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Market Insights
February 15, 2024

Ocean & Air market insights – October 2021

Ocean: as demand increases with the onset of peak season, haulier shortages and power outages in China bring schedule reliability to new lows

  • Delays, port congestion and elevated costs are set to remain an issue, with recent power outages in many key Chinese provinces (affecting manufacturers and ports) adding further pressure1. As peak season approaches and retailers rush to restock low inventories, severe trucking shortages and congested container yards threaten to exacerbate delays. Port omission in Northern Europe may become more frequent, as carriers run blank sailings to ease mounting backlogs, and cope with seasonal surges caused by Christmas and Golden Week (1 – 7 October)2.  
  • Capacity: remains constricted, with schedule reliability at its worst, hitting 33.6% in August3. As a result, knock on-effects are still being felt in ports like Yantian, where average delays range between 7-10 days.
  • Rates: after five months of continuous increases, rates have finally started to plateau at $18, 320 per FEU. This can be partially attributed to some carriers freezing spot rates, as well as a reduced risk of disruption caused by Chinese typhoons. However, rates are still 6x more expensive than they were a year ago, and are expected to remain elevated through the holiday rush into Q1 2022.

1. Bloomberg, China’s Power Crisis Moves From the Factory Floor to Homes, link
2. Loadstar,  ‘Plan ahead’, says Maersk, unveiling plans to skip ports as demand grows, link
3. Sea Intelligence, Schedule reliability drops to all-time low, link

Air: cargo rates set to increase amidst new product launches, airport closures and seasonal rush

  • Predictions are in that Q4 2021 could present one of the highest peaks the air freight industry has seen, with demand exceeding 2019 highs1.
  • Capacity: new consumer items and technical product launches ahead of Christmas combined with ocean freight disruptions and airport closures in China and Vietnam, are set to push existing capacity constraints up2. But, if power cuts in Chinese factories continue for much longer, we may see decreased production help alleviate constraints. Average transit times from the Far East to Europe have increased from the usual 1-2 days, to 3-5 days.
  • Rates: air freight rates, already at an all time high, could be driven up further due to rising demand. August recorded a 15% MoM increase in rates globally and as we head into peak season (with the launch of new Apple products coming) we expect rates to increase. At an average cost of 3x more than ocean freight, air still presents a good alternative, if possible.

Rate sources: IATA,  Xeneta and ANS Baltic freight index – Predicted air and ocean freight rates for 2021 are based on historical increases during that time period and do not account for any unforeseen shocks that may occur in the next few months.
1. Loadstar, Prepare now for a very challenging air freight peak, link
2.Loadstar, Asia Pacific battling peak season air cargo capacity crunch and rising rates, link

H2 2021 > plan ahead and prioritise shipments as supply chain crunch persists

  • Plan ahead: Book ahead where possible, to avoid missing out.  Continue to book well in advance of Cargo Ready Dates (4-6 weeks), and encourage departures from different origin ports if possible.  
  • Book air freight, where possible:Be flexible where you can, and consider which mode of shipping is best for you right now.  Though ocean is typically less expensive, current market conditions continue making air far more competitive than it once was.
  • Visibility platform: With a digitally connected supply chain, it’s easier to make informed decisions about prioritising goods and spreading shipments. Coordinated alerts can be useful for flagging and managing exceptions, as port congestion and haulier issues continue disrupting global trade.