Leads times under pressure:-
Equipment, space, congestion, challenges..
Following on from last month’s blog, discussing market conditions, the current position unfortunately is largely unchanged and looks set to remain this way for the foreseeable.
We continue to see huge pressures across the supply chain, particularly on the main East West trade. As well as service issues the pressure on rate continues, as reported recently in Loadstar, spot rates on the Shanghai Containerised Freight Index are some 85% higher than this time last year
Demand buoyed by the seasonal rush being magnified due to global COVID restocking and Brexit stock piling. We continue to see equipment shortages brought about due to a combination of this high demand and issues still present due to the slow down in container through put earlier in the year which put schedules out of sink and subsequently, equipment inventory has been massively disrupted.
Carriers themselves continue to manage capacity efficiently, a discipline that has been lacking in previous years when the battle for market share was the key driver. This year perhaps spooked by the early landscape presented by the pandemic, the carriers have been quick to remove capacity where needed to prevent rate erosion. They have also blanked sailings and omitted ports to maintain demand which has then seen vessels sailing at near full capacity.
Whilst this has been beneficial to carriers in terms of rate, operationally, they have created issues, with high levels of rolling’s leading to significant delays for cargo owners. On top of roll overs, ports have also been struggling to cope with volumes with many running with reduced resource due to COVID safety restrictions. The knock-on effect here, slower turnaround times, which in turn leads to delays in berths and a back log of vessels then waiting to be discharged and an increase in vessels cutting & running to try and maintain longer term schedule integrity and mitigate idle costs.
The busiest UK port, Felixstowe continues to face issues and serious delays with a host of issues causing misery for importers and leading to many carriers introducing additional charges as a result.
The haulage availability in the UK especially from main ports in the south continues to be a major issue with demand out stripping supply, further compounded by the congestion and long wait times to get empties restituted and loaded containers lifted on.
We are also seeing rising demand for air freight because of the distressed sea freight market conditions, tech launches and ecommerce booms and now the Christmas countdown well underway. However, there is still reportedly 20% less capacity in the market, so when added to the above, means rates here continue to rise, quickly heading towards the levels seen during the last lock down in March, April & May.
So a challenging outlook to say the least but our advice to customers remains: –
- Book early
- Forecast well
- Be mindful of the pressures on available space – Carriers are favouring the highest paying cargo
- Contingency – Allow 3-4 weeks in current climate where possible
- Alternatives – There are alternatives, Air, Sea Air & Rail all options available that can save time and help meet deadlines.
- UK haulage – Many carriers are walking away from haulage due to delays – We can help find alternatives, paying move for a merchant haul to avoid quay rent could be the best option and having our own dedicated department has been a huge benefit to many already.
We continue to face unprecedented challenges, and our teams are working flat out to limit your exposure to the issues being felt across the industry.
For further information support or guidance please speak to your local commercial or operational contacts at John Good Logistics.