Name: European Freight Market Update: Key Trends and Insights
Uploaded: 2025-11-12T16:30:39.967Z
Duration: 34 min 4 s
Description: European Freight Market Update: Key Trends and Insights

Transcript for "European Freight Market Update: Key Trends and Insights": Hello, everyone, and thank you for attending today's, European freights market update. My name is Milena, and I am the head of air freight in EMEA here at, Flexport. Before we dive in, we will go over a few quick housekeeping notes to help everyone get a bit oriented. On your screen, you will see a sidebar to the right of the main stage where you can submit questions. At the end of the presentation, we will host a q and a, and we will answer a few audience questions. Normally, we answer as many as we can as the time allows. So be sure to get your questions in early so we can see them on time and answer. In the same sidebar, you will see a tab that is labeled docs. This is where you can download a copy of today's slides. Then, we also have a very brief legal note. So please keep in mind that all information provided in this session is based on the situation at this current time and may not be customized to your specific business requirements. We always recommend, that you reach out to a Flexport expert to discuss your particular situation. So here is also today's agenda. Today, we will give you the latest updates on what is happening in Europe's air and ocean markets, and we will cover the latest updates on customs and provide recommendations to ensure your freight keeps moving. Before we start with, airfreight market update, we would like to invite you to participate to this poll. And, basically, we would like you to answer what kind of price validity are you currently requesting for your air freight rates. The answers are spot, ad hoc, weekly, monthly, or quarterly. We see the first answers arriving already. We will give it another minute for you to vote. Okay. I think we have we have a lot of answers. Thank you for that. So, basically, the spot ad hoc wins with 60 almost 60, 1%. Then we have a very, very small part that is weekly, followed by monthly and quarterly, which are basically the same of around 10%. And then we have the long term six to twelve months of 13%. So I would say that this this particular picture here, as I see it on the on the poll answers, is describing perfectly what is happening in the market right now. So, I will deep dive into this, but, obviously, it is peak season and, mainly, rates are requested on a very, very short, validity. So I think we can then start with the market update for airfreight. So I will stay with you for, for another couple of minutes. Basically, we always start with the global airfreight market picture. So on the demand side, we forecast the global volume growth to settle on around four percent in 2025. However, if we uncover this number, we see that there is a significant split inside of it. So general cargo demand is slowly going down and this is reflecting the global economical situation. There are two main exceptions, which are semiconductors and high-tech, but the rest of of the of the general cargo is actually going lower and lower, this year. In the meantime, the e commerce is actually showing a double digit growth, especially on lanes from Asia to Europe. Then we have on the supply side, the global capacity growth, which is stable at around two-three percent also this year, and we expect the same to continue next year as well. There are still many new aircrafts on order, but this year, mainly Boeing is delivering consistently, most likely because of a better organized supply chain. We don't know this for sure, but, it is what was causing the delays in the first place. And what is interesting to note on the supply side, especially for next year, is that these new aircrafts are being delivered mostly to integrators and to the Middle Eastern carriers. If we go to to the rate development situation, globally today, rates are higher, but this was expected and it's normal because it's q four peak season. However, the rates today, the rate levels are not as high as last year. So for Far East Westbound, which is our import from Asia to Europe, rates are approximately 10% to 15% lower than what we had in November. And on Transatlantic Westbound, which is our European export into US, Rates are higher compared to q three, and this is driven by a specific supply situation that I will, describe a little bit more when we go into the into the specific of the Transatlantic lane. So if we want to cover the full picture, we see a very shy growth in 2025. As I mentioned, it's going to be around 4%, as estimated, which is much lower than what we saw in 2024, which was for around 12 to 13%. Nevertheless, even if it even even if the growth is around 4%, flights on key lanes are are still very full and the rates are steady, meaning that they're not going down rapidly or with the big differences, but they're always within this range of 30% up or down based on the specific week of the year. And, most of all, if you consider everything that I said earlier, the outlook of for 2026 does not look too positive if we take into consideration that, the general cargo is diminishing step by step. We can move into Asia Pacific now. This is, one of the key lanes, especially at this moment of the year. There is growth as well, but ecommerce remains the key driver. As I mentioned earlier, it was a double it's a double digit driver double digit growth this year. It is estimated to be of around 60% year on year. Volumes have shifted. It used to be Asia to North America. Now, a lot of that volume is going into Europe. And we, at this moment, see exceptional growth into Hungary, Belgium, France, Spain, and most of all, The UK. UK is actually developing several smaller airports that are, getting geared up to be able actually to receive all this volume and process it on time. On China and Hong Kong to Europlane, the volume growth is estimated to be of around 12% year on year. So as you see, the growth this year is very lane specific, and it changes pretty much lane on lane. Today, we are facing the ecommerce peak season, which is driven by, Black Friday and the upcoming upcoming, Christmas shopping, and it is going quite strong at the moment. We see following this, we see following, we see significant capacity constraints from Taiwan, Vietnam, Cambodia, Malaysia, Indonesia, and Singapore into Europe. So to recap, this is not much of a news because we are used to seeing this kind of picture in q four. The difference is more that Asian cargo is now almost, not exclusively, but it is going much more into Europe than it used to go to US. We can move to the Transatlantic market update now. Transatlantic lane is suffering a little bit from the new winter schedule. Normally, this runs from October to March. And, in winter, winter schedule is known for, cutting belly capacity because the, the flights and, the frequencies are, driven by the demand on the passenger side. So the cargo is typically, at this this moment of the year, suffering a little bit. The prices are going upwards, but we do not expect the same intensity as, last year because, as I said earlier, there is a reduced demand for general cargo, which is the typical, freight that is shipped, on this line. One important topic to mention when we talk about Transatlantic today, is an important situation that is worsening hour by hour, and that is the prolonged, US government shutdown. This is is, especially in the last twenty four hours, ex escalating from a concern to a critical risk. So what is happening, it is that the Federal Aviation Administration directed flight reductions to basically all US carriers. This began on November 7, which was last Friday. Until today, there have been 5,500 flights, canceled. And this is the the number from this morning. So as I said, it is rapidly go up. And it is getting worse because the government shutdown is still on, and the cuts are increasing. So it started with the 4% reduction, and it is moving to 6% reduction starting today, November. And airlines are being warned and pushed to, achieve a 10% cut by this Friday, November 14, if the shutdown continues. So we thought that it would be stopped as of today, but it didn't because there is no agreement. The root cause, for those who don't know, is a critical shortage of air traffic controllers who are not being paid and are not showing up for work. The transportation secretary in The US, is warning everybody of this critical situation. And, the situation has to be and is monitored very closely because today, the impact is, mainly and still on domestic flights. But if it continues and if they really want to go into 10% reduction, there will probably be, some reduction also on international flights. We can go now to the outlook and recommendations. So we normally, close off our market updates with a couple of recommendations and some dates to, to remember. So as we usually say, the important thing, especially at this time of the year, is to manage expectations by staying in very close alignment with your sales departments, with your suppliers, and with your customers. Planning is critical because it will avoid you express shipping at this time of the year, which especially now can be very, very expensive. You need to be ensured that, you follow all the new compliance, regulatory changes. There are not too many in Europe at the moment, but, the ones such as ICS two or new security requests in some countries are very important for you to stay on top of because if these are not managed, they can slow down or completely stop your supply chain for a while and you don't want that. It's very important to stay informed about it. And why we asked as well in the beginning in the poll, how are you managing your rates? It is very important now to do a right assessment of your rate strategies. And you can do that by monitoring closely all the capacity shifts like we mentioned earlier. This will allow you to take advantage when the market is soft on some lanes, and it will protect your budget a little bit against high costs on the lanes that are pretty much demand driven such as, for instance, Paris westbound, meaning our import out of Asia. And finally, a few, key dates to remember. So the winter schedule is now active until the March, and, I explained a little bit earlier what that means for us, especially on the Transatlantic. Then, today, November 11, is the single's day, which is driving high demand out of China. And at the end of this month, we have, like, the most important event for ecommerce, which is Black Friday, which is, the same basically as Thanksgiving. And this is, impacting all global lanes because on Black Friday, everywhere, the rates are reduced and everybody is shopping online much more than normal. So for the air freight, this would be all. I will pass it on now to Jannik for the ocean update. Thanks, Milena, and also from my side. My name is Jannik, and I'm going to lead you to the Oceanfret Slides. Before we start with the actual slide deck, also the ocean freight team, would want to ask you for your input. As we are closing the year, we are super interested in your procurement strategy for 2026. So as you can see on the screen, we would like to know what type of pricing you're targeting for the next year. Are you looking for spot monthly prices? Do you want to procure quality rate levels, an SCFI based, so index based pricing model for the upcoming year, or are you looking for annual pricing, either fixed or subject to peak season surcharges? Whereas the fixed and our question, would come with with a penalty charge or a no show charge. See a lot of votes already coming in. Let's give it another few seconds. So the vast majority with 50%, of use looking for monthly, and spot pricing, then we see quite a bunch of quarterly pricing, which I would say is pretty common for for ocean freight, but also indexed and and corridor pricing related requests, which, have been a very successful pricing model, especially after COVID situation. So so there we see, quite a bunch of clients asking for it. Overall, make sure when you request the pricing to, be transparent in your needs and also, what you are asking for so that you can, get a valid and and stable pricing model. Alright. Let's kick it off and, jump to the actual ocean slide deck starting with VICE Westbound. Last Friday, we saw the SCFI decreasing, a small amount of 21 US dollar per TEU, which marks the first decrease since, week 41. In total, we are having, week 45 STFI at 1,323 US dollar per TEU. If you check the slide, if you check the graph on the left side, you can see that the 2024 development hasn't been that much different. So in late October, early November, we saw increasing rate levels before they had a slight dip in November, preparing basically the market, before an increase in December. So this year, we see it's not sure if it's going to continue as a dip, but we see the slight increase a little bit earlier in November. And, of course, it's a big question how the demand situation for December is going to look like and if we will see increasing rate levels here. In terms of, capacity, this week is sitting roughly at 79% on FICE westbound trade, and the upcoming weeks are roughly at 90% capacity on Asia to North Europe and MET. One point to mention is that the Ocean Alliance or dedicated CMAs, fall seven, is suspended until further notice from the upcoming weeks. As a reason, the carrier mentioned significant, delays and port disruption in in North Europe, where we are also going, to have a closer look in a couple of slides. Especially, is a pain at the moment, and we do see a couple of vessels and carrier omitting the port. Before we dive deep onto this, let's check the next slide on US related news and transcendent response. The US East Coast rates, from North Europe remained stable for q four. One of the reasons is that the usual q four peak has not yet materialized. On TPEB, we saw a drastic decrease last Friday on the indexes. 435 US dollar per TEU to the West Coast and almost 600 US dollar to the East Coast. Besides that, one of the big news, during the last weeks, the USTR, which have been postponed by twelve months after a meeting between China and US government. It clearly needs to be stated that this is so far only a postponement. The USTR have not completely been waived. The US government stated that during the next twelve months, they monitor closely how Chinese shipbuilding, has an influence on the industry. In terms of global volume, it's quite an interesting slide on the right side. You can see that the global demand grew 5% in September year over year. What clearly needs to be mentioned that since the trade wars and the tariffs in The US started six months ago, the imports and exports, which are US related, dropped by 3.1%, so a slightly different direction than the vast majority of the global market. Let's jump to the next slide and have a look into our operational update. So what is clearly causing, let's say, some pain and disruptions, especially for for European clients, are, congestion and delays in Northern Europe. What we do see right now are, if we talk about Rotterdam, birthing windows of forty eight hours, also causing a lot of delays in terms of, Rhine shipping and batch transportations, which forced a couple of carrier to omit Rotterdam discharge import container in different ports, for example, Antwerp, and now, need to reroute them to back to Rotterdam. But also Antwerp sees, some high yard congestion as the port itself remains pretty busy. In Hamburg, we do see a slight different topic. We have, since a couple of months and which is also going to continue to at least the end of the year, some construction zone on the major railways, from and to the port, causing severe delays in transports, to the port of export equipment, but also import equipment being facilitated, to Germany and, also, for example, Austria or Switzerland. You can also see one comment in terms of no update on on, sewage transit yet. Since this morning, this is not 100% correct anymore. There are some articles in the news that the 7,000 17,700 TEU vessel, CMA, CGM Benjamin Franklin, is on its way or transited the Suez Canal from North Europe into direction Asia. So this is very important to mention. It's it's an eastbound vessel, truly one of the bigger ones. We've we don't, what we have not seen in a while. But overall, on on westbound traffic from Asia to North Europe or MET, there is no further news or communication about transiting through zoos once again. Let's go to the next slide, and have a look at one of the headlines during, last week. So MSC becomes the first carrier with an overall capacity of 7,000,000 GU. In numbers, that does mean that the carrier almost doubled its size in capacity over the last seven to eight years as you can see in the graph on the right. A lot of this capacity is not new build vessels that came into service, but secondhand purchases over the last five years where, ocean vessels have been deployed under the service of MSC and then have also been bought, and are now moving under MSC. The order book, of vessels, over the next years is roughly selling at 2,000,000 additional to you, which clearly marks the further growth of, the carrier. Now let's have a I like let's have a small look at, how the carrier itself is performing in global trade. So in October, the scheduled reliability the global scheduled reliability was sitting roughly at 65%. MSC here, itself has reliability, roughly sitting at 70% with Transatlantic Westbound being on the higher side between seventy five and seventy six, and Firebase Westbound, for example, being slightly, below that, but still above the global average. What I need to clearly mention here is that the scheduled reliability itself is not giving any idea about transit time or port to port transit time itself. It basically says how accurate are the carrier forecasting the departures and arrivals, in the certain ports. Let's shift to, our ocean recommendations, and there's not much of of, yeah, let's say, different, opinion here. Continue to book early, and book in small lots so that the bookings can be facilitated on on, the first available space. Make sure that that your needs or the goods of the needs of your goods are are clearly, communicated because the first departure is not always the fastest one. Again, Christmas is coming. Check your warehouse closings, especially with the congestion in North Europe. Stay close with your freight forwarder in order to make sure that that, you get your goods gated in before warehouses close before the Christmas holidays. Now before I hand it over to Charles, to talk a bit, about, customs clearance, I would like to invite you to next week's next week's webinar, where we talk, in a big round about ocean predictions for the next year. Join, our VPs in in global ocean freight and also in procurement, and have a chat about, vessel deliveries, overcapacity, how you can position yourself in terms of procurement, and what, what strategies you can drive to cut costs and also to get your goods moving successfully during 2026. Now let's hand it over to Charles on customs. Well, hello, everybody. Thank you for that. And, today, I'm going to speak to you again about EUDR. It only seems a few weeks ago that we were discussing this subject and it being delayed until the 2026. And in a few short weeks, here we are back with, the 2025. So just as a reminder for those of you that may not be familiar with this, one might say this is the toughest trade rules that exist to fight global deforestation. It's a mixture of environmental protection, compliance, and trade, And it covers seven major commodities, cattle, cocoa, coffee, palm oil, rubber, soya, and wood, and the derivatives of those. So things we use every day, such as shoes, furniture, paper, coffee and and chocolate and the like. So quite a wide ranging area of products. It requires companies to, make sure that they are deforestation free. So, essentially, looking at the legal requirements of this regulation, whether you're selling into the EU or you're an EU importer, there are elements of this legislation that you need to comply with if you wish to import your goods beyond 2025, December 30. It means full supply chain transparency. So here, you're looking at tracing material origins, mapping production sites, geolocation data, and ensuring that the documentation is legal and that you can digitize that and retain those records for five years. So what's happened? The EU Commission reannounced that EUDR will implement on the 12/30/2025. There's a six month grace period for enforcement. That was made very clear, And the authority's focus in those first six months is going to be on supporting importers, supporting the data required, making sure systems work, etcetera. The 30/2026 is the date for small or micro businesses, and there's a link here. If you're not sure whether you are a small or micro business, then, you can go into the link that's on the slides when we share them, and you'll be able to pick that up or alternatively alternatively reach out to us, and we'll give you that link directly. This is a further six months to what the original legislation, illustrated. So there are some key changes. Simplified due diligence. This is for those companies downstream from the original importer. It means that the company can effectively just quote the original DDS reference numbers and data. It's far easier than having to go through a much longer process that the original legislation required. If you're not sure how that impacts you, please let us know. We'll be happy to discuss that with you and work through it. Expanded low risk countries. As many of you that are playing in this space know, there are high standard and low risk countries. The list for low risk has been expanded. The habit of the, EUDR regulation to look at everything as standard will probably still continue for the first six months. But, of course, if you're a low if you're buying from a low risk country, if you move your supply chain around so that you're in a place where that low risk, applies to your supply chain, you're gonna have less administration, less auditing. Your level of due diligence will reduce in terms of the amount of work you have to do, and therefore, your cost of running this will reduce. We're thinking about in terms of where the low risk countries are. So the core principles really remain unchanged. You're gonna get a situation. Importers, must have and obtain verifiable due diligence data from their suppliers. They need to prove geolocation. They need to prove that they're deforestation free, and that deforestation free goes back to 2020. And there are other legal points that need to be addressed. The supplier questionnaires are still quite challenging, to complete, and some of that data is quite difficult to get. So if you're not there already, you need to start working very quickly to getting that information. Submit the DDS file filings. So make sure that you apply. You can use the traces, link, which is in is in the slide to do that, and you'll obtain a d d a DDS reference number that you need to use for importation. If you don't have that DDS reference number and you can't supply it to your Flexport operation or your customer's broker, then your goods are not going to pass the customs order on the 01/01/2026. Expanding record keeping is needed, and you should think about how you demonstrate this. So there is, of course, all of the due diligence you're doing. You apply for your DDS reference number. You have declarations from your suppliers. How do you prove it transactionally day by day, shipment by shipment, making sure that when you are audited, you are actually able to prove at the shipment level, at the SKU level, that these goods have actually complied with the DDS reference numbers that are required. So this is a small point that we often find in conversations with clients. They have all their paperwork, but they're not quite sure how to marry that into their transactional activity. We'll be hitting, we'll be we'll be sending out a, a client advisory on this in the next few days. Jannik, our head of customs operations, will be issuing that, and you should see that coming out over LinkedIn and the usual sources. If you're internal to Flexport, I will circulate that to everybody. If you are a small or micro sized business, obviously, you have until 2026. I would start early if you haven't already. This will still evolve as a piece of legislation. I think we will learn over the next year how it will migrate and how it will change. But as an organization, if you are subject to this, even if you're small or micro sized by the definition, start looking at how you're going to maneuver and put yourself in a position to be able to comply. If you have questions, we've left you an email there to link into. If you have specific questions and you've asked them today, I will certainly come back to you on that as I'm not quite sure where we are on the time. Going to handle back now to Elena. Thank you very much for your time. Thank you, Charles and Jannik. And, so far, actually, we haven't received any questions. So I hope that this means that we explained ourselves very well and and in great detail. If that is not the case and you still have questions for us, please reach out, to to to your flexible representative or to the three of us, and we will be, very happy to to answer your questions. I would say this concludes today's webinar. Thank you everyone for your time. Thank you for attending today. As usual, we will email everybody the link of the recording of this webinar tomorrow morning, and you can download the slides as we mentioned in the beginning. Thank you again, and have a great day.