The invention of modern container shipping in the 1950s revolutionised international commerce. Before its advent, loose cargo transported in odd-sized wooden crates, barrels and sacks was handled by armies of dockworkers. By reducing the need for labour — and the risk of theft and damage — the humble metal box cut the cost and time for moving goods across the oceans.
It unleashed a huge expansion of trade during the latter half of the 20th century. Seaborne container volumes have increased nearly every year over the past four decades, from about 100m tonnes in 1980 to 1.8bn tonnes in 2017, according to the UN.
Until now, the only contraction during that period was following the 2008-09 financial crisis.
Reduced Capacity Higher Prices
A big strain we are hearing from our FL family members is the ongoing rate increase on container shipping. The Composite index of the Shanghai Containerised Freight Index, a benchmark for spot market prices, recently touched an eight-year high and is up more than half since April — its lowest point this year. This was driven by a jump in rates between Shanghai and the US coasts, as well as on routes to Europe.
Container De-hire Parks Filling Up
We have seen from the UK in the Northern Hemisphere to Australia in the Southern Hemisphere issues with empty containers causing yard congestion.
The port of Felixstowe and London Gateway advised that from 17 September they will no longer accept the return of empty containers. Therefore, hauliers are being asked to deliver these back to alternative ports and depots causing forwarders additional charges. The same situation is currently taking place in Sydney with Maersk’s container yards refusing to accept empty containers leaving forwarders with containers sitting in transport company’s yards incurring storage charges. For Forwarders it is extremely hard to pass these charges onto clients which begs the question do you risk upsetting your client with additional charges or take a punch on the nose?
Further to that Australian shippers are outraged after Hapag-Lloyd, CMA CGM, ANL, and Mediterranean Shipping Co. announced plans to introduce an emergency port congestion surcharge on all containers to and from Sydney. That comes amid an escalating congestion crisis that has already led to delays of up to two weeks for some vessels, containers being diverted to Melbourne, and full container storage parks.
Hapag-Lloyd on Tuesday said it would introduce a raft of surcharges while also cutting services because of the problems at Sydney.
The carrier joined CMA CGM and MSC in announcing plans for a $300 per TEU congestion surcharge from September 16 on non-US trade lanes. The surcharge will be implemented from October 16 on US cargo after details are filed with the FMC.
Our Freight Lounge Members’ thoughts:
“The Corona virus pandemic has caused untold disruption to our lives both professionally and personally. On a professional basis whilst measures do continue in the UK despite the initial easing of lockdown there has been the signs of stimulus in business again particularly after the initial March to May lockdown and we are seeing a gradual return to a new form of normal. Personal meetings may currently only be possible to a limited extent, however video & conference calls seems to be the new normal now and we cannot see that changing in the short term. Specifically airfreight pricing has reflected the decrease in airlines operating into specific routes and decreased competition, combined with lack of passengers on flights the airline kilo rates increased exponentially. The net result is that the turnovers of business have artificially inflated whilst the margins decreased, not a good combination unless you have a up to date MA system that allows your reporting to reflect your day to day business
The pandemic has been devastating for certain sectors in the logistics industry namely courier which has seen an unprecedented down turn. As the EU locked down, CN and the Far East re-opened allowing to businesses to flow and we have seen a decrease in rates from airlines as the market competition increases. AU, US along with specific countries the rates still remain high but we are seeing them to begin to drop now (pre-the second wave of Covid-19). The positives that have come from this is that it has shown business can operate employees from home efficiently (although certain elements of the business will always remain within the business). Split shifts have become more common place. More efficient reporting systems that allow you monitor in greater detail on a daily basis MA and margins. Revaluation of specific work that businesses handle.
TLC has been fortunate as we have been involved with some project cargo work that has helped sustain the business overall”.
Lots of love.
TLC Team (United Kingdom)
Across the Ocean Shipping Australia:
Across the Ocean’s David Aherne MD, advised that the disruption being caused in Sydney is going to have massive knock on effects for forwarders and importers. We are always working on behalf of the client but when things like this occur with industrial action and de-hire yards not taking empty containers there are costs that are passed down the supply chain. We are actively lobbying and in consultation with the Australian Logistics’ Council (ALC) to engage with the shipping lines and trade unions to minimise additional costs being incurred by freight forwarders.
Never has there been an important time for forwarders to be in a network and pull together. If we keep business within Freight Lounge we can face these challenges and work together on solutions.
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