Asteelflash: Update on supply chain disruptions

Update on the situation from Asteelflash blog post: SOURCE

• The port of Shanghai is operating normally, but inland transport, warehouses, and some production sites are slowed down,
• Trucking services for Shanghai should be cut by 30%,
• Flows are beginning to be redirected, in particular to Ningbo,
• Longer delivery times and a probable increase in transport costs are expected,
• Containment could be extended beyond April 5th, depending on the evolution of the pandemic,
• Port congestion in major Chinese ports reached its highest level in five months last week.

PVG airport is still operating as normal. PVG and most co-loaders recalled part of their staff to stay at the airport. However, the magnetic inspection service will be stopped until April 1st.

AIR FREIGHT

Sanctions imposed on Russian aircraft fleets are further squeezing air cargo capacity in an already constrained market.
Airspace bans on Russian aircraft imposed by the EU, US, and others have added to the existing pressure on airfreight capacity caused by the Covid-19 pandemic and ongoing sea freight congestion.
We have seen an increased interest in airfreight in the wake of previous situations that delayed sea freight services, such as the Suez Canal blockage last year. Additionally, there has already been a marked shift from sea to air due to ongoing sea freight problems as a result of the pandemic-related disruption.
This trend is expected to continue as airfreight continues to become an ever more attractive option for exporters. The good news is that the situation is improving in Shenzhen and Guangzhou, as well as in Hong Kong.
There, the border crossing with Shenzhen returns to normal, although many flights are still canceled.

SEA FREIGHT

The BAF (Bunker Adjustment Factor) increased by 15 to 20% depending on the country, due to the war in Russia and Ukraine. Truckers apply fuel surcharges with weekly validities, which means that the quotes will not always match the amount charged.

Unfavorable EUR/USD exchange rate: 1 EUR = 1.10 USD today / 1 EUR = 1.13 USD on 02/01/2022.
IMO 2023 will have a negative impact on vessel capacities. Today, around 55% of the world’s fleet is IMO 2023 compliant. Therefore, either the ships will have to be replaced or shipping companies will have to reduce the speed of their ships.
Both of these options will reduce actual capacity in 2023. New ships ordered will only partially compensate.

USA
There were 39 container ships waiting off the ports of Los Angeles and Long Beach on March 24, the lowest level since September 4, 2021.

GERMANY
The introduction of a diesel surcharge of 15% will start on March 16th for all sea freight shipments and from March 22nd for all airfreight consignments in Germany. The diesel surcharge applies to pre-carriage and on-carriage of all shipments, for import shipments from the above delivery date, and for export shipments from the above pickup date.