Halifax a winner as vessels re-route due to US east coast strike
The Canadian east coast gateway of Halifax – and, by extension, port operator PSA which ...
AMZN: EUROPEAN REVERSE LOGISTICS GXO: NEW HIGHSCHRW: CATCHING UPBA: TROUBLE DHL: GREEN GOALVW: STLA: MANAGEMENT SHAKE-UPTSLA: NOT ENOUGHBA: NEW LOW AS TENSION BUILDSGXO: SURGINGR: EASY DOES ITDSV: MOMENTUMGXO: TAKEOVER TALKXOM: DOWNGRADEAMZN: UNHARMED
AMZN: EUROPEAN REVERSE LOGISTICS GXO: NEW HIGHSCHRW: CATCHING UPBA: TROUBLE DHL: GREEN GOALVW: STLA: MANAGEMENT SHAKE-UPTSLA: NOT ENOUGHBA: NEW LOW AS TENSION BUILDSGXO: SURGINGR: EASY DOES ITDSV: MOMENTUMGXO: TAKEOVER TALKXOM: DOWNGRADEAMZN: UNHARMED
The US dockworker union ILA may only just have confirmed the east and Gulf coast port strike, but disruption is already happening – with shippers bracing for extra airfreight costs.
“Containers will be in the wrong spot, and shippers will have to deal with that,” said Niall van de Wouw, chief airfreight officer for Xeneta.
“Some have already pulled back freight they had dispatched. So they will need to supplement their stock in a different way, or stick it out. Either way, things are going to be a mess; and when there is a mess, airfreight comes in.”
Shipco Transport said it was seeing additional requests for airfreight.
“The mere threat of a strike has already had an impact on the airfreight market,” noted Kim Ekstroem, global COO – airfreight.
“A couple of weeks ago, we started to see quote requests for large shipments which normally would be LCL or even FCL shipments. Forwarders and their customers started to brace themselves for a potential strike.
“In the past week, many of these early requests turned into bookings and actual shipments. From the US east coast, we have seen an extraordinary number of large shipments, both import and export.
“This is a smart move by the shippers. They control their destiny. While we have seen a small increase in the transatlantic air rates, prices are still reasonable. But the question is, for how much longer?”
Mr van de Wouw pointed out that, as the airline winter season begins, some 20% of cargo capacity – from bellyholds – will leave the market.
“If you add it all up, there is the seasonality of ecommerce, which has a big spike in Q4. Traditional airfreight also has a busier Q4, while belly capacity will be leaving the Atlantic. Add a strike, and that’s a lot to contend with.
“It’s another element that will add more pressure to already tense supply chains. Potentially, a very big storm is brewing.”
Mr van we Wouw said many shippers had already decided to avoid east and Gulf coast ports, fearing their goods “getting stuck”.
“On the ocean, there are very few other options available, although some shippers may have brought forward their schedules. But airfreight has the potential to become very expensive towards the end of this month.”
Mr Ekstroem said the market would likely change today.
“When enough shippers are hedging for the possibility of a strike, the market will go into a frenzy.
“The impact will be especially pronounced because airfreight capacity is limited – widebody passenger aircraft have cargo capacity equivalent to one 40ft container or less.
Last week he warned: “There will be a huge imbalance of demand and capacity, and the airlines will take advantage of that. Almost immediately, there will be a lack of capacity, and rates will sky-rocket. The best-paying cargo will fly. What cost $2 per kg today could be $6 or more by the end of next week.
“Airlines will prioritise express or guaranteed products at premium rates, leaving businesses scrambling for space.”
As China’s Golden Week holiday begins, WorldACD reported last week that global air cargo tonnages had fallen about 3% in week 38 (16-22 September) due to Asian holidays. Observers expect airfreight tonnage to rise soon.
Comment on this article