- Retailers opt for sea-air to bring their goods out of China.
- Garment industry needs new season launch stocks into shops before Easter.
- Importers do not want to pay air freight spike which is likely to be $4-$5 per kg, up from about $2 per kg.
- Sea-air is an attractive option, as it would come in at about the $2.80/kg mark.
- Some importers still see sea-air as a risk, so they opt for pure air freight.
- Smaller feeder vessels also opted to get goods out of China bypassing the mega-ships as they have blanked sailings leading to port congestion.
- Virus and some vessels in yards for scrubber fitting are the reasons for some ocean freight to blank sailings.
- Best sea-air transit points would be Singapore and Dubai, and routes like Korea and Taiwan.
Retailers plan to opt for sea-air to bring their goods out of China as they are awaiting their spring-summer stocks, writes Alex Lennane for an article published in The LoadStar.
Awaiting new season launch stock
The garment industry is looking to get its new season launch stocks into shops before Easter. It is just in eight weeks’ time.
Grant Liddell, business development director for Metro Shipping said that nearly 70% to 80% of Chinese factories are still not back up to speed.
Delay expected
So there will be at least another week’s delay in production, and a lot of anxiety with sea freight.
Importers opt sea-air
Mr Liddell said most of the importers do not want to pay for the expected air freight spike in one or two weeks’ time. The increase is likely to be $4-$5 per kg, up from about $2 per kg.
That makes sea-air a very attractive option, as it would come in at about the $2.80/kg mark.
Cheaper option
Major retailers are now looking at sea-air as soon as production is up and running. It recovers the delay in production and is cheaper.
Some importers still see sea-air as a risk, so they opt for pure air freight.
Feeder vessels to get goods
Metro to get goods out of China, plan to use smaller feeder vessels of about 2,300 teu bypassing the mega-ships. Many of the mega-ships have blanked sailings which has led to some port congestion.
Read more: Major Carriers Announce Blank Sailings As Coronavirus Spreads
According to Mr Lidddell, Intra-Asian trade seems pretty buoyant. “Air freight outside of China is not affected, the schedules are all OK, and there is still belly capacity.”
Sea-air transit points
He said the best transit points for sea-air would be Singapore and Dubai, then can include routes like Korea and Taiwan, but those air carriers will really stick their rates up.
Singapore is a stable market –
- at a lower cost,
- works well normally, but
- could get congested
Hong Kong and China rates can spike overnight.
Freight has to move!
It is just a displacement in demand into March and April. Meaning, instead of planes being 70%-full it will be 90%-full. So the dip in February will mean a sharp recovery in March/April.
Huge air freight demand
It is still not clear when factory production will restart in China. Many staff, including forwarders, are still working from home. Few have started to return in some cities, such as Beijing and Suzhou.
He said, once production is up and running, air freight should enjoy huge demand, and carriers may be able to make up for the losses during this period.
Ocean freight
Virus is used as an excuse for ocean freight to blank sailings. But actually some do not have their vessels as they are in the yards for scrubber fitting.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: The LoadStar
