Upstream at all stages of the chain

The first signs of such a situation were already visible in the middle of 2020, when there was a certain upward trend in international trade at all stages of the chain. This was particularly pronounced compared to the global container fleet affected by the first half of the 2020 pandemic. In a highly competitive and volatile market, affected by persistent overproduction problems and erosion of freight rates, the situation of sea freight carriers has significantly improved.

Gross profit will reach about $ 47 billion

According to several experts, the container cargo market has never been as active as it is today. In the UK, for example, local container shipping rates have risen by 200%, while stock prices for ocean liner companies have risen by 300%. The gross annual profit of the container industry will also reach approximately USD 47 billion. The industry points out that practically all indicators have the same – upward – trend.
Cargo congestion in ports

However, there are always two sides of the coin, and rapid “warm-up” can have different consequences. In this case, it is worth paying attention to the quality of supply chain management – productivity in moving container cargo from ships to North American supply chains has been poor for months. In Denmark’s latest shipping market survey, the global container market was described as a frontier of chaos in the fourth quarter of 2020 and the first quarter of 2021. The example of congestion in the report shows that delivery from Tianjin, China to the port of Long Beach, California, took 92 days. The causes of cargo congestion in North American ports range from labor shortages, partly caused by the pandemic, to container shortages caused by shipping disruptions in early 2020, as well as lack of space in warehouses and other bottlenecks in the supply chain.
Although the situation has put freight owners in a difficult position, the consolidation of the ocean shipping industry from around 20 main lines five years ago to 10 lines, which now account for 85% of container capacity, has increased shipping discipline and strengthened the integrity of freight tariffs.

Overall increase of 10%

Forecasts for the rest of 2021 suggest that the boom in container shipping will soon slow down. Experts estimate that in the second quarter of 2021, container traffic will grow by 15% and overall growth will be around 10% compared to 2020. The profits of the container industry could reach $ 87 billion between 2020 and 2022. At the same time, it should be noted that experts are not concerned about future overcapacity in the container transport sector, when the market will inevitably start to decline. Nor are there any concerns about the prospects of ocean carriers who have chosen to invest windfall profits in their shipbuilding rather than charter them.

The post Impact of Covid-19 on container freight and global trade appeared first on Cargo News Today.

Upstream at all stages of the chain

The first signs of such a situation were already visible in the middle of 2020, when there was a certain upward trend in international trade at all stages of the chain. This was particularly pronounced compared to the global container fleet affected by the first half of the 2020 pandemic. In a highly competitive and volatile market, affected by persistent overproduction problems and erosion of freight rates, the situation of sea freight carriers has significantly improved.

Gross profit will reach about $ 47 billion

According to several experts, the container cargo market has never been as active as it is today. In the UK, for example, local container shipping rates have risen by 200%, while stock prices for ocean liner companies have risen by 300%. The gross annual profit of the container industry will also reach approximately USD 47 billion. The industry points out that practically all indicators have the same – upward – trend.
Cargo congestion in ports

However, there are always two sides of the coin, and rapid “warm-up” can have different consequences. In this case, it is worth paying attention to the quality of supply chain management – productivity in moving container cargo from ships to North American supply chains has been poor for months. In Denmark’s latest shipping market survey, the global container market was described as a frontier of chaos in the fourth quarter of 2020 and the first quarter of 2021. The example of congestion in the report shows that delivery from Tianjin, China to the port of Long Beach, California, took 92 days. The causes of cargo congestion in North American ports range from labor shortages, partly caused by the pandemic, to container shortages caused by shipping disruptions in early 2020, as well as lack of space in warehouses and other bottlenecks in the supply chain.
Although the situation has put freight owners in a difficult position, the consolidation of the ocean shipping industry from around 20 main lines five years ago to 10 lines, which now account for 85% of container capacity, has increased shipping discipline and strengthened the integrity of freight tariffs.

Overall increase of 10%

Forecasts for the rest of 2021 suggest that the boom in container shipping will soon slow down. Experts estimate that in the second quarter of 2021, container traffic will grow by 15% and overall growth will be around 10% compared to 2020. The profits of the container industry could reach $ 87 billion between 2020 and 2022. At the same time, it should be noted that experts are not concerned about future overcapacity in the container transport sector, when the market will inevitably start to decline. Nor are there any concerns about the prospects of ocean carriers who have chosen to invest windfall profits in their shipbuilding rather than charter them.

The post Impact of Covid-19 on container freight and global trade appeared first on Cargo News Today.

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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