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    Global tech supply chains – which include semiconductor to consumer electronics manufacturers – have faced a variety of risks and trends as companies attempt to adapt and transition into a new COVID-19 environment.

    November 20th, 2020: 


    The COVID-19 crisis presents a challenge that the world has never faced before. Without any doubt, the situation continues to test the global logistics industry’s resilience. As the COVID-19 pandemic shows no signs of abating, the world is moving into what is considered to be the ‘the second wave’ of the crisis.

    As per the previous newsletters, the possible impact of this 2nd wave of the pandemic on transportation operations (air, sea and rail freight) is unprecedented.
    Many countries have again imposed lockdowns as well as certain preventive measures, including significant travel restrictions, in order to slow the spread of the virus.

    Road, air, sea and rail transport infrastructures (airports, ports, terminals, freight stations, transport companies) are affected.

    Air and sea transport capacities are severely impacted by the lack of passenger planes and by the numerous cancellations of ship rotations. To this can be added, depending on the origin and / or destination, a very significant shortage of equipment and human resources.


    The air freight market remains very saturated, capacity is insufficient to meet strong demand and additional boarding times are to be expected.
    The "peak season" is here!


    Containers’ shortages push up rates on head haul trades and start to affect backhaul trades as well.
    A combination of a very strong cargo demand in Asia and an increasing shortage of 40’ containers has seen spot rates for Chinese export rising sharply over the last few weeks, with the Shanghai Containerized Freight Index (SCFI) last Friday reaching its highest level since its launch in October 2009.

    Getting empty 40’ containers in China to take advantage of the lucrative rates on head haul trades has become a top priority for the carriers.
    Carrying cargo at low rates on backhaul trades is obviously becoming less interesting as the inland transport and the stuffing and stripping of the boxes takes extra time.
    The situation becomes very complicated in terms of the availability of equipment and space.
    Moreover, some shipping lines are considering implementing an ERS or ECR fee for the repositioning of empty containers at requesting ports.
    The cost incurred by the sea freight companies will be passed on to the end customer.

    Blank sailings are maintained by the ship-owners despite the strength of the market. Besides, the armaments continue their race for profitability and therefore favor the Asia-USA axis much more profitable than the Europe axis.
    The latter is very overloaded by the growing demand for the coming weeks and in particular towards the United Kingdom.
    Indeed, fearing to be overtaxed from January 1, 2021, English companies anticipate and inflate their stock before the Brexit goes live.
    Moreover, port congestion is setting in and does not seem to want to be resolved. The UK's port infrastructure is not equipped to ensure such volume growth.

    All the major carriers are experiencing equipment shortages at Asian ports.
    Some carriers introduced a “box priority fee”, which secures equipment availability and is payable at the time of booking.
    Many carriers have introduced restrictions on the release of empty containers prior to the intended shipment, i.e. release of empty containers maximum eight days prior to the ETD. Carriers are working to resolve the issues in Asia by repositioning as much equipment as possible, even returning empty containers to Asia without first making them available for export cargo, as is currently a challenging situation for the US and European export markets.

    In order to better anticipate volumes and equipment, shipping companies are either increasing their PSS (already in force since August) or set up a new PSS (Peak Season Surcharge) from November 23rd.
    This PSS applies as follows (applicable: 20 ’and 40’ container and specific equipment):

    1 / Origin: From all ports in Asia (including Japan, Southeast Asia and Bangladesh)
    Destination: To the ports of Northern and Southern Europe: 500 USD / 20’ and 1000 USD/ 40’.

    2 / Origin: North and South Europe
    Destination: Asia / Oceania: 375 USD/ 20 ’and 550 USD/ 40’


    The transportation by Rail between China and Europe has become a very attractive option, and Rail has proven its strength during the pandemic by helping to sustain supply chains across all industry sectors. Freight volumes carried by Rail between China and Europe hit records in 2020 as the demand spiked during the COVID-19 crisis and Rail connections remained stable at all times.
    The unexpected substantial volume increase in recent months lead to congestions at key transit locations due to equipment shortages.
    This may impact the end-to-end transit times in the Westbound direction (China to Europe); transit times are stable in the Eastbound (Europe to China) direction.
    • Due to space limitations on trains and container equipment availability in China, qualitative volume forecasts are crucial for the upcoming weeks.
    • Rail space continues to be allocated on the ‘First booked – first railed’ basis with a booking window of 14 days until train departure for Westbound and 10 days for Eastbound trains.
    • Delayed departures in China due to high train numbers, border congestion at KZ/CN border and PL/BY border need to be considered in the supply chain planning.

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