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Bimonthly Market Outlook - December 2021 (part 1)

Updated: Feb 18

The latest news about Air Freight and Sea Freight Market in December/2021 (First Fortnight).


Key Points:

  • Global GDP is projected to grow by 5.7% in 2021 and 4.5% in 2022. A strong rebound in Europe, the likelihood of additional fiscal support in the United States next year, and lower household saving will boost growth prospects in the advanced economies.

  • As of the 29th November 2021, 90 495 commercial flights were flown in the last seven days, compared to 66 856 and 109 376 in 2020 and 2019 respectively.

  • In week 46, worldwide volume decreased by -1% compared with previous week. Worldwide capacity increased by +1% week-over-week.

  • 47 cancelled sailings have been announced between weeks 48 and 51, out of a total of 556 scheduled sailings, representing 8% cancellation rate.

  • The composite index remained stable this week but remains 224% higher than a year ago.

  • Schedule reliability recorded another marginal improvement in October, of 0.4 percentage points to 34.4%, maintaining the range of 34%-40% seen throughout the year.

  • Data from the last November edition of the Alphaliner Weekly Newsletter shows that Matson and the OCEAN Alliance get their inbound TP Sailings berthed at LA/LB much faster than competitors.


Economy

AI GROWTH AND GOVERNANCE


Venture capital investment in artificial intelligence technology increased 20-fold between 2012 and 2020. This scaling up of AI cuts through all sectors of the economy, including transport, healthcare, business, digital security and others.


The transport sector alone saw USD 18 billion of VC funding in 2020 with mobility and autonomous vehicles taking center stage in global efforts to scale up broader sustainable mobility drives, up from less than USD 4 billion in 2014. VC investment in healthcare and biotechnology almost reached USD 12 billion in 2020, compared with less than USD 1 billion in 2014. Other sectors that have seen a notable influx of VC investment include business processes, digital security, marketing and logistics. However, governments and other actors must think hard about policies that best harness the power of technology with people in mind – ensuring that technology serves people, rather than the other way around. The OECD AI Principles sets standards in the use of AI that focuses on human-centered values and nurturing trust, complementing existing OECD standards in areas such as privacy and responsible business conduct. Ultimately, they could play a vital role in bolstering efforts to support inclusive growth, sustainable development – and individual well-being.




Air Freight

Market Trends (24/11 - 30/11)


In week 46, worldwide volume decreased by -1% compared with previous week. Worldwide capacity increased by +1% week-over-week.


On a regional level, volumes from North America and Asia Pacific did best with a volume increase of +2% week-over-week, while Central & South America experienced the largest decrease (-10%).


The average worldwide yield/rate in week 46 increased compared with week 45.




Market Trends (01/11 - 14/11)


Global international air cargo capacity has remained largely flat in the last two weeks. Air cargo capacity offered by widebody passenger aircraft continues to increase, aided by the easing of (US) travel restrictions.


Widebody passenger belly cargo capacity from the UK to US increased +21% since the US lifted international travel bans. The UK was the only country to show significant (double-digit) growth of Transatlantic widebody belly air cargo capacity.


Air trade from Asia Pacific to the United States reached another record high in September 2021, now around 8k tonnes/day (or 80 full B777F freighters). Asia Pacific air imports have concentrated at freighter hubs Chicago (ORD) and Los Angeles (LAX)




Air Cargo Capacity




Commercial Flights Tracker



As of the 29th November 2021, 90 495 commercial flights were flown in the last seven days, compared to 66 856 and 109 376 in 2020 and 2019, respectively.


On a year-to-date basis, 27 552 760 commercial flights have been flown this year, 24% more than 2020 and 28% less than 2019.



Sea Freight

Cancelled Sailings - 01/12


Across the major trades: Transpacific, Transatlantic and Asia-North Europe & Med, 47 cancelled sailings have been announced between weeks 48 and 51, out of a total of 556 scheduled sailings, representing 8% cancellation rate. During this period 72% of the blank sailings will occur in the Transpacific Eastbound trade, and mostly to the West Coast.


Over the next 4 weeks, The Alliance has announced 20 cancellations, followed by 2M and Ocean Alliance with 10 and 1 cancellations, respectively.


Whilst port congestion in San Pedro Bay is increasing weekon-week, as reported in Drewry Port Waiting Time Tracker, this week Los Angeles and Long Beach Port Authorities announced additional improvement in container dwelling time at terminals, and once again postponed a decision on imposing a Container Dwell Fee to 29 Nov, allowing more time to assess the situation.




World Container Index (WCI)


The composite index remained stable this week but remains 224% higher than a year ago.


The average composite index of the WCI, assessed by Drewry for year-to-date, is $7,413 per 40ft container, which is $4,723 higher than the fiveyear average of $2,690 per 40ft container.


Freight rates from Shanghai – Rotterdam gained 1% per 40ft box. Similarly, spot rates from Shanghai – New York grew 1% per feu. However, rates on Rotterdam – New York dropped 1% per 40ft container. Rates on Rotterdam – Shanghai, Shanghai – Genoa, Shanghai – Los Angeles, Los Angeles – Shanghai and New York – Rotterdam hovered around previous weeks level. Drewry expects rates to remain steady in the coming week.




Global Schedule Reliability



Schedule reliability recorded another marginal improvement in October, of 0.4 percentage points to 34.4%, maintaining the range of 34%-40% seen throughout the year. The only “positive”, if one should call it that, is that schedule reliability is not plummeting further.


On a Y/Y level, schedule reliability in October 2021 was down -18.0 percentage points. The average delay for late vessel arrivals also improved marginally, dropping to 7.34 days, albeit still the highest figure for this month, which has been a theme throughout 2021.


FRONTHAUL TRANSIT TIMES



Capacity Outlook (week 47 - 6)
















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