Crude shipping revs up; supertanker rates top $100,000 a day
Spot rates for very large crude carriers (VLCCs) — tankers that carry 2 million barrels of oil — just breached the $100,000-per-day threshold. It could be a taste of things to come. Analysts and investors are increasingly confident that the tanker business is headed into a long, sustained upcycle.
“VLCC rates have surged at the end of the week,” said Clarksons Securities analyst Frode Mørkedal on Friday. Brokerage Fearnleys reported “frenzied activity” in VLCC charter market.
Air cargo capacity surpasses pre-pandemic levels
Available cargo capacity increased for the 11th consecutive month in February, surpassing 2019 levels for the first time, according to a March 2 update from Xeneta’s Clive Data Services.
Increased capacity comes as demand for air cargo declines. Volumes dropped 4% YoY in February with shippers continuing to rely on cheaper modes of transport in addition to grappling with labor challenges and inflationary pressures.
“The volumes are not there, flights are less full, and more capacity will be coming in April as summer flight schedules commence, so I don’t see fundamental changes that will help the current market conditions,” Xeneta’s Chief Airfreight Officer Niall van de Wouw said in the report.
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Elevated freight and labor costs remain issues for stressed supply chains
Despite the instability that first reared its head during COVID-19 and continued with the disruptions caused by the Russia-Ukraine conflict, the greatest pressures on the supply chain are not the headline grabbing news events, but rather more common problems: labor and freight costs.
Granted, freight costs encompass a myriad of inputs, including the aforementioned events. But when combined with labor challenges, the two categories contribute to 92% of the supply chain stress being felt today.
That is the finding of the second Supply Chain Stability Index, a joint venture between the Association for Supply Chain Management (ASCM) and KPMG, the U.S. firm of the KPMG global organization of independent professional services firm.