November 11, 2009

Significant backlog in freight from Hong Kong to Europe and the United States

Converge Freight and Compliance Alerts.

The Hong Kong Association of Freight Forwarding and Logistics is reporting at least 4,000 tons of cargo backlogs heading to the United States and Europe from Hong Kong (as of the first week of November). Affected airlines believe that this backlog will increase and sustain through mid- to late-December. Some carriers report at least two weeks of backlogs. These backlogs are starting to impact regional airports, particularly in China.

Converge is keeping in close contact with its providers to stay on top of this situation.

As in all markets when demand exceeds supply, rates are being impacted. Add in the push of consumer goods to the United States for Christmas, this perfect storm has caused spot market pricing to double (currently up to $4.50/kg) since August.

To manage through these capacity constraints, the Converge freight and logistics teams work with multiple forwarders and these constant communications allow Converge to capitalize on excess spot availability. Leveraging our mix of vendors allows Converge to take advantage of the best transit time versus cost by obtaining multiple quotations. Currently, Converge is reaching out to its network and reviewing options for advanced bookings through calendar year-end.

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