Posted on 10th May 2021 in the categories: Market Update

Market Update

Market Update May

Currency

One of the biggest updates of the last week is news that the European Parliament has approved the UK/EU trade and Cooperation agreement, by an overwhelming majority, which many are hopeful will mitigate most of the worst consequences of Brexit.

Last week’s Federal Reserve speech did not live up to market expectations. Whilst recent U.S economic, employment data and vaccination numbers have been better than expected (some with even historic growth), some analysts were hopeful that Jerome Powell’s speech could suggest measures to control inflation. However, the verdict was much on the contrary, the meeting emphasized that the increase in inflation is transitory and that there is still significant slack in the market.

Sea Freight

Delays and congestion in ports across Europe have continued through April. Although there has been some improvement in the global schedule reliability, there is a long way to go to reach the levels of previous years. April 2021 was still the lowest schedule reliability for the same month in the previous 10 years. Higher shipping costs continued throughout April, as the demand for services outstripped the supply.

Port Disruption

Over 400 ships caught up in the Suez Canal incident have arrived at their destination ports across Europe. Vessels continue to face delays on arrival, being held offshore due to the congestion. With this, UK ports have had to look at ways to handle the backlog. Felixstowe, which accounts for nearly half of UK imports, have extended Sunday hours for pickup and deliveries.

Air Freight

The International Air Transport Association (IATA) released figures for air cargo demand in March 2021 showing a 4.4% rise in demand from the pre-Covid levels seen in March 2019. This is the highest level recorded since the reports began in 1990. It also showed a continued month-on-month growth over February 2021 levels.

It is still very unclear when passenger air services will recover. However, there’s strong likelihood that any recovery will miss the major tourist seasons. Airlines will therefore focus on fewer, more profitable services, keeping the belly freight capacity depressed. As such, air cargo prices remain high in response to the shortage of services and availability.

Brexit

The European Parliament overwhelmingly voted to ratify the trade terms of the Brexit deal at the end of April. The deal had been applied provisionally since January 1st but required approval of MEP’s before it could be ratified. The UK has now become the first ever EU member to leave the bloc.

However, disruption and controversy continues in relation to the Northern Ireland Protocol, as additional documentary checks and physical inspections on goods arriving into NI from GB are required. The UK has extended grace periods covering essential areas of the economy. Therefore, meaning that post-Brexit checks not being fully applied and a continuing legal dispute with Brussels.

Goudsmit UK

At Goudsmit UK, we use a number of different freight partners to transport our customers products globally. This multi-carrier approach allows us to select the carrier best suited to your requirements, providing flexibility and a tailored service. Whilst freight delays are unavoidable at this time, we work with our customers by holding UK stock and would encourage that 6-8mths of buffer stock is considered when re-ordering new production, reducing the impact of potential freight delays and lessening the potential requirement of costly airfreight.

For more information email us at info@goudsmit.co.uk or speak to a member of our team on +44 (0)2890 271 001.

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