                 •   Equipment situation is improving
 $2.300
                                                                                 •   There is still a strong demand in the trade and it is
                                                                                     expected new services and capacity to be added
 $1.800

                                                       Source: SCFI March 2021

12 | DSV – Market update Air & Sea March 16th , 2021
Ocean Freight Asia – South America (East Coast)
Reduction of rates still at high levels

                        SCFI to Santos Brazil (US$/40ft)
 $17.000

 $15.000                                                                           SCFI Levels Week 10-2021:
                                                                                   • Shanghai – Santos: USD 14,746/ FEU
 $13.000

 $11.000                                                                           Allocation of space is a big problem in the trade
  $9.000
                                                                                   •   vessels are utilized on both ECSA and WCSA. All
  $7.000                                                                               sailings are fully booked, with a few exceptions.
                                                                                       Utilization is 100% and Bookings are above 150%,
  $5.000
                                                                                   •   Booking’s minimum a month in advance as vessels are
  $3.000                                                                               already full
  $1.000
                                                                                   •   This is the trade with the higher price per nautical miles
                                                                                       out of Asia.

                                                       Source: SCFI Week 02-2021

13 | DSV – Market update Air & Sea March 16th , 2021
Ocean Freight Europe – Asia
Full ship scenario continues

                 Drewry Rotterdam Shanghai (US$/40ft)
 $2.000
                                                                                   Drewry Levels Week 05-2021:
 $1.900
                                                                                   • Rotterdam – Shanghai: USD 1,465/ FEU
 $1.800
 $1.700
                                                                                   Allocation of space is a big problem in the trade
 $1.600
 $1.500                                                                            •   Some carriers have introduced temporary booking stops
 $1.400                                                                                in order to cope with the surging export demand

 $1.300                                                                            •   Port congestion and the on-going equipment shortage is
 $1.200                                                                                creating massive operational challenges
 $1.100
                                                                                   •   Several Post-CNY blank sailings expected for 2nd half
 $1.000                                                                                of March/early April. Details to follow

                                                       Source: SCFI Week 02-2021

14 | DSV – Market update Air & Sea March 16th , 2021
Ocean Freight Europe – North America
Rates are increasing – Bookings required well in advanced
                                                                                     Drewry Levels Week 10-2021:
                                                                                     • Rotterdam – New York: USD 4,500/ FEU
                 Drewry Rotterdam New York (US$/40ft)
 $4.000
 $3.800
                                                                                     Bookings need to be places 6-8 Weeks in advanced

 $3.600                                                                              •   Rates are being added various surcharges like PSS,
 $3.400                                                                                  EIS, EBS etc. Expect a GRI to be announced in
                                                                                         February to become effective by latest April 1, 2021
 $3.200
 $3.000                                                                              •   Equipment deficit in most origin regions in Europe. This
 $2.800                                                                                  will remain the biggest issue for quite some time.
                                                                                         Carriers charge EIS/EBS to cover empty moves,
 $2.600                                                                                  although no guarantee from carriers that they can
 $2.400                                                                                  provide the needed containers.
 $2.200
                                                                                     •   Port concession is adding to the problem, situation is
 $2.000                                                                                  critical

                                                                                     •   Bunker oil prices are on a upturn, we expect carriers to
                                                                                         charge higher BAF in March + Q2
                                                       Source: Xeneta Week 10-2021

15 | DSV – Market update Air & Sea March 16th , 2021
Ocean freight market overview – All time high as a ”new normal”
TRADE LANE                 COMMENTS                                                                                             RATES AND SPACE
                           •    Situation is improving slightly but still remains tensely at some locations.
ASIA to Europe             •    Space is still tight from China and there is equipment shortage (specially 40’)
                           •    Long term rates will increase due to BAF

                           •    Rates steady at historical highest levels.
ASIA to NAM                •    Equipment shortage, specially in Vietnam and South east Asia.
                           •    Ships are waiting at anchor in LAX, Oakland and Savannah
                           •    The need of equipment is affecting all trades globally
                           •    Vessel are full and less capacity available
Europe to NAM
                           •    Congestion (Port facility) surcharge for the port of New York applied by Ocean Carriers. This
                                is applicable for all cargo to and from Europe

                           •    Rates:Trade uncertainties due to country political situation
Exports from
                           •    Space is tight
India

                           •    Booking needs to be placed one month in advance
ASIA to LATAM              •    ASIA to LATAM due to longer transit times needs to offset with higher rates
                           •    Rates are stable

                           •    Port congestion at most of Asian ports
                           •    New bunker level. Australian ports are still congested but improving
INTRA ASIA
                           •    Equipment under serious shortage, (long haul trades receive the equipment before intra
                                Asia)

16 | DSV – Market update Air & Sea March 16th , 2021
Airfreight
Update

17 | DSV – Market update Air & Sea March 16th , 2021
Air cargo capacity declined 15% compared to the same
weeks in 2019
                   We are now running a full year (COVID out break) and we will be able to compare in similar
                                                            terms

 Total air cargo capacity growth, last two weeks vs same weeks 20191,2
 % growth vs last year

                                                                                      Global capacity decline: -17%

                                                   Asia Pacific returned to ‘flat’ growth over the last two weeks
 Note: Arrow thickness representative of May 2020 capacity, direct flights only; all flows indicate region-to-region capacity; regions are indicated by color coding; all dates measured in UTC; 1) Total cargo capacity includes
 international widebody passenger and all freighter flights; 2) Comparing capacity between 22 Feb- 7 Mar 2021 to capacity the same weeks in 2019; Source: Seabury Consulting Capacity Tracking database, Seabury Consulting Source: Seabury
 analysis (March 2021)

18 | DSV – Market update Air & Sea March 16th , 2021
After a decline during Chinese New Year, air cargo capacity
bounced back in the last two weeks
      Weekly international air cargo capacity, Feb 2020 – Mar 2021
      Thousand of tons

                                                                                                                                                                    •   Increase in air cargo
                                                                                                                                                                        capacity was both for
                                                                                                                                                                        passenger and freighter
                                                                                                                                                                        operations

Note: Direct capacity only; All freighters and widebody passenger aircraft only, Date measured in UTC time; 1) Corrected for day-of-week fluctuations, smoothened
for clarification; 2) Comparing 11 - 24 Jan 2021 to 13 - 26 Jan 2020; 3) Comparing the daily average for 28 Dec – 10 Jan 2021 vs. 11 – 24 Jan 2021; Source:
Seabury Consulting Capacity Tracking database, Seabury Consulting analysis (January 2021)

19 | DSV – Market update Air & Sea March 16th , 2021
Traffic Scenarios for December to June 2021
   Air traffic throughout Europe is expected to be approximately 66% down in February 2021
   compared to January 2019 and the situation is quickly deteriorating.

  EUROCONTROL Draft Traffic Scenarios
  20 March 2021 (base year 2020)                                                                   •   The ‘Coordinated Measures’
                                                                                                       Scenario is based on there being a
                                                                                                       common approach to putting in place
                                                                                                       operational procedures and lifting
                                                                                                       national restrictions.

                                                                                                   •   This is a major requirement of both
                                                                                                       airlines and airports to support their
                                                                                                       recovery.

                                                                                                   •   The ‘Uncoordinated Measures’
                                                                                                       Scenario assumes that this common
                                                                                                       approach does not materialise.

                                                                                                   •   Overall, the Coordinated Measures
                                                                                                       Scenario envisages a loss of 45% of
                                                                                                       flights (5 million) in 2020, while the
                                                                                                       Uncoordinated Measures

                                                                                                   •   Scenario would result in the loss of
                                                                                                       57% of flights (6.2 million).
check the AIU dashboard: https://www.eurocontrol.int/Economics/DailyTrafficVariation-States.html

20 | DSV – Market update Air & Sea March 16th , 2021
A higher demand from the UK to mainland Europe has led to
an increase in cargo capacity, potentially driven by Brexit

  Weekly capacity from UK to mainland Europe, Jan – Mar 2021 vs 2020
  % Tonnes

                                                                                                                                                           Widebody belly capacity has
                                                                                                                                                           increased the most, with
                                                                                                                                                           Germany, Belgium and
                                                                                                                                                           Luxemburg
                                                                                                                                                           and the Irish Republic seeing
                                                                                                                                                           the highest absolute growth

Note: 1) Year-over-year growth rate compared to the same weeks in 2020, using average growth rates for visual purposes 2) Top 4 destinations by capacity
increase from the UK to Europe ; Source: Seabury Cargo Capacity Tracking database, Seabury Cargo analysis (March 2021)

21 | DSV – Market update Air & Sea March 16th , 2021
Incheon is now the largest airport for cargo capacity, with a
21% increase compared to last year

Top 10 largest airports by capacity, Feb 2021 vs 2020                                                                    YoY (%)             Rank 2020
Thousand tonnes

                                                                                                                                                                  •   All top 4 airports increased
                                                                                                                                                                      their capacity in February
                                                                                                                                                                      2021 compared to 2020

Note: Does not adjust for the impact of passenger freighters on cargo capacity or by differences in load factors 1) Comparing February 2021 vs 2020 2) Based on
air cargo capacity in February 2020; Source: Seabury Cargo Capacity Tracking database, Seabury Cargo analysis (March 2021)

22 | DSV – Market update Air & Sea March 16th , 2021
Air freight market overview
          Many shipper are preparomh their cargo out of factories before CNY long holiday (Started in Week 6 this year), market is
                                              expected to be turning active from next week
 TRADE LANE                              COMMENTS                                                                                 RATES AND SPACE
                                         •    North and South China markets continue to be weaker than expected due to
 Exports from
                                              new capacity
 China / Hong Kong
                                         •    We see a ramp up of volumes by the end of Q1.
                                         •    North Asia (Korea/Japan) and Southeast Asia markets are very busy and yields
 Exports from JP, KR and                      continue to climb as demand exceeds available capacity.
 South Asia                              •    The yield difference between these markets and China is approaching $4-5 per
                                              kg.

 Exports from                            •    Lack of space and high rates
 India/Bangladesh                        •    Limited capacity available (limited PAX) and strong demand at the moment

                                         •    Trans-Atlantic market continues to be very strong in both directions as demand
                                              outstrips capacity.
 Export from Europe
                                         •    Cargo is taking between 5-7 days minimum for uplift so please plan ahead and
                                              be patient with transit times.
                                         •    US Export market is strong to both Europe and Asia. The backlogs to Europe
                                              are especially acute and transit times are much longer than normal. With the
 Exports from NAM
                                              continued drought of belly capacity, expect these conditions to continue into the
                                              foreseeable future.

23 | DSV – Market update Air & Sea March 16th , 2021
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