ECX announcement and analysis of 2020’s upward freight rate movement for sea, air and truck.

The strength of the market, combined with capacity management, also brought two rounds of GRI’s and two rounds of Peak Season Surcharges (PSS) from carriers.
The initial announcements that they made going into the third quarter were for 75 blanked sailings, but larger than anticipated demand has them adding back sailings and in some cases, utilizing extra loaders. Through the period of mid-June, the container volume of eight major Chinese ports increased 2.5% year on year according to SeaTrade Maritime News.
Because there are few industries more driven by the economics of supply and demand, rates have risen accordingly. Freightos reports an increase of 50% between mid-May and mid-June between China / Asia and the US West Coast. Freightos also reports that only 6% of Asia – USWC have been removed, similar to Asia – Europe.
The Shanghai Containerized Freight Index this week reports continued strong spot rate pricing from China thanks to strong space management. The first round, imposed on June 15th, saw increases of $900/$1000/$1000 – The Loadstar covered this very well. A second round, slated for July 1st, shows the same projected increases.

The absence of belly space from grounded passenger aircraft was the single largest driver for the exponential spike in air freight rates in 2020.
The tale of the importance that cargo has played for carrier bottom lines during this time is evident in numbers from IATA showing as an overall percentage of airlines bottom lines, cargo in 2020 is on track to represent 26% of revenue.
“Cargois the one bright spot. Compared to 2019, overall freight tonnes carried are expected to drop by 10.3 million tonnes to 51 million tonnes. However, a severe shortage in cargo capacity due to the unavailability of belly cargo on (grounded) passenger aircraft is expected to push rates up by some 30% for the year. Cargo revenues will reach a near-record $110.8 billion in 2020 (up from $102.4 billion in 2019). As a portion of industry revenues, cargo will contribute approximately 26%–up from 12% in 2019.”
The insane rates of $15 – $20/kg that were being charged by cargo carriers and “phreighter” operators at the height of the demand to move Personal Protective Equipment (or PPE) to the United States and Europe have subsided to a still expensive just under $10/kg – off 50% from its heights.
While the rest of the world continues to experience low rates of infection and stay atop of hotspots, Europe is weighing the difficult decision of whether or not to ban travelers from the United States because of our overall response and nationwide infection rate.

Trucking pricing power has swing from shippers back to carriers.
With a closure of retail and non-essential businesses, demand for trucking dropped precipitously. Even the rapid-fire pivot to e-Commerce that saw traditional brick-and-mortar retailers like Target realize a 275% jump in online ordering couldn’t make up the difference. The impact was felt across both dry and refrigerated trucking sectors with the closure of restaurants and traditional food service channels like hotels and schools.
Today, load volumes are up 7% year on year and pricing power is returning to carriers.

As an essential business with offices in Asia, Europe and the Americas, we have continued to work through the pandemic as it has impacted every major global market. Our airline and steamship line partners have worked through these times with us and we are committed to transparency and keeping you informed of current and changing market conditions.