What can be expected for the month ahead?

The current market environment continues to remain incredibly volatile, with freight rates at all-time highs, pandemic-induced staff shortages and extreme congestion at major ports, all contributing to what has been a fragile situation for over a year.  

The logistics industry has been on rocky shores since early last year after the pandemic began to take hold in global manufacturing hubs in Asia. As global demand surged amid panic buying and online shopping, carriers have been unable to bring online the needed capacity.

Local responses to the pandemic have slowed vessel turnaround, and we now have around a quarter of global shipping capacity (containerships) in port at any given time, the highest on record. Shippers, forwarders, ports and carriers all have a vital role to play in the global economy, so it’s more important than ever to work collaboratively to build effective solutions to today's global problems.

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A brief overview:

• Yantian working at full capacity. Whilst operations have resumed as normal, there is still significant backlog to clear
• Deal reached on the Ever Given which looks like the ship could be released if all goes well with the agreement
• Freight rates at an all-time high, which unfortunately, doesn’t seem to be dropping anytime soon
• Ex-Asia Air freight is picking back up so good to book in advance to secure space at good rates
• Congestion is still a big problem in the UK, Europe & US. Easing port congestion would be the best remedy to get more container ships actively sailing again

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Yantian resumes full operations

After a month of limited operational capacity in Yantian port, services now resume. Significant delays are expected however, with average berth times of about two weeks reported. Hapag-Lloyd have announced that they’re diverting vessels to Nansha and omitting some vessel callings at Yantian – We expect updates from other carriers in due course.

Trucking in and out of the surrounding provinces are restricted due to testing procedures and time constraints.

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The Ever Given’s imminent release

Despite the freeing of the Ever Given in late March, where its obstruction caused a complete week-long shutdown of the Suez Canal, it is still being held under arrest by Egyptian authorities.  

Insurer UK P&I Club state they have had discussions with the SCA (Suez Canal Authority) to finalise a settlement agreement. They have reached an agreement in principle, which should lead to the release of the container ship, following formalities.  

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Operations restrictions between North Europe and Montreal

Falling water levels on the St. Lawrence River has prompted shipping companies to impose special fees on cargo. This adds to the pain of Canadian, American and European companies already being hit by record transportation costs and is likely to remain in place until tonnage limits are lifted when water levels increase.

Restructuring UK/EU Supply Chains through Northern France routes  

The new customs requirements, sanitary and phytosanitary controls, and the end of freedom of movement between the UK and EU (European Union), are all directly affecting companies who are established in the UK and fundamentally disrupting their supply chains.

As the UK’s closest neighbour, the Hauts-de-France region can supply rapid, efficient and realistic solutions to UK businesses who wish to continue accessing EU markets at acceptable costs. This could be achieved, for example, by selling your goods to your clients on a DDP (Delivery Duty Paid) basis using France as your gateway to the EU. By doing so, EU clients are not involved in the customs process and UK businesses keep full control on their supply chain and delivery times.

We recently hosted a webinar on this topic that will allow you to gain a precise understanding of the challenges ahead for your business and find concrete and workable solutions that will preserve your hard-gained network of European clients. Missed it? Watch it here.

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Ex-Asia Air Freight picking back up

After the usual fall in demand around Chinese New Year, ex-Asia air freight capacity is set to increase in July and in Europe, demand is strong across all trade lanes. Early booking is advised to secure space at the best possible rates.  

Ex-Asia air freight looks to be a strong choice for those shipping high value or small volume cargo looking to mitigate the risk of Sea Freight schedule volatility and ever-increasing costs.

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The state of freight rates

Last month, we stated that freight rates were at a record high, however, fresh records continue to be set, as we’re still seeing all-time high rates and foresee little relief in the months to come.

All major trade lanes have seen rate growth in the first half of 2021 and with nothing changing as we enter July; shippers continue to struggle with ever-increasing costs.

The continued global imbalances are pushing prices further up, with problems stemming from the beginning of the pandemic. In early 2020 the demand for goods drastically spiked at a time when countries had locked down, ports were closing, and shipping companies were cutting capacity on major routes. Now leaving many shippers in a position where they are frantically trying to catch up in an environment where competition for ocean freight capacity has severely intensified.

Freight rates will remain high this month due to a combination of further increases in demand and the constraints of a congested system.  

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Container capacity

The demand for container space over the last year has been sporadic to say the least. The issue is, when pandemics arise or a major waterway becomes blocked, there are few alternatives that do what ocean freight can do. A lack of alternatives means it’s difficult to avoid the surging transport costs and drop in container availability.  

2021 has seen new orders for container vessels reach 229 ships with a total cargo capacity of 2.2 million TEU – a record high. Whilst this wave of new container capacity will certainly ease price pressures, it won’t necessarily bring freight rates back to pre-pandemic levels. And although it seems like much needed relief now, new container capacity won’t be ready for use until 2023.  

For now, container capacity continues to be tight, and as usual, we recommend booking space as far in advance as possible.

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What can Unsworth do to help?

The first thing to consider is one of the simplest solutions. Optimise your movements. We can help ensure you’re fully loading each container and maximising use. This can be done through our digital platform, Pathway, where we can analyse all your data in one place to give you the insights you need to ensure you reduce inefficiencies and cut unnecessary costs.  

We developed this tool, after discovering that many of our client’s full containers were only around 80% full. As carriers aren’t always able to fit more containers on our ships, we can recommend that shippers find ways of being more efficient in the way they load, enabling more inventory per container.  

This can be easily done using our technology driven platform, which we strongly encourage every client of ours to utilise. It’s a free tool for each of our shippers that enables instant access to key information, from shipment visibility to container analytics.  

Finally, adaptability has never been more important than now. There’s no predicting when we’ll gain a sense of ‘back to normal,’ and with the approaching peak season, it will be a while before we come out of this backlog.  

It’s key to put yourself in a position where you can react to schedule changes, plan around delays, speed up shipments to cover stock shortfalls to help you on your way to a more powerful supply chain.