As we enter the 2020 Holiday season, Janel Group is monitoring market conditions with our global partners to mitigate your peak season blues. Here’s a quick overview of our findings and recommendations.
Ocean Freight Status and outlook
Severe equipment shortages (20’,40’ GP & HC) are prevalent across various lanes. We do not expect any near-term relief entering the holiday season.
Vessel space is also in short supply, despite additional capacity entering the market and peak season will only add to the crunch. Limited supply places the carriers in control. Our opinion is carriers will use blank sailings to control supply and thus rates. As of November 3, 2020, the only service subject to systemic blank sailings is THE Alliance’s EC3 service, which is operating on a every other week basis. Carriers have reinstated a significant amount of capacity into the trade during Quarter 3 which has resolved most of the booking availability challenges. We do not anticipate significant capacity increases in the final weeks of the year. However, carriers may decide to implement emergency additional sailings at the last minute based on booking demands.
Contract Season
During these unprecedented times, carriers have been unable to forecast demand any better than shippers and BCO’s. However, carriers have now shown their ability to manage supply to fit situational demand in a declining market. It is expected that carriers will continue to use removal of capacity to prevent a market rate collapse.
Therefore, be wary of published long-term schedules; any freight rate drops in 2021 will surely be offset by blank sailings and therefore, it is questionable as to what product is offered in a 12-month contract.
Current market conditions are exposing bottleneck type issues... some influenced by carrier actions and others by market or global situations.
As we enter contract negotiation season, stakeholders must balance their own need for agility in the supply chain through the benefits of controlling contracted rates against the spot market. It is our opinion that we may see large and sudden market changes similar to 2020, with associated blank sailings and bottleneck issues.
Ocean Solutions
Reserving Space: In times of a capacity crunch, advanced supply chain planning is the best course of action. When possible, booking in advance is key. JGI suggests reserving vessel space 2-3 weeks prior to cargo ready date, thus avoiding possible delays and maintaining supply.
Non-Operating Reefer Containers: NOR containers are a great trade secret for solving capacity issues on certain lanes. These containers are about 10CBM less than a standard 20’ or 40’ dry container and are in much better supply than standard 40’ & 40’HC equipment. While not always preferred, use of an NOR container could mean a much sooner and more stable loading as well all-in transit time.
Premium Options: Although all freight is at a premium right now, most carriers are offering different levels of guaranteed services at varying costs. These services range from guaranteed booking, space, movement, etc. depending on level of service provided. If you have freight that cannot miss a deadline, we suggest discussing these options with your Janel Group representative.
Air Freight Status and outlook
Although flights schedules have improved, there are still currently far less transatlantic and transpacific passenger flights, meaning fewer cargo options. Thus, the strain on cargo aircraft volume is still prevalent. As we move into the holiday season, we expect upward pressure on air freight rates.
Rates are currently changing on a 3 to 4-day basis, with spot requests being the only means to confirm a rate.
Air Freight Solutions
Like ocean blues, planning is everything - booking in advance is key! Advance booking at about 7 to 10 days ahead is the best possible option for securing space. Although it is not always possible to know the exact size and weight of your shipment so far ahead, trying to anticipate future freight can be the difference between securing a flight.
Whenever possible, it is best to pack your airfreight shipments to size limits that will satisfy both passenger and cargo aircraft requirements. This permits the most options to getting your freight to the final destination as fast as possible.
As always, you can rest assured that Janel Group is working diligently to alleviate any Holiday Shipping and Peak Season Blues you have! A JGI representative is available any time to discuss your supply chain requirements and concerns.