The market continues to cool down with carriers reducing rates for both Transpacific Eastbound (TPEB) and Far East Westbound (FEWB) lanes, according to the latest report by Flexport.

In its freight market update on July 19, the freight forwarder said additional capacity has also been added to the EU which will only further drive down the rate levels.

Flexport noted that new Covid cases are still being reported in Shanghai, however, at the moment "there has not been any impact" on air freight or trucking services.

It added that due to this, terminals and airlines are still operating as normal.

For South China — Shenzhen, Guangzhou, Dongguan, and Hong Kong — Flexport said the market demand is increasing ​and more cross-border shipments are moving ex-HKG.

"Due to crew issues, Cathay Pacific has canceled multiple TPEB flights in July which will result in schedule disruptions," the freight forwarder added.

For Taiwan, it said the TPEB market is picking up quickly and space is getting tight, especially to the USWC while the FEWB market is also getting tight; carriers are also able to offer more space and flexibility for weekday flights.

For Korea, Flexport said the air cargo market ex-Korea remains the same as the week prior with demand continuing to be very slack with "no signs" of picking up anytime soon.

Meanwhile, it added that demand ex-Thailand and Malaysia continues to be slow and capacity is still available.

Flexport said carriers continue to ask around for cargo in the market and ex-Vietnam the market remains soft with some carriers even canceling flights due to low demand.

Asia-Europe ocean freight "picking-up"

In terms of ocean freight, for Asia-North America, Flexport noted that floating rates continue to downtrend despite a sharp increase in bunker fuel prices.

"Importers continue to look to the floating market for short-term savings solutions as the rate differences between the fixed and floating market separate further," the forwarder added, noting that the latest bunker fuel increases are expected to see floating rate levels increase with the shift to increased spot market demand.

"However, the continuing downtrend in floating rates leads to there being lower floating demand than previously thought and capacity is still available," it added, further saying that rates remain soft in many major pockets.

For Asia-Europe, the market update said volumes have picked up in Q3. However, the overall market is relatively stable without a major surge in volumes.

"There have been a large number of blank sailings and omissions. Europe's consumer confidence and demand level continue to be impacted by economic and political uncertainty," Flexport said.

The freight forwarder noted that rates are mostly extended or slightly reduced going into the second half of July. 

"Overall space is starting to fill up again. Congestion in European ports is causing sailings to return to Asia late, resulting in additional delays and some blank sailings," Flexport added.

For Europe-North America, it added that demand for August is expected to be "lower" due to some European factories closing from late July until mid-August.

"Anticipate a high return of demand beginning in September. Congestion is improving on both the East and West Coast but still far away from normality," it added.

For North America-Asia, it added that vessel arrivals and available capacity remain fluid for all US West Coast (USWC) ports.

"USEC ports continue to see challenges with vessel congestion and some vessel strings still omitting Charleston and Savannah entirely. The rail operations from Chicago over the West Coast have improved and are open to increased volumes," Flexport said, adding that "erratic vessel schedules" continue to cause significant challenges with posted earliest return dates and vessel cut-offs at the port.

For North America-Europe, Flexport cited continuous challenges.

"Congestion issues persist in Europe due to local labor actions at base ports in Germany and the Netherlands. The port of Houston continues to experience significant capacity constraints due to schedule delays and port congestion with one service being reduced from weekly to biweekly," it said.

The freight forwarder noted that USWC service to Europe remains extremely tight due to void sailings and skipped ports caused by systematic delays.

Meanwhile, USWC coverage for Mediterranean ports now has reduced capacity due to one string being phased out.

Flexport said all carriers have also issued a booking stop for shipments to Ukraine, Russia, and Belarus.