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COVID-19 Outbreak at Hong Kong Terminal, Demand and Cost for Air Freight Soar Even Higher, Union Pacific Extends Operating Hours

By October 21, 2021 No Comments

Ocean  

Ship capacity forecasted to remain tight through 2022. As bottlenecks persist, global ports may not be able to handle as many containers as previously predicted. The COVID-19 pandemic and challenges with trucking, rail, terminal, and warehouse capacity are contributing to the worsening forecast of the container market. Furthermore, many of the container ships on order will not arrive until 2023.

Ports

Trans-Atlantic carriers redirect from clogged Savannah ports to Charleston. CMA CGM has followed Hapag-Lloyd and OOCL in temporarily bypassing the crowded U.S. East Coast port of Savannah in favor of a Charleston call on its trans-Atlantic routes. Customers were informed that “severe congestion” at Savannah was causing delays of eight to ten days. CMA CGM will begin operating its AMERIGO service connecting the West Mediterranean to the U.S. East Coast from Charleston, with its first sailing on Nov. 27.

J.B. Hunt predicts high freight demand to extend beyond the holiday season and into 2022. J.B. Hunt Transportation Services Inc. forecasts bottlenecks at the West Coast ports to worsen as the holidays approach, with labor shortages and high shipping demand continuing industry-wide. The issues are exacerbated by a backlog of vessels waiting for berths at the West Coast ports.

Air

COVID-19 outbreak at Hong Kong terminal may cause air cargo delays. Due to quarantine restrictions resulting from a positive COVID-19 case, transit times at a Hong Kong International Airport cargo terminal are projected to increase by an average of two to three days. Further stressing the challenges, according to Everstream Analytics, 25% of Hong Kong Air Cargo Terminal’s (HACTL) staff will decrease by roughly 25% as they quarantine until the end of October.

Long-term shift in the importance of air cargo among airlines. Following the industry’s role in moving PPE in the early months of the pandemic and later transporting Covid-19 vaccinations, the importance of air cargo has grown. Additionally, over the last 18 months, the air cargo sector has become increasingly important to the airline industry as many carriers have become reliant on cargo income to stay afloat. Cargo revenues presently account for nearly a third of total revenues, although this is likely to decrease when the passenger market recovers. 

U.K. air freight bookings increase as companies try to avoid port congestion. According to one cargo group, bookings for air freight services in the U.K. increased by 70% in October, as businesses sought methods to avoid port backlogs. Air Charter Service, which allows stores and other companies to rent entire planes to deliver goods, said demand had increased since September when bookings at its U.K. headquarters were already 20% more than the previous year, and 150% higher than pre-pandemic figures. 

Shipping crisis driving some companies to pay steep costs to charter air cargo planes. Demand for air freight is soaring with anxious retailers inflating the cost of an air freight charter to new heights. A trans-Pacific charter on a Boeing 777 currently costs approximately $2milion, according to Air Charter Service. Prior to the pandemic, the peak price for such a charter was $750,000 according to a U.K.-based charter firm. Companies trying to ship goods out of Vietnam may face even higher costs, with prices in the area of $2.5 million to $3 million. If you have any questions about air travel, contact one of our air experts.

Trucking

Ex-Seattle trucking rates skyrocket due to congestion and container shortages. As a result of the increased import activity, spot truckload rates from the Pacific Northwest to inland markets like Chicago and Memphis are rapidly increasing as cargo intended for congested Southern California ports is rerouted north and a lack of intermodal containers forces more transloaded freight into over-the-road trucks.

Cost of trucking’s main fuel spikes. According to Energy Information Administration data released Oct. 18, the national average price of diesel continues to jump, rising 8.5 cents to $3.671 a gallon. Diesel prices have risen 19.4 cents a gallon in the last two weeks and 26.5 cents in the last three with Monday’s increase. A gallon of gas now costs $1.283 more than it did in 2020.

Rail

Union Pacific extends operating hours to support the port of LA. Union Pacific has lengthened operating hours at a near-dock rail facility by the Port of Los Angeles in an effort to match the port’s goal of 24/7 operations.

Other

The reality of the 24/7 commitment at the ports, expressed by Lori Ann LaRocco of Freightwaves. Biden’s claim of ports operating 24/7, according to LaRocco, is not accurate. Furthermore, LaRocco expresses that congestion will not be relieved in the next 90 days unless the ports and all stakeholders, including truckers and warehouse workers, operate at the same time.

What can consumers do as we head into the holiday season? Everything from holiday shopping to everyday goods and services has been impacted by the strained supply chain and global shipping crisis. Good Morning America put together a panel of experts to discuss what’s going on and offer shopping tips for the holiday season.