The final quarter in 2018 continued to present unprecedented challenges for the industry.
We experienced a strong and prolonged peak shipping season exacerbated by the expected China trade tariffs coming into force in January impacting the Trans Pacific route. The unease from Brexit continued to create uncertainty with the Government no closer to agreeing terms for departure from the European Union.
Despite the challenging circumstances, PFE remain best placed to continue to provide our customers with the highest levels of service.
Sea Freight
- The industry continued to be impacted by the rise in fuel costs however we saw this start to curtail during November. The results in Q4 2018 for shipping companies suggests that most carriers are feeling the impact of heavily increasing fuel costs particularly since May.
- Q4 saw a surge of advance shipments on the Pacific – The likelihood of an additional 25% tariffs from January 2019 created a mini-boom in US imports for most of the final quarter. The Asia to Europe market saw the usual early spike in volume with the final surge in Christmas shipments which tapered off towards the end of the quarter as usual.
- The global sulphur fuel cap continued to make an impact with shipping lines all announcing plans to separate the bunker (fuel) element of the freight rate from the freight cost in 2019. This is in readiness for compliance with IMO 2020.
- The UK and Europe continued to experience major truck driver shortage issues. The reduction in haulage availability resulted in challenges to import deliveries particularly during seasonal peak, negatively impacting productivity at ports.
Air Freight
- We saw the expected seasonal increase in volumes predominantly driven by the technological industry: high tech companies needing their devices and accessories delivered fast and in big quantities for the Christmas market. There was also demand increase directly related to the growth in e-commerce platforms that give the ability for Chinese sellers to offer their products directly to consumers.
- Air Freight volumes were also impacted by the US and China trade war with demand for Airfreight increasing in the final weeks of 2018, with inventory that was supposed to go by ship, being transported by Air to beat the January 2019 deadline.
- The seasonal increase in volumes continued to be exacerbated by the lack of progress on Brexit leading to uncertainty in terms of ordering stock to come by sea, adding to an overall increase in Air Freight volumes above the seasonal norm.
Looking Ahead
As we approach Chinese New Year (beginning on 5th February) we are seeing the usual seasonal demand for space from Asia increase. As usual we are working very closely with our customers to plan and execute the smooth shipment of all cargoes ahead of, or during, the Chinese New Year period.
The general economic outlook globally is not as positive as it has been. We are expecting to see this have an impact on the overall movement of cargoes from Asia to most destinations, but specifically the uncertainty around the China/US tariffs is pushing sourcing to other markets in Asia and the Indian Sub Continent.
While market uncertainty is expected to see fewer forward bookings in air freight, the potential chaos caused by Brexit, or a significant upturn in trade hostilities between the US and China, could see shippers turn to air to ensure timely deliveries.
In 2019 we anticipate that all shipping lines will continue to prepare for the change in sulphur regulations. At PFE we are acutely aware of the need for cost certainty and will endeavour to keep you informed of any further industry announcements as and when information becomes available.
Brexit will no doubt continue to create uncertainty and as time passes its complexity seems to increase. The impact of Brexit is still unclear and may be far reaching, we will work with our customers to ensure any impact is minimised and clearly communicated. As the Brexit picture comes into focus we will facilitate our customers to comply with the new regulations that will be required.
As PFE we remain absolutely committed to providing the best levels of service to ensure your goods move as planned, be it via any mode of transport, from the many geographic locations we work directly within.
We would like to thank you for your support in 2018 and look forward to working together in 2019.
