COVID-19 MARKET

OUTLOOK

11/01/2021 – V01

2

KEY POINTS

Source: World Bank, Seabury, DrewryCOVID 19 - MARKET OUTLOOK

Prospects for the global economy are uncertain, and several growth outcomes are possible. The global economy is

estimated to have contracted 4.3% in 2020, before expanding to 4% in 2021. a previous release.

Year-to-date uplift loss as a result of COVID totals 14M tonnes of capacity. Direct international widebody belly

cargo capacity decreased by as much as 82% YoY, after the majority of widebody passenger aircraft were grounded

from March onwards. Freighter capacity (+5M tonnes) was insufficient to make up for lost belly capacity.

Close to 40% of the widebody passenger aircraft are still in storage. A slight increase of retrieved widebody

passenger aircraft in Q4 indicates these aircraft are likely used as passenger-freighters to satisfy demand of the 2020

Q4 peak.

Between weeks 2 and 5 this year, 2 cancelled sailings have been announced on major trades: Transpacific,

Transatlantic and Asia-North Europe & Med, out of a total of 488 scheduled sailings,

Container shipping remains disrupted by box equipment shortages which are restricting available capacity and

so forcing freight rates to record highs.

3

ECONOMY – GLOBAL ECONOMIC PROSPECT

Source: World Bank

COVID 19 - MARKET OUTLOOK

Global economy is estimated to have

contracted 4.3% in 2020. In advanced

economies, the initial contraction was less

severe than anticipated, but the ensuing

recovery has been dampened by a

substantial resurgence of COVID19 cases.

Prospects for the global economy are

uncertain, and several growth outcomes are

possible. In the baseline forecast, global GDP

is expected to expand 4% in 2021, predicated

on proper pandemic management and

effective vaccination limiting the community

spread of COVID-19 in many countries, as

well as continued monetary policy

accommodation accompanied by diminishing

fiscal support.

After this year’s pickup, global growth is

envisioned to moderate in 2022 to 3.% —still

above its potential pace, but weighed down

by lasting damage from COVID19.

Real GDP1

(Percent change from previous year)

2018 2019 2020e 2021f 2022f

World 3.0 2.3 -4.3 4.0 3.8

Advanced economies 2.2 1.6 -5.4 3.3 3.5

United States 3.0 2.2 -3.6 3.5 3.3

Euro area 1.9 1.3 -7.4 3.6 4.0

Japan 0.6 0.3 -5.3 2.5 2.3

Emerging market and developing economies 4.3 3.6 -2.6 5.0 4.2

China 6.6 6.1 2.0 7.9 5.2

Russian Federation 2.5 1.3 -4.0 2.6 3.0

Brazil 1.8 1.4 -4.5 3.0 2.5

Saudi Arabia 2.4 0.3 -5.4 2.0 2.2

Egypt, Arab Rep. 5.3 5.6 3.6 2.7 5.8

South Asia 6.5 4.4 -6.7 3.3 3.8

India3 6.1 4.2 -9.6 5.4 5.2

Sub-Saharan Africa 2.6 2.4 -3.7 2.7 3.3

Nigeria 1.9 2.2 -4.1 1.1 1.8

South Africa 0.8 0.2 -7.8 3.3 1.7

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COVID-19 – TRADE IN MEDICAL GOODS (H1 20 vs H1 19)

IATA COVID 19 - MARKET OUTLOOK

• While total world trade declined by 14% in the first half of 2020 compared to the same time period in

2019, imports and exports of medical goods increased by 16%, reaching US$ 1,139 billion in value.

• Leading importers of COVID-19-critical products registered double-digit import growth compared to 2019,

including 62% in France and 52% in Italy.

• Trade in all categories of medical products increased in the first half of 2020. Trade in personal protective

products grew 50.3%, followed by medicines (11.6%), medical supplies (9.6%) and medical equipment

(5.5%).

5Seabury

COVID 19 - MARKET OUTLOOK

Global international capacity fell by 20% year-to-date (Jan-Nov, compared to last year), or 14 million tonnes of capacity uplift. Freighters

accounted for 66% of 2020 cargo capacity, up from 42% last year. Integrators went from 16% to 24% in the same period.

AIR FREIGHT – YEAR 2020 IN SUMMARY

• Major cargo-reliant

airports showed an increase in

international capacity

• 700,000 tonnes (~5% of total air

trade) of PPE and work-from-home

items flown between January and

September

• Since April, carriers have operated

more than 400,000 passenger-

freighter flights, enabled by high

yields.

• Capacity recovery in 2021

depends strongly on global

distribution of vaccines, with

vaccines anticipated to generate

around 60,000 tonnes of air freight

demand in the coming 2-3 years.

6Seabury

COVID 19 - MARKET OUTLOOK

COVID-19 has pushed load factors and yields up due to a decrease in supply. Global air cargo demand is constrained by

capacity, pushing load factors up by 12 percentage points compared to October 2019; yields remain to be at +60% higher

than 2019 levels in Q3 & Q4

AIR FREIGHT – MARKET TRENDS

7Seabury

COVID 19 - MARKET OUTLOOK

Year-to-date uplift loss as a result of COVID-19 totals 14.5M tonnes of capacity. Direct international widebody belly cargo

capacity decreased by as much as 82% YoY (more recently ~60%), after the majority of widebody passenger aircraft were

grounded from March onwards

AIR FREIGHT – MARKET TRENDS

8IATA

COVID 19 - MARKET OUTLOOK

Industry-wide capacity continued to improve at a

modest pace, with the year-on-year (yoy) decline

moving from 22.4% in October to an even 20.0% in

November.

Bellyhold cargo capacity fell by 53.0% yoy in

November, a robust gain from October (a 58.4%

fall).

While actual dedicated freighters capacity

increased slightly, airlines were unable to match

the increase in demand for the peak season due to

limited fleet size and a number of specific

operating issues such as flight cancellations at

PVG (Shanghai) airport.

This led to a decline in the pace of freighter

capacity growth – up 20.0% yoy in November vs

26.2% yoy in October – offsetting part of the gains

on the belly side.

AIR FREIGHT – CAPACITY GROWTH

Int’l belly cargo and freighter capacity growth

ACTK = Available Cargo Tonne Kilometers or Capacity

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SEA FREIGHT – MARKET TRENDS

• The global container fleet

grew 2.9% in 2020, the

lowest rate since 2016

• However 2020 saw an

increase in ordering activity.

Capacity contracted rose

30% compared to 2019

• Orders placed in 2020

averaged 9 325 teu in size,

an increase of more than

2.5x in just four years

Alphaliner COVID 19 - MARKET OUTLOOK

10

SEA FREIGHT – CAPACITY OUTLOOK (WEEK 02 – WEEK 05)

Across the major trades: Transpacific, Transatlantic

and Asia-North Europe & Med, only 2 cancelled

sailings have been announced, between weeks 2 and

5, out of a total of 488 scheduled sailings.

The overall cancellation rate has decreased by 88%

year on year from Jan’20 to Jan’21, and effective

capacity has increased by 9% during the same period.

As 2021 starts, we do not see any significant changes,

apart from the Brexit trade deal. It is just a continuation

of the end of 2020. Demand for container transport is

soaring as there is not enough capacity and most

importantly, not enough containers to meet the

demand. Meanwhile, spot rates continue to test record

highs.

Drewry COVID 19 - MARKET OUTLOOK

11

SEA FREIGHT - CAPACITY OUTLOOK (WEEK 49 – WEEK 7 2021)

HighlightsUpcoming 12

weeks (Y/Y)

Asia

-

North Europe

In the Asia-North Europe trade lane the weekly capacity decreases drastically in week 52 and 1, and

increases significantly in week 53, as three blanks will occur in week 52 and 1. On the backhaul, the

weekly capacity increases significantly in week 49 and 51, and decreases drastically in week 53.

15.4%

Asia

-

Mediterranean

In the Asia-Mediterranean trade lane the weekly capacity increases significantly in week 50, and

decreases drastically in week 51 and 52, as four blanks will occur in week 51 and 52. On the

backhaul, the weekly capacity increases significantly in week 50, and decreases drastically in week

52.

8.2%

Asia

-

North America East Coast

In the Asia-NAEC trade lane the weekly capacity increases drastically in week 49 and 1, and

decreases significantly in week 53.31.6%

Asia

-

North America West Coast

In the Asia-NAWC trade lane the weekly capacity increases drastically in week 1, and decreases

significantly in week 5. On the backhaul, the weekly capacity decreases drastically in week 49, 51

and 5, and increases significantly in week 52.

42.8%

Asia

-

East Coast South America

In the Asia-ECSA trade lane the weekly capacity increases drastically in week 49, and decreases

significantly in week 51 and 52. On the backhaul, the weekly capacity increases drastically in week

49, 52 and 2, and decreases significantly in week 53.

14.2%

Sea Intelligence

COVID 19 - MARKET OUTLOOK

12Sea Intelligence

HighlightsUpcoming 12

weeks (Y/Y)

North America East Coast

-

East Coast South America

In the NAEC-ECSA trade lane the weekly capacity decreases significantly in week 49, and increases

drastically in week 50. In the ECSA-NAEC trade lane the weekly capacity decreases significantly in

week 51, 53, 4 and 6, and increases drastically in week 5.

15.0%

North Europe

-

East Coast South America

In the North Europe-ECSA trade lane the weekly capacity decreases significantly in week 49, and

increases drastically in week 50. In the ECSA-North Europe trade lane the weekly capacity

decreases in week 51, 2 and 6, and increases in week 53, 1 and 4.

6.3%

North Europe

-

North America East Coast

In the North Europe-NAEC trade lane the weekly capacity decreases significantly in week 49 and

51, and increases significantly in week 50 and 52. In the NAEC-North Europe trade lane the weekly

capacity decreases drastically in week 53, and increases significantly in week 3.

14.3%

Mediterranean

-

North America East Coast

In the MED-NAEC trade lane the weekly capacity decreases drastically in week 49, 50, 52, 53 and 3,

and increases significantly in week 51. In the NAEC-MED trade lane the weekly capacity increases

significantly in week 51, and decreases drastically in week 52.

11.8%

Europe-

North America West Coast

In the Europe-NAWC trade lane the weekly capacity decreases significantly in week 49, and

increases drastically in week 50. In the NAWC-Europe trade lane the weekly capacity increases

drastically in week 50 and 51, and decreases significantly in week 52 and 4.

0.2%

COVID 19 - MARKET OUTLOOK

SEA FREIGHT - CAPACITY OUTLOOK (WEEK 49 – WEEK 7 2021)