A surge in demand for consumer goods during the pandemic has created major supply bottlenecks around the world, which has impacted the supply of container ships and boxes to transport cargo.

Shipping and port officials expect global supply chain disruptions to extend into 2022.

“The current surge in freight rates will have a profound impact on trade and undermine socioeconomic recovery, especially in developing countries, until maritime shipping operations return to normal,” said UNCTAD Secretary General Rebeca Grynspan.

In its Review of Maritime Transport for 2021, UNCTAD said that the current surge in container freight rates, if sustained, could increase global import price levels by 11% and consumer price levels by 1.5% between now and 2023.

“The impact is expected to be more significant for smaller economies that depend heavily on imported goods for much of their consumption needs,” it said.

UNCTAD said maritime supply chain stakeholders including container lines, ports, inland transport providers, customs and shippers “should work together to share information and make maritime transport more efficient”.

“In the face of these cost pressures and lasting market disruption, it is increasingly important to monitor market behavior and ensure transparency when it comes to setting rates, fees and surcharges,” it said.

Source: www.marinelink.com

Image: www.pexel.com

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A couple of steps short of humanitarian disaster and incalculable damage to the environment

At the end of the year around Christmas, up to 10,000 trucks headed from Dover to Calais via Eurotunnel. When France suddenly closed its border with the UK, all trucks and their drivers that were still in Britain got stranded in the ports without any information about their chances to continue their journeys, without food and access to essential hygiene facilities. Truck congestions near the ports in Kent were so bad that they even caused local traffic disturbances in some areas. Police was brought in to help organize the HGV queues.

With the chaos continuing, it was a matter of days before a possible humanitarian disaster in Kent, as a huge number of people and various freights ranging from foodstuffs to goods and products requiring special storage conditions which could not be ensured unless the goods were delivered to their destinations with special storage facilities — were gathered in an unsuitable place.

Movement of unaccompanied freights (containers, etc.) was not stopped. However, how quickly could the carriers regroup to transfer their freights on trucks stuck in the ports to sea or air freight containers? Is it even physically possible when the trucks are tightly parked side by side in an open field inaccessible to other vehicles or reloading equipment? Of course, if the traffic ban continued, other solutions would have been sought. Nonetheless, we have to understand that switching all land freights to sea or air freight transportation is not possible in a short time, as their capacities are not unlimited either.

Blocking the traffic, France stated that only drivers with a negative COVID-19 test results would be allowed in. The UK had to arrange mass testing very quickly. Even the army and fire fighters have been brought in for the task. As a result, several thousands of trucks crossed the Eurotunnel on December 25 alone. It created an additional load both on the tunnel and its servicing companies and undoubtedly also increased the burden on the environment on both ends of the tunnel as this large number of trucks in one place generated huge amount of exhaust gases.

How prepared are countries for a sudden stop of deliveries?

In Europe, the disruption of deliveries from Britain would not not cause much disaster as there are other ways and other suppliers available, while Great Britain is an island. If no deliveries are coming from the continent, where will the necessary goods come from in the absence of long-term stocks? How to obtain goods that are not made in sufficient quantities in Britain? The situation was additionally aggravated by the fact that delivery disruptions occurred during Christmas season when trade companies generate their largest turnover.

Ian Wright, chief executive of the British Food and Drink Federation (FDF)[1], also noted that France’s decision to block accompanied freight from the UK to the continent “can cause serious disruptions to fresh food supply.” At the same time, the British Retail Consortium (BRC)[2] stated that short-term haulage suspension would not stop retail trade, as retailers had created stocks. In fact, nobody could predict how long the ban would last.

The influential newspaper The Guardian stated that around 3000 trucks with vegetables, flowers and plants come to the UK from Europe daily. According to The Guardian, small shops, local markets, restaurants and catering companies which supply up to 40% of fruit and veg will most likely experience shortage of those foodstuffs already in the next few days.

Analyzing the existing situation, theconversation.com[3] journalists pointed out that soon after Brexit they warned that just-in-time delivery systems were easily disrupted and leaving the EU from which Britain sources a third of its food opened new risks. Brexit had not yet happened when the British had to experience first-hand what the disruptions of deliveries meant, if only for a couple of days. “We were not surprised concerns about food shortages emerged when France and over 40 countries imposed travel or truck movement bans on the UK,” theconversation.com noted.

I.e., this situation highlighted the problem, which had not been openly and frequently discussed before: are we prepared for a stop of logistics due to COVID-19 or any other reason (natural or technogenic disaster, etc.)? I believe that it’s time for Britain and others alike to check their stocks of essential goods and develop plans B, C, etc. in case of any supply disruptions.

Risk assessment is more important than ever

COVID-19 is still tearing the world apart. Although active vaccination campaigns have already begun, it is clear that this year we will not return to normal life as we have known it before the beginning of last year. Currently, there are no available data on losses suffered by the UK haulers and exporters due to closure of the border with France and other countries. At the height of the crisis, haulers cautiously said that they would “account losses as precautionary measures to stop the spread of COVID-19”. But it is not a long-term solution.

Representatives of Nottingham-based Baxter Freight stated that the delays had cost the industry “millions of pounds an hour” while director of Peterborough based Chiltern Distribution Paul Jackson) estimated that freight delays had cost the company “more than 5000 pounds a day”. The company also looked into possibility to redirect freights via Belgium, but the earliest available supply corridor then was on January 4 only. At the same time, the Scottish Seafood Association declared that it would demand compensation for the loss of profit from the Government, as during Christmas season their goods did not make it to their target markets in Europe. Jimmy Buchan, chief executive of the SSA, said that “people’s livelihood and job are under threat”.

The events in the UK showed that every hauler must focus on potential risk analysis and crisis solutions more than ever before.

[1] Food and Drink Federation (FDF)

[2] The British Retail Consortium (BRC)

[3] https://theconversation.com/food-shortages-brexit-and-covid-19-how-britains-problems-converged-at-christmas-152412

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