COVID-19 UPDATE

At Max Post Courier, we are equipped to navigate the changes to best support our clients. We will continue to monitor the situations globally to keep you informed.

Many countries have entered lockdown; however, all our facilities and warehouses are still operational. We have warehouse space available, ground transportation options globally, book air charters, and fill space on ocean carriers.

Ocean Operations

• Port of LA and LB are currently severely congested.
• Space and equipment availability has been limited for the past 9 months, especially from inland locations.
• GRI from the US is to all destinations is going into effect in March and April of 2021.
• Free time requests have become restricted globally. Existing free times are being honored so far. But ocean carriers decline new requests. Extended equipment detention free time is for the new contracts remains unlikely as carriers seek to turn equipment much faster.

Future Expectation for 2021-2022

• Shippers Face Increasing Bunker Surcharges Amid Rising Fuel Costs.
  • Higher fuel costs are triggering increases in ocean carrier bunker surcharges.
• Increasing vaccinations will eventually ease US port congestion.
  • Expect to see less pressure on container traffic and ports by the second half of the year.
  • According to JOC analysts, The US economy will rebound strongly from the recession this year, especially in the second half, with US real gross domestic product (GDP) rising 5.7 percent in 2021. That should reduce congestion at US ports and lead to a more normal year in 2022.
• Global Cargo Traffic Jam Could Last to 2022.
  • According to Sea-Intelligence analysis, almost 87% of the arrivals were late for Asia-North America west coast, And when they are late, they are on average more than 10 days late.
  • Maritime rates have surged the most. The cost of shipping a 40-foot container from Hong Kong to Los Angeles has nearly quadrupled in the last year.
• US ocean freight import growth is set to continue throughout 2021.
  • According to the analyst, US demand for goods from the Far East continues to be the root cause of wider market dislocations and shortages of equipment and vessels. Asia-US volumes reached over 5 million TEU in Q4 20, the highest level on record.
  • Looking ahead, it is expected to see the US demand surge continue into Q2 2021.
  • Since port executives at the key US terminals expect ongoing congestion some way into Q2 2021, analysts believe the trans-Pacific market will absorb an abnormal volume of tonnage for the next 3-4 months at least.
  • But the analyst’s latest container report says there are indications that spot freight rates will start to ease in the coming months from their current record-high levels.

Ocean Port Status

• Prince Rupert and Vancouver: Vessel wait time is 3-4 days, Port delays are an additional 2-4 days.
• Seattle: Fri 3/12 – T18 and T30 all day closed.
• Oakland: Vessel wait time is 3 days. Nearly 20 vessels waiting to discharge, including seven container ships.
• Los Angeles/Long Beach:
  • Fri 3/12 – ETS, PCT, TTI, and YTI 2nd shift closed.
    • The vessel wait time is 10+ days. Over thirty vessels waiting to discharge, including nearly 20 container ships. Fifteen container ships are berthed.
    • IPI On Dock Rail delayed 7+ days.
    • Major Chassis shortages, delaying MLB/Doors, average LALB MLB dwell is 3+ days, some stragglers aging to 7+ days.
    • Cargo is buried, expediting containers from any terminal after discharge is quite difficult.
    • Due to continuing stay-at-home-orders for the LALB area due to hospitalization surge, delays for vessels, rail, and trucking are expected to increase significantly over the next 3 weeks.
• New York/New Jersey: Vessel wait time is 4-5 days

US Port Update

• US West Coast
  • LAX/LGB – Delays will most likely be ongoing until late Spring because of large inbound volume, berth delays, terminal congestions, rail delays, trucking shortages, and severe weather conditions.
• US East Coast
  • NY/NJ – Currently experiencing congestion but are open and operations with limited availability at APMT and PNCT
• US Gulf
  • In January 2021, The Port of Houston received $19.5 million in federal funds to begin constructing the Houston Ship Channel Expansion Channel Improvement Project.
  • That project was authorized in the Water Resources and Development Act of 2020 as part of a larger legislative package passed by Congress in December.
  • The Houston Ship Channel Expansion, known as Project 11, will widen and deepen the channel for safer and more efficient navigation of vessels calling the port’s eight public terminals.
  • The Houston Ship Channel port complex and its public and private terminals, collectively known as the Port of Houston, is now the number one Port in the United States in terms of total waterborne tonnage. It is also ranked first for the foreign waterborne tonnage and the number of vessel transits. Nearly 285 million tons of cargo moved through the Port of Houston overall in 2019.

Charter Operations and Aircraft Availability

What charters do Max Post Courier Worldwide Logistics have available?

• Capacity is available for charters globally. Contact us for current rates and availability.
• If you have an opportunity, send us the details, and we can work on the current part charter capacity and pricing. Charter prices are based on current availability, and that could change rapidly. Size and rates have been fluctuating a lot over the past few days.
• Crane Worldwide Logistics must have a signed charter authorization from our client before signing the charter contract with the provider.  Make sure you have someone standing by to sign agreements; capacity and rates change quickly.
• On all charters, funds must be received from our client before wheels up.

Air Freight Update

Hong Kong Air Export Screening Requirement – There will now be 100% screening for both passenger and cargo flights effective as of March 1, 2021. The screening fees are as follows: Charge item = X-ray screening fee: HKD 0.80 per kg.

• Air China – China Southern Airlines (ZNH) and China Eastern Airlines (CIAH) (CEA), reported their estimated annual losses in 2020, collectively reaching a total of CNY30 billion ($4.6 billion) net loss. Among China’s three largest airlines Air China is expected to perform the worst, as it forecasted a net loss of between CNY13.5 and 15.5 billion ($2.1 and2.4 billion), while the net profit in 2019 was CNY6.4 billion ($992 million).In the first half of 2020, Air China’s net loss was up to CNY9.4 billion ($1.4 billion). In the second half of 2020, the airline’s losses gradually narrowed, as the company continued to manage cost controls. Meanwhile, Shanghai-based China Eastern Airlines (CIAH) (CEA) forecasted a net loss between CNY9.8 and 12.5 billion ($1.5 and 1.9 billion), while in 2019, it managed to reach a net profit of up to CNY3.2 billion($496 million).“Although the company tried all means to increase revenue and reduce costs, it still was severely impacted by the epidemic,” read the China Eastern Airlines (CIAH) (CEA) statement. Among China’s “Big Three”, China Southern Airlines (ZNH) forecasted the smallest financial loss. The country’s largest airline by passenger numbers predicted a net loss of between CNY7.9 to 10.8 billion ($1.2 to1.6 billion). In comparison, it posted a net profit of CNY2.7 billion ($418 million) in 2019. The Guangzhou-based airline said in a statement that its operational capacity for international routes fell by 80.6% in 2020, compared to a year prior. All three state-owned airlines said that operating results were adversely affected due to the severe impact of the COVID-19 pandemic, which continues to negatively influence passenger demand and has led to net losses. According to the statistics of the Civil Aviation Administration of China (CAAC) reported in November 2020, international air traffic levels were down by 86.1% and domestic air traffic fell by 32.1%.“Affected by the COVID-19 pandemic, the traveling willingness of passengers dropped sharply, which had a significant impact on the global aviation industry,” indicated a China Southern Airlines (ZNH) statement.
• Air Europa – International Airlines Group (IAG) (IAG) announced its final agreement to acquire Spanish air carrier Air Europa for €500 million ($612.5 million) on January 19, 2021. “Under the terms of the Amendment Agreement, the parties have agreed that the amount to be paid by Iberia for Air Europa will be reduced from an equity value of €1 billion to €500 million with payment deferred until the sixth anniversary of the Acquisition’s completion,” the statement read. The acquisition is still subject to approval by European Commission. The completion of Air Europa acquisition is expected to take place in the second half of 2021, if all conditions of the Amendment Agreement are fulfilled, according to the statement. “Being part of a large group is the best guarantee to overcome current market challenges which will also benefit Air Europa once the transaction is completed. I am pleased that we have reached agreement with Globalia to defer payment until well into the expected recovery in air travel,” CEO of IAG Luis Gallego said. IAG believes that the purchase of Air Europa would further expand the group’s network in Spain. The group already controls a significant part of Spanish market, as it owns Iberia and Vueling. It also would increase the significance of IAG’s Madrid hub, transforming it into a major rival to Amsterdam, Frankfurt and Paris Charles de Gaulle airports. “This transaction makes perfect strategic sense to reinforce Madrid’s hub competitiveness on a global stage. It will benefit consumers and Air Europa’s incorporation into the Iberia Group will improve the company’s viability benefitting both Iberia and Air Europa employees,” Javier Sánchez-Prieto, Iberia’s chief executive, said. On November 4, 2019, IAG initially agreed to buy Air Europa for €1 billion ($1.2 billion). However, due to the economic downturn caused by the COVID-19 pandemic, British Airways parent company IAG has been pushing to reduce the price. In October 2020, CEO of International Airline Group Luis Gallego reaffirmed the group’s interest  in buying Air Europa. “For sure if possible, we would like to do this deal,” Gallego said. “We are waiting to see the package and the conditions attached, and at that moment, we will continue the negotiation.”
• Etihad – Severely hit by lower demand amid the pandemic, Etihad Airways reported an operating loss of $1.7 billion for 2020, compared to a loss of $800 million in 2019.Operating revenues were halved as passenger numbers dropped by 76%, to 4.2 million, down from 17.5 million the year before. For air cargo, freight revenue saw an improvement of 77%, standing at $1.2 billion compared to $700 million in 2019. “Covid shook the very foundation of the aviation industry, but thanks to our dedicated people and the support of our shareholder, Etihad stood firm and is ready to play a key role as the world returns to flying,” Tony Douglas, Group Chief Executive Officer, said. “While nobody could have predicted how 2020 would unfold, our focus on optimizing core business fundamentals over the past three years put Etihad in good stead to respond decisively to the global crisis.” Etihad said its 2020 operations focused on the Boeing 787-9 and 787-10 aircraft due to their range, efficiency, and cargo capacity capabilities in the belly of the aircraft. The airline received two new Boeing 787 Dreamliners during 2020, bringing the number of its fleet to 103 aircraft. The future of the company’s A380 fleet remains uncertain. Since 2017, Etihad is shrinking its operations and harmonizing its fleet, and was ahead of its transformation targets prior to the pandemic, with a 55% cumulative improvement in core results at the end of 2019. The carrier said it projected “a complete turnaround by 2023,” after the pandemic accelerated its transition to a “leaner and more agile business.”
• IAG – International Airlines Group (IAG) (IAG), the owner of British Airways, plunged to the biggest loss in its history, as a result of continued negative impacts to passenger demand due to COVID-19 crisis. On February 26, 2021, IAG reported a net loss of €6.9 billion ($8.4 billion) after tax in 2020 compared to a net profit of €1.7 billion ($2.1 billion) after tax in 2019. The airline’s financial results also disclosed the operating loss of €7.4 billion ($9 billion) in 2020 compared with a profit of €2.6 billion ($3.2 billion) in 2019. “Our results reflect the serious impact that COVID-19 has had on our business. We have taken effective action to preserve cash, boost liquidity and reduce our cost base. Despite this crisis, our liquidity remains strong,” Luis Gallego, the Chief Executive of IAG Group, said. Following the financial statement, IAG’s passenger capacity, which was crucial for the group’s financial performance, slumped by 34%. Looking to the future, IAG indicated that passenger capacity plans for the first quarter of 2021 would be only around 20% of the group’s pre-pandemic capacity. However, the cargo business tipped the balance and compensated for decreased passenger demand. The group disclosed that it operated 4,003 cargo-only flights and increased its cargo revenue by 17% compared to 2019. “IAG Cargo’s turnover increased by almost €200 million to €1.3 billion. Cargo helped to make long haul passenger flights viable,” Gallego added. Furthermore, the airline group said that due to the uncertainty over the impact of the COVID-19 crisis, it would not provide profit guidance for 2021.
• Qantas – After reporting a loss of $1.03 billion that put the airline’s workers at risk of losing jobs, Qantas Airways pushed the restart of international travel to October 2021. On February 25, 2021, Australia’s biggest carrier announced it suffered a half-yearly net loss of $1.03 billion. While many domestic routes in Australia are slowly recovering, international travel is still highly restricted. The airline announced that the date of international travel restarting is being pushed to October 2021 from the previously planned July 2021. “More certainty that domestic borders can stay open because frontline and quarantine workers will be vaccinated in a matter of weeks,” said Joyce. “And more certainty that international borders can open when the nationwide rollout is effectively complete by the end of October. “According to Qantas CEO Alan Joyce, around 7500 international flight workers are at “prime risk” of losing their jobs as the opening of the borders gets postponed. “The prime issue is going to be around 7500 people that are fully dedicated to international — they will have no work,” said Joyce. “Through no fault of theirs, (these workers) are going to be without the income that they built their lives on for a period of time without those borders opening up.” Qantas aims to have restored 60% of pre-COVID domestic capacity by September and 80% by the end of 2021. The major Australian airlines, Qantas, Virgin Australia, and Rex Airlines are currently battling for customers on the domestic routes. To compete with other airlines, Qantas had dropped prices on the Sydney-Melbourne route and introduced a “Fly Flexible” policy that permits travelers to have unlimited flight changes until January 2022. Earlier in 2020, Qantas CEO Alan Joyce announced plans to make vaccination against COVID-19 mandatory for international air travelers once the vaccine was widely available, saying that such measurements would be a necessity if the air travel wanted to reach pre-COVID conditions. Currently, Qantas is serving limited international flights, mainly to repatriate Australian citizens stuck overseas during the COVID-19 pandemic. The only travelers allowed to Australia are those who have been in New Zealand for more than 14 days, according to Australia’s Department of Health.

Ground Update

United States

• Dry van load post volumes increased by 15% week over week in the top 10 markets, as shippers struggled to move freight following the recent winter storms that disrupted freight networks. Fleets continue to deal with the aftermath of winter storms as capacity and demand shifted to those areas hardest hit. In addition to record-level spot market volumes, intermodal network disruptions pushed more freight into the spot markets as shippers sought to meet delivery deadlines with customers. Spot rates in the top 10 markets were up an average of $0.18/mile last week, with spot rates in the West Coast continuing to climb. Los Angeles and Ontario, CA, volumes were up 18% and 36% w/w respectively with spot rates up $0.25/mile in both markets to $2.72/mile and $2.78/mile respectively.  Unusually high first-quarter freight demand is denying shippers relief from a capacity crunch that already outstrips the capacity shortage of 2018, previously the tightest market on record for trucking. The crunch became much more noticeable in February when widespread winter storms and frigid weather literally froze trucks off the road.
• Current outbound volumes are 59% higher than 2020 and 55% higher than 2019.  Outbound tender rejects increased to 27%, impacted by the recovery from the weather and represents an increase of over 400% from this time last year.  Yearly comparisons will soon become tougher given the 30% volume surge last March on the backs of consumer panic buying and hoarding of grocery and household staples. We are entering the seasonal second-gear freight markets find toward the end of Q1.  Warmer weather brings about elevated consumer demand and low inventory levels across manufacturing and retail will drive increased demand.
• FreightWaves predicts consumers are likely to prioritize spending on durable goods and ecommerce in the first half of 2021 much like they did in the second half of 2020.  FreightWaves thinks that it will take significant time to balance out the supply – demand picture, given a host of issues restraining capacity.  The issues currently holding back capacity include a shortage of experienced drivers, a job growth boom in industries like ecommerce and parcels pulling away drivers, and bottlenecks at driver training schools and the Drug and Alcohol Clearinghouse.
• The Ecommerce boom continues to have a significant, positive impact on the trucking industry.  Although many analysts believe it will have a bigger impact on Less Than Truckload (LTL) then Full Truckload (FTL), it has impacted both as well as intermodal, as overall the acceleration in on line purchasing in 2020 was unprecedented.  The reason for believing the impact will be greater on LTL is due to distribution and fulfillment centers getting closer to the consumer, resulting in smaller shipment size vs. FTL.  Intermodal is expected to gain share as the gap in cost (transportation and fuel) grows greater between truck and rail.
• Port congestion on both coasts (LA/LB and NY/NJ) is soaking up capacity and available drivers to move a backlog of containers.  It is impacting the spot markets as shippers pay higher prices to secure moves. Dry Van capacity for the entire east coast, Texas, Southern California and parts of the Pacific Northwest remain tight. Freight coming out those areas is difficult for carriers to cover, regardless of the fact they continue to point available capacity to those areas. Freight going into those areas are extremely attractive to most fleets.
• Rail volumes increased 6.2% y/y this week, up from +1.4% and -17.6% the prior 2 weeks. Volumes increased another 5% sequentially and have now fully recovered from severe winter weather in mid-February, with absolute volumes at their highest point so far this year. From a commodity standpoint, intermodal volumes were very strong (+17% y/y).  Intermodal containers and trailers—at 1,015,995—increased 1.8%, or 18,184 units annually, in February. Cumulative February U.S. carload and intermodal originations, at 1,840,631, were off 4.4%, or 84,788 carloads and intermodal units annually.
• The National Transportation Institute has found that four factors are interacting to cause driver pay to change. They include Driver Turnover, Driver Supply, Capacity Demand, and Freight Rates.  Driver turnover is up significantly across the industry, the driver pool continues to shrink, demand continues to outstrip supply and both spot and contracted rates continue to climb.  Fleets are reacting accordingly and raising driver pay.
• North American Class 8 orders hit 43,800 in February, up 212% compared with a year earlier, ACT Research reported, citing truck makers’ preliminary data. A year ago, Class 8 orders were 14,040, according to ACT. The orders came as the U.S. economy is strong in areas key to truck fleets’ profitability, ACT President Kenny Vieth said. “Consumer spending on goods, a red-hot housing market, a reaccelerating manufacturing sector, and pent-up inventories combine to provide very good visibility to near- to mid-term freight trends,” he said. “Contract freight rates are at record levels, as are spot rates.
• The price of Diesel increased for the 18th consecutive week.  The two-week increase is the most since September 2017.  Per the Department of Energy, the price for a gallon of diesel is now at $3.14, its highest since May of 2019.  Up 2% last week after the previous two weeks went up a total of 19.6 cents.
• The country continues to recover from the impact of winter weather two weeks ago.  In addition to networks being out of balance and out of position, many manufacturing locations had production disruptions that are causing shifts in demand for capacity.  The recovery is causing more pressure on volume than the weather did.  Port Congestion is now causing many retailers to report inventory/stocking issues and close to 60 ships remained at anchor off the West Coast.  Intermodal networks continue to struggle with service performance as they manage through this recovery.  Preliminary data for January indicates that retail inventories were the leanest ever relative to sales, creating pressure for replenishment. Meanwhile, supply chain shortages likely led to more specially arranged shipments of components and supplies.
• Outbound Tender Volume Index (OTVI) was up 20% last week and when compared to 2020 up 59%.  Volumes out of Texas and Oklahoma surged over 60%.  Housing Construction and Manufacturing / Industrial drove the increase.  Outbound Tender rejects remained around 26% and saw spot pricing increase significantly in both Dry Van and Flatbed.  Of the 11 major markets identified by Freight Waves, Flatbed volumes rose in all 11 representing a significant increase in demand for open deck equipment.  Load postings in the truckstop.com system jumped nearly 25% during the week ended February 26 (week 8) to set a third straight weekly record. The increase in truck postings slightly outpaced load growth, so the ratio of loads to trucks eased slightly from the prior week’s record.
• The Logistics Management Index which tracks the number of logistics-related costs, transportation prices, warehousing prices, and inventory costs hit its highest level in more than two years. Transportation costs lead the way with tight capacity and increasing demand driving the growth in rates.  They note that transportation capacity has dropped for the ninth straight month.  This contraction was accelerated in February and seen across all modes. Trucking continues to suffer from a driver shortage due in large part to fewer driver school graduates and drivers impacted by the Drug and Alcohol Clearinghouse not taking the steps to reactivate.
• The price of diesel continued to skyrocket, surging 9.9 cents to $3.072 a gallon, according to data released by the Energy Information Administration on March 1. The increase marked the second consecutive increase above 9 cents, following a 9.7-cent rise. Before Feb. 22, the last gain of at least 9 cents came Sept. 23, 2019. The rise is the steepest since a 15.3-cent spike on Sept. 4, 2017. Diesel topped $3 a gallon for the first time since Jan. 27, 2020. The price of trucking’s main fuel has increased for 17 consecutive weeks.