27 May 2021
Spanning more than 40 countries, spread over East Asia, South Asia, Southeast Asia and Oceania, the Asia-Pacific market has seen an explosion in growth over the last few years.
This has been powered by the flourishing economies of China and India – who alone account for 36% of the world’s population – as well as smaller nations like the Philippines and Malaysia, who are finding their way to greater economic prosperity through innovation and technology, creating new consumers and untapped markets in the process.
However, as the region continues to recover from the impacts of COVID-19 and the Suez
Canal incident – Asia-Pacific is experiencing continued pressures on supply chains, which is leading to delays and equipment shortages.
For your business, that means supply chain forecasting is more important than ever – not just to ensure your cargo arrives on time but also to help you capitalise on opportunities. We’ve compiled the most relevant and up-to-date information in this article to help you stay on top of your planning and make the best decisions for your business.
The key industry trends in shipping these days
Starting with industry trends, perfect for spotting opportunities in specific markets and sectors, the picture is strong! Asia-Pacific currently leads the way in projected GDP growth – with China topping the charts at 8.9%, followed by the Philippines (8%), Vietnam (7.7%) and Malaysia (6.5%). (1)
In sector news, the apparel sector is expected to grow by 8.2% globally in 2021 – with more than half the annual spending coming from outside of North America and Europe. Looking at last year’s figures, Asia already leads the way with 38% of the 2020 global spend. This is expected to increase to 41% by 2025. (2)
These growth figures reflect changing consumer habits, with online shopping growing rapidly in Asia – and as demand increases, sourcing from South East Asia is growing as companies seek more options in addition to China. So, while challenges lay ahead, new sectors are emerging, and others are growing – which means there are opportunities to be explored!
A challenging period for ocean freight
In ocean freight, the impacts of delays, congestion and shortages are most severe. We are working hard, supercharged by Maersk, to alleviate pressures wherever possible, but it is important to note developments and plan your future bookings accordingly.
Here are the latest updates:
We have decided to temporarily limit bookings on certain trade routes for Asia to North America, and Asia to Europe. This decision has been taken to avoid us becoming a bottleneck for your business – and will affect trades from Asia to Europe and from Asia to the US. For all other trades, we are open and ready for bookings.
We expect strong demand for exports from Asia to continue in Q3, and ocean networks are projected to be highly utilised.
Australia and New Zealand ports continue to experience significant congestion. Oceania/Americas services continue to be impacted by delays in the US and terminal congestion in New Zealand. We are working hard on a solution to protect overall network stability and Maersk vessels connecting Oceania to the US East Coast.
If you have opted to use less-than-container-load (LCL) services recently due to the quantity of goods or time constraints, it is important to be aware that challenges are also present in the LCL market. There have been container shortages for China LCL shipments in May and looking ahead, LCL space will be impacted by general ocean capacity and schedule reliability, which will result in longer lead times – so plan accordingly!
Equipment shortages in Asia-Pacific
In an article earlier this year, we detailed the equipment shortages affecting the logistics industry and Asia in particular.
Today, equipment shortages remain an industry-wide challenge in Asia-Pacific. 20-foot dry containers are sufficient, but 40-foot and 45-foot dry containers are currently short in supply.
This is particularly true in China, Korea and Japan – where 40-foot and 40-foot-high dry containers are facing shortages. In other countries, the picture is brighter – with Australia and New Zealand showing sufficient supply of almost all container types.
Elsewhere, in Indonesia and the Philippines, Thailand, Malaysia and Singapore – capacity is tight but sufficient at the moment.
The outlook for major trade lanes
Global trade is an inter-connected network of importers, exporters, suppliers, ports and vessels that respond and react to each other across key trade routes. Between these trade routes, the current delays and disruption are being felt differently, with congestion being a major theme:
In the Asia to Europe lane, demand for retail products and fast-moving consumer goods is growing, especially in the UK. In the Mediterranean, the trade network is facing schedule delays and we will omit certain origin ports when needed to improve schedule reliability.
For the Asia to the United States lane – US port congestion continues to impact schedule reliability and capacity on the West Coast; while on the East Coast, the Suez Canal congestion continues to impact capacity. If you’re planning cargo to or from this route, we suggest planning for at least 10 days lead time between your planned departure date and actual departure date.
Vessels carrying cargo to Asia from Latin America are being highly impacted by delays from port congestion in destinations. We are exploring multiple port omissions to mitigate the impact of this and improve schedule reliability.
On the Asia to West Central Asia lane, demand is flattening – due mainly to India’s recent COVD-19 surge and lockdowns, which have resulted in lower terminal productivity and cargo delays.
For cargo between Asia and Africa, limited space in North China and South East Asia is impacting cargo acceptance. We encourage anyone booking on this lane to plan in advance wherever possible to secure space.
Finally, port congestion for trade between Asia and Oceania is impacting schedule reliability. As a result, we expect there to be port omissions made to alleviate the situation.
Better news for Inland Transportation and intercontinental rail
Inland Transportation and intercontinental rail represent key links in supply chains – sometimes making up those final important miles for your cargo, or in some cases covering the bulk of the journey!
Unfortunately, these modes of transport are being impacted too by delays and demands at other points in the supply chain – however, the picture is improved and in places, there is sufficient capacity to meet demand.
In Thailand, Malaysia and Singapore for example, the equipment shortages have impacted trucking capacity in May, but demand remains strong and cross-border trucks are operating normally. The story is similar in Japan and Korea where inland demand has decreased due to COVID-19, meaning capacity is available.
For Mainland China, Hong Kong and Taiwan trucking space is also generally available in all locations; however there are cross-border bottlenecks to be aware of between Mainland China and Hong Kong/Southeast Asia due to COVID-19 restrictions
When it comes to intercontinental rail, China Railway continues to keep tight controls on rail space to ease congestion. We forecast that intercontinental capacity will remain tight, particularly between China and Eastern Europe – with delays between 3-7 days in places.
The status of major ports
Across the globe, most ports are facing operational delays – port swaps and port omissions will likely play a part in mitigating the impacts and improving schedule reliability. If you have any bookings with us, you will be notified by our expert customer care team if any changes are set to affect you – but we recommend planning and managing cargo delivery times.
Ports in Northern Europe are under high pressure due to import cargo peak and the ripple effect of the Suez incident; while ports in West Central Asia are facing operational delays due to high yard density.
These are the ports with higher waiting times than three days:
Yantian (Greater China)
Tanjung Pelepas (Malaysia)
Auckland & Tauranga (New Zealand)
Long Beach, Los Angeles, Oakland (The United States)
Dar Es Salam (Tanzania)
Keep an eye on our Knowledge Hub for updates
We hope this update has been helpful in giving you a picture of trade capacity and pressures in the Asia-Pacific region as it stands. You can use this information to help shape your planning for the months ahead – and don’t forget to keep your eye on our Knowledge Hub for more updates, insights and helpful tips!
Maersk GDP forecasts based on Oxford Economics
Maersk Asia Pacific customer insight analysis based on Statista Apparel Report 2020 (Aug 2020) and Seabury Database