Freighters Grapple with High Demand as Airfreight Capacity Drops 23% In March

April 30, 2020

Passenger airlines are cutting flights as a result of the coronavirus pandemic, but some are adding capacity to cargo market by repurposing planes to carry freight.

“We’re taking some of the main deck seats off a few of our international planes to facilitate taking a greater lift in the short term and we’ll continue to use those resources where it makes sense for certainly for some time to come,” Delta Air Lines CEO Ed Bastian said on the company’s earnings call last week.

As overall demand falls, carriers that specialize in airfreight are seeing increased demand for their service since so much capacity has left the market.

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Source: Supply Chain Dive

Freight Activity Falls After Historic Rise

April 28, 2020

As trucks are busy restocking stores in reacting to COVID-19, capacity available for other products is causing a historically tight trucking market that has dropped 20% in volume in just the last two weeks, according to ABI Research.

“Rising costs, shrinking capacity, and panicked customers are shaking up the freight transportation and logistics markets,” says Susan Beardslee, Principal Analyst at ABI Research.

The American Association of Port Authorities sees 1Q volume decreased by at least 20%, including blank sailings, which may cost carriers $1.9 billion.

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Source: MH&L news

FMC Eases Certain Service Contract Filing Requirements

April 28, 2020

The U.S. Federal Maritime Commission (FMC) on Monday, April 27, said it would temporarily allow service contracts to be filed up to 30 days after they take effect to provide relief to shippers and ocean container carriers impacted by the coronavirus pandemic.

According to the FMC order, the relief becomes effective immediately and will last through December 31, 2020.

The relief measure was identified by the Fact Finding 29 Supply Chain Innovation Teams, which includes more than 50 industry representatives who hold regular telephone meetings with FMC Commissioner Rebecca Dye to identify pain points in container shipping due to the COVID-19 pandemic. The spring is the period when most annual service contracts are concluded between ocean carriers and shippers.

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Source: American Shipper

May Day Could Be A Cry For Help From Carriers, As Another Holiday Looms

April 27, 2020

The five-day May Day holiday shutdown in China is adding to capacity adjustment problems for ocean carriers.

Notwithstanding the 20% of headhaul Asia-North Europe sailings already cancelled next month, carriers are still struggling to best match supply with ever-weakening demand and to avoid the ‘nightmare’ scenario of half-full 20,000 teu ULCVs arriving in North European hub ports in June and July.

A carrier source told The Loadstar last week their biggest fear was that if utilisation levels plummeted then, it would be very difficult to halt the erosion of freight rates.

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Source: The Load Star

Union Pacific Expects 25% Volume Dip In Q2

April 23, 2020

Union Pacific’s efficiency markers improved in the first quarter, compared to the same quarter last year, which bolstered the railroad’s results despite the early impacts of the coronavirus. Trip plan compliance for intermodal cars was up 19%, car velocity was up 8% and dwell time was down 11%.

“We have made great progress at this point; however we will continue to transform our operations in order to further improve safety, asset utilization and network efficiency,” said Vena. But precision-scheduled railroading (PSR) can only insulate the railroad’s margins through so much loss of business.

Automotive volumes fell early, sending railroads an early sign of the volume erosion on the way. But the worst is yet to come. “Nothing would please me more than to be wrong about this 25%-ish, and see some time in the second quarter that we’re starting to see demand firm and our supply chains reflected. But there’s a lot that needs to happen between here and there,” Fritz said.

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Source: Supply Chain Dive