In the autumn of 2020, before the new variants of the Covid-19 virus forced countries back into winter lockdowns, one of the main worries for traders was chaotic scenes at overly congested ports.
Felixstowe in particular struggled with a spike in imports following the first wave of the pandemic and at a time when it was still grappling with staff shortages.
The build up of incoming goods culminated in the port banning hauliers from bringing in empty crates for six days back in September, according to This is Money.
The knock-on effect for importers was delays in the supply chain and increased delivery costs.
As the UK’s recovery from the latest wave of the virus continues at a pace, are ports and supply chains ready for another surge in goods trade? The IOE&IT Daily Update has a look at some of the key indicators….
1) Shortage of containers and staff
The rates for freight moving from North Asia to Northern Europe are soaring due to ongoing container shortages and low staffing at ports, energy and commodities intelligence firm S&P Global Platts report.
The price for a forty-foot equivalent unit (FEU) was US$12,000 on 17 May, up $1,500 from the previous week and a near ten-fold increase from the $1,300 rate a year ago.
“I am struggling, my clients are struggling, everyone is struggling,” said one freight forwarder. “We pay and pay and still there is a high chance cargo will be rolled as demand is just through the roof at the moment”.
2) Suez impact could reach SMEs
Peter Wilson, group managing director of logistics and maritime service provider Cory Brothers, has told Lloyd’s Loading List that the blockage of the Suez Canal in March is also contributing to the soaring rates.
“Having softened slightly in March, rates took an absolute kicking when the Ever Given got stuck on the sands, going up and up,” he said. “The incident also led to delays in vessels arriving in Europe, the emergence of blank sailings out of China and heightened difficulties with regard to congestion and the positioning of containers.””
He added that SMEs will be worst hit as they are unable to negotiate the preferable rates larger firms can due to their smaller volumes.
“Unless you’ve got a BCO (beneficial cargo owner) rate, like the big guys, the supermarket chains, who’ve negotiated through sheer volume, you are really struggling. SMEs on named accounts and FAK (freight all kinds) rates are hard-pressed to get stuff shipped,” he said.
3) Container ships arriving late
The knock-on effect of congestion and shortages is that container ships are arriving later than expected, with the Wall Street Journal reporting that only 40% of ships around the world arrived on time in March, compared to 70% for the same month in the previous two years.
Delays of up to six days have been reported at ports in Rotterdam, Piraeu and Southampton.
4) Air freight 'maxed out'
Ocean rates continue to soar, but air freighters are about to hit capacity, with the global transport and logistics practice of McKinsey & Company telling Lloyd’s Loading List that the industry has “maxed out”.
Belly capacity – where goods are stored underneath passengers on civilian flights – remains half of what it was before the pandemic, when it held 55% of all cargo transported by air.
5) Pallet network under ‘undue pressure’
In the UK, Loadstar reports that pallet networks are collapsing under the weight of “undue pressure” during the pandemic.
The chairman of the Association of Pallet Networks, Paul Sanders, asked for customer “support and patience” as it sought to address the challenges firms in the industry are facing.
He said: “Following more than 12 months of disruption, during which we kept Britain moving, shops and hospitals stocked and goods reaching their customers, we have recently had to deal with an extraordinary surge in volumes at a time when our resources are acutely stretched.”
Pallet demand in March was three million deliveries – “the highest volume month the sector has ever seen” – following a 14% increase over Q1.