March 2020 Department of Transport
March 2020 Department of Transport
March 2020 Department of Transport
Setting the Challenge
Our 16th update on the Coronavirus and its continuing impact on the logistics sector here in the UK and across the world. In general news the UK is now facing a split on how it is dealing with the outbreak between England, Scotland, Northern Island and Wales. In England from Monday life continues to get closer to normal with more restrictions lifted, people allowed to meet each other in limited numbers and more general shops / services being allowed to reopen from the middle of the month. However in Wales they are taking a much more cautious view and now date has yet been announced. In Northern Ireland certain venues are being allowed to open, including furniture shops and car showrooms, while outdoor weddings will be allowed to take place but with a restricted number of guests allowed. Overall in June the economy should begin to recover slightly however everybody will be watching to see if there is any sudden second wave of infections. South Korea has closed over 250 schools which had just reopened the previous day due to a sudden spike of infections. South Korea had the virus under control, but has had several new outbreaks, often linked to one place or an individual who has become infected and then spread it further.
Airfreight once again is still in high demand to move PPE equipment from China to Europe however it looks like June will see lower freight rates with rates ex-Shanghai to European and USA destinations dropping over 10% on average this week. Currently airfreight belly capacity has increased by over 15% on the previous week as more passenger freighters come on line. With the talk of more passenger services being allowed to operate in June and July capacity will continue to increase. However as the world enters an economic depression caused by the virus and lock downs all around the world, it may result in by August or September being too much capacity available as the demand for non-medical goods is not there, or shippers and buyers preferring to take the cheaper seafreight route even though transit times are much longer, in order to save costs in an increasing competitive market.
Ocean freight is also still seeing the effects. Shipping lines are still having issues with shippers and importers not notifying them of delays to shipments, or outright cancellations which is causing difficulties in managing supply chains with cargoes not being delivered to ports for sailings and vessels leaving empty. There is still reports being printed saying that there will be no bounce back for container freight in 2020 with there being an overall decline of around 10%. While shipping lines have temporary cut sailings and has allowed them to lay up vessels, these vessels still cost money while they are mothballed and if the shipping lines cannot put them back to work, or dispose of them economically, it is going to be be a significant cost for them to support. Smaller container vessel operators are also feeling the pain. The Loadstar reports in an article how MPC container ships which operates in the container feeder service is experience a severe downturn due to the the Coronavirus. The part of its fleet which operates in the spot broker market has now over 160 feeder vessels lying idle around the world. This again again highlights the severe disruption the virus is having and indicates how much cargo demand has fallen over the past few months.
This is the fifteenth update on how the coronavirus is impacting the transport,logistics and supply chain sectors. In general news the UK, mainly England, is gradually lifting more and more of its restrictions as death rates and new cases continue to fall. Across Europe there are small breakouts of second waves but nothing major, in fact the rate is declining so fast in the UK, some researchers are concerned there may be not enough subjects available to test any potential vaccine on. Up to now over 250 thousand confirmed cases with unfortunately 36000 deaths. Sweden which has had no lock down while initially seaming to be in control, now has the highest death rate per capita, but lower per population than elsewhere in Europe and there is doubts that is declining as effectively as in other countries which did have a lock down. One continent which has had little coverage in the western world is Africa. Despite the world press declaring it was going to be a complete disaster for the region, it has managed to hold its own against the virus despite have considerable less resources but managing to use what they have more effectively. There is even support for a herbal remedy which several leaders are saying helps control the virus. However there is very limited scientific research available to support any claims at the moment however sometimes home made remedies can help show a possible route to usefully manufactured remedy.
Return to the logistics sector. The UK government has announced that all travellers returning to the UK will have to self quarantine for 14days. Road haulage companies initially thought this would stop all cross movement borders for accompanied trailers, however it has been confirmed that lorry drivers are exempt from the quarantine but will be expected to observe social distance and other coronavirus preventive method such as using PPE including face and glover coverings. The UK RHA has issued a short safety briefing to its members on how to work safely during the coronavirus outbreak, and the areas a Covid 19 risk assessment should cover.
With airfreight capacity issues still in China, forwarders are coming up with various new routings of cargo to try and increase capacity. This includes airfreight to locations which currently have spare capacity and then using seafreight to ship the goods onwards to the UK. Other solutions include using seafreight to get the goods part of the way to such locations as the Middle East then loading onto plane for final shipment into the UK. While not anywhere near as fast as direct airfreight, with the delays at airports for non-essential cargo and the increased cost this option currently is much more viable.
Ocean freight rates from China to Europe have actually begun to rise off their lows due to the shipping line’s efforts to reduce capacity through blank sailings. The continued demand for PPE products along with the normal goods being shipped is creating a rapid increase in freight pricing. Especially with companies looking for alternatives to airfreight as mentioned already. Several of the shipping alliances are now looking to reinstate a few services from the start of June. Currently this is just for the North American market but there may be some additional sailings being reinstated on for the Asia Europe routes. However it is still unlikely at the moment there will be a large peak season this year, with the coronavirus have an impact on the worlds economy and this only now start to show.
This is AJF’s continuing coverage of how the Coronavirus is impacting the logistics sector from ocean freight to road haulage within the UK and further afield. Generally in the UK the government has released a rather confusing update to what the public can now do. The “Stay at Home” message has been replaced in England with a “Stay Alert” message. The general public is allowed to do more exercise and travel further afield in order to do it. Garden centres and golf clubs have been allowed to reopen if the follow social distancing rules.Additionally much to quite a few people surprise they government said people can return to work from Monday. However while the death rate is gradually falling now, the number of new cases being reported has been increasing again. Time will show if having more people moving about and interacting will result in a new spike in cases and deaths resulting in the lock down being reintroduced. Scotland and Wales have refused to adopt the new message and have not changed their guidance to the general public yet.
Within the logistics industry, the warnings of a storage shortfall for incoming cargoes in the UK has not yet happened, with warehousing and general open storage still available. Ocean freight beginning to generally settle down. Few new blank sailings have been announced by the shipping lines as they get to grips with the virus and its impact on the supply chain. Forwarders are still seeing bookings being cancelled in some sectors as importers expect a general decline in demand for goods over the coming months and do not want to have lots of unsold stock sitting in warehousing. The Cass Freight Index which has been reporting on domestic movements in North America since 1995 has published its April figures which has shown how severe the impact of the coronavirus has been. The index has shown shipments in North America dropped over 20%, one of the steepest recorded. However with restrictions being lifted it is expected the May figure not to be as severe and the June figure be much closer to normal.
Once again in the airfreight sector it is China and the still increasing demands for PPE equipment, has resulted in large backlogs in cargo at China’s Shanghai Pudong Airport. Due to handling restrictions and when trucks can arrive at the airport cargo has been missing it’s booked flight, which then means it has to be stored for the next available flight and this then adds further to the congestion. Apparently foreign operators of flights are only allowed to fly one route in to and out of China no matter where the origin was. Even Chinese airlines are having route restrictions imposed on them. It is likely this situation is going to continue at least for the next two weeks. Demand for airfreight in April out of China is clearly shown with over 1500 cargo flights in this period which amounts to a staggering increase of over 50% year on year. Shipments of PPE equipment are still showing no signs of declining with demand still very high for these products in most countries.
If you have any freight shipments either import or export from the UK, AJF is ready to handle it from LCL, full container shipments and airfreight to all areas of the world.
This is the thirteenth update on the continuing effects the Coronavirus is having on the logistics and supply chain sectors. In general news the USA is beginning to reopen up even while it is still showing increasing infection and death rate. This is reflected in the financial markets, despite the terrible job loss news out of the USA and continuing tensions with China, the DOW, S&P and Nasdaq are now powering ahead refusing to pay attention to this bad news. It is shrugging off any fear about long term effects of all these shutdowns on the world’s economy. The Nasdaq may even break the 10000 barrier with the next week. This rally appears to have caught many market commentators by surprise with initially everyone saying the initial rally off the previous lows would not last. If the markets are right then it will mean the logistics sector will be back in demand at least by some sectors. However it is still unlikely that the Oil and Gas sector is going to recover much over the next few months with oil still below 30USD a barrel and long term contract prices are currently not forecasting much of an increase in demand.
Returning to the UK and despite the newspapers and other media outlets trying to imply the lock down in the UK is going to be all gone by soon, the reality is the UK government is only expecting to announce a very slight easement of restrictions on Sunday. This may include allowing garden centres to reopen and people to use parks to relax in. Scotland has decided to continue all its measures unchanged for another 3 weeks showing that this crisis is still far from over. Vaccine trials have begun with estimations of a workable one being available anytime from September this year to September 2021.
HackerNews had a thread this week on sellers looking for alternative e-commerce markets to Amazon. The thread discussed how sellers where getting disenfranchised with one of the worlds market and looking for alternatives such as Shopify. Several website designers noted that they were busier than ever with requests for setting up individual operated e-commence sites. For the logistics sector this means there will be more potential clients out there looking for fulfilment services, from devaning containers to reverse logistics. This may reverse some of the losses over the past decade to Amazon. Though with the current market share Amazon has is unlikely to be concerned at the moment by this development.
Ocean freight services are still seeing serious imbalances on availability of equipment and space on some routes from Europe to Asia and the MiddleEast. As a result shipping lines are coming up with new emergency surcharges which they can add to existing rates this includes an ESS surcharge which is short for Emergency Space Surcharge. This does not mean shippers will be guaranteed space, just they will be guaranteed the extra charge. The continuing in balance in trade is also seeing Peak Season Charges being introduced. Overall exporting from the UK is in general going to be more expensive for the next few months.
Lloyds has reported that more and more vessels are now choosing to transit via the Africa Cape rather than via the Suez Cannel due to the very low oil bunker prices meaning it is becoming more cost effective. The one downside of this is the increased levels of pollution from these vessels burning more fuel due to taking a longer route. In the UK the expected shortage of container storage space has not occurred with currently there being no real issues for shippers looking for off site storage of incoming containers.
Once again airfreight is still in high demand for shipping from China to to the rest of the world. Medical and other related Covid-19 supplies leading the demand. Some airfreight industry reports are now showing that the decline in airfreight space has finally reached a bottom and is beginning to show signs of increasing in the 1st week of May. However rates are still much higher than previous years even though oil is lower. Some shipments are still attracting additional cargo handling charges when they arrive at European Airports. May will be an interesting month overall to see how trends are going in this sector.
At AJF we often can asked what kind of products we can handle and if this includes unusually shaped items or those which are not boxed. The answer is we can take both standard pallets and non palletised oversized items in our warehouse. Our pick and pack order fulfilment services are available not just for boxed items but for oversized products including those which cylinder shaped, circular or irregular shaped. Our warehousing has handle goods for many different industry sectors. These have included after market car parts, specialised building construction materials, and AJF have specific handling skills for order fulfilment in furniture sector. We have handled both the dispatch of furniture and returns.
We can handle non palletised items with individual weights of up to 75kilos by hand. If you have items above this weight then they need supplied so they can be moved and stored by using a forklift. These items should be packed in a way that that the lifting points are clearly marked and have additional packaging around these areas to prevent the blades from marking the product. Pre-sale checks can be undertaken of any product if a client has concerns over the quality of a product or it is not as expected. This can include photographing or videoing the product in question.
The reverse logistics (returns) services AJF offer apply to non palletised or oversized items. These processes include the ability to fully assess an item for any damage / wear and tear while it was with the customer. We can arrange products to be photographed before repacking the product if required for resale. The photographs are not just suitable to assess the status of the product but can be used directly on e-commence sites so potential buyers understand exactly what they are buying and reduces the risk of further returns.
The technology we have managing our warehousing operations allows us to mix our human picking with an accurate order barcoding check system which ensure the correct pick rate is 100% as opposed to a manual only system which has a high risk of misidentification. We can help clients with how to mark up their products such as using colour identification labels and where to place their product labels where barcoding is not possible.
For distribution of goods and oversize items we can use one of our pallet network agents which offer coverage across all of the UK, Ireland and Europe. Where two man delivery service is required AJF has worked with two man delivery services such as ArrowXL. When working with these service providers we can work directly with them for collections from our warehouse or we can delivery to their local distribution point.
We have flexible storage charges from charges per pick location to long term contracts where clients can rent part of our warehousing which is dedicated solely to their products. If you are looking for storage either short term or long term, use our contact form to get in touch with ourselves to find out how we can assist.
This our twelfth update on how the COVID-19 virus is impacting the Logistics sector. Briefly in general coronavirus news, the UK is planning how to ease lock down with the UK government saying we are now past the peak and next week will issue updates on how it plans to go about doing this. However we have not had confirmed that the 5 points that need to be fulfilled for removing the lock down have actually been met yet. Despite this many more shops are opening up and road traffic has increased considerably over the past week. Many construction sites are starting up again or have plans to restart which will drive demand for more construction goods and increased road haulage. It is not only the UK looking at easing restrictions, several other countries included some of the currently worst hit Italy and Spain and looking to relax the much tighter controls. Further afield both Australia, New Zealand and South Korea are all report no new local cases and have begun to remove their restrictions. However Germany has decided not to ease their restrictions as they noticed a slight increase in cases.
Returning to the logistics sector.In airfreight it is now reported that rates have now begun to rise out of Hong Kong after being much lower than other mainland China areas such as Shanghai. This is driven by shippers trying to find alternative routes routes which are not only cheaper but also have spare capacity. Airlines in general are suffering particularly the ones loaded with debt and limited cash reserves. In Australia Virgin has already gone into administration basically destroyed by the huge debt mountain it had. In the UK Virgin airlines future is also not looking very good. The airline is 49% owned by Delta with the rest by the Virgin group. While it has made some profit in the past the previous couple of years have not been particularly outstanding and is very vulnerable. If it does go then it is going to create a hole in airfreights routes out of Manchester and leaving BA with reduced competition on several routes.
Ocean freight is still seeing blank sailings being announced as shipping lines struggle to try and match supply with demand, especially from Asia. However the industry is beginning to see the situation stabilise. Rates have fallen slightly for May sailings across some routes. However forwarders in Asia are still facing difficulties in getting load containers to the port and overall cancellations as factories remain shut or on reduced staffing levels so are unable to load containers. Within Europe there are reports of capacity to store incoming containers running low with offsite container yards filling up. The shipping lines introduction of services which shippers can delay the containers on routes at transshipment hubs can help the situation. But this is all additional costs which some party in the supply chain will have to eventually take.
Larger logistics companies are having to rapidly adapt what will be the post coronavirus world. While some are expecting the demand for logistics to rapidly rebound later in the year others are not as sure and have begun laying offer employees. DSV one of the largest forwarders in AJF’s local area has been reported it plans to reduce its freight and logistics personal by nearly 10%, citing expected lower demand for services because the decline in the world economy.
Overall while the currently worst hit countries appear to be getting a hold of the virus, without any cure or vaccine available the outlook still looks unsettled with the risk of a secondary wave of infections, and economies all around the world severely impacted.
Our eleventh update on the current effects of the Coronavirus on the logistics and supply chain sector in the UK and worldwide. In general terms there are now over 139000 confirmed cases in the UK with the daily death toll dropping slightly. The UK is attempting to roll out a testing system for key workers and a new centralised website to manage the distribution of PPE equipment, however both are delayed in getting operational. While there is still a lock down in the UK, there are increased signs of activity with more traffic on the roads and more commercial premises such as B&Q reopening. Apart from Scotland there is still no published lock down exit plan. The government is still concerned by a second wave of infections and over whelming the NHS.
The Road Haulage Association(RHA) and the Chartered Institute of Logistics and Transport have sent a joint letter to the UK government raising the plight of haulage operators and the financial duress they are under. They write in the letter that their current market intelligence says that now almost 50% of the UK’s lorry fleet is parked up and operators are experiencing severe cash flow issues as their customers delay payments. Significantly the letter mentions the very low profit margins in this sector which is part of the overall issue of haulage. It is very difficult to build cash reserves if your daily revenue only just covers your operations.
In the letter they ask the government to consider 5 areas which if implemented would assist hauliers:
Meanwhile in all of this decline the shipping line HMM (previously called Hyundai Merchant Marine), has launched the HMM Algeciras container vessel. This container vessel at nearly 400m long can carry almost 24000 20ft containers making it the worlds biggest ship in the Ultra Large Container Vessel category. Maersk originally had the title before MSC took it in 2019. HMM currently still have plans to run it on their Asian – Europe service, being a “THE Alliance” member. However whether there is going to be the cargo available to fill this ship both now and post Coronavirus will be interesting to watch.
There are more warnings form the UK Warehousing Association that there is still increasing risk of lack of storage for containers and palletised goods. The UKWA have issued advice to importers to start looking for additional space before the goods arrive in the country. This is especially important for cargo that is imported to meet a seasonal demand and has now missed the selling period and needs to go into long term store. The limited space available means that there is a possibility that importers may incur significant storage at the port quay or in an ERTS warehouse while they try to locate warehouse which will accept the goods for long term store.
Any anticipated decline in airfreight demand out of China along with pricing has not yet happened. Rates from Shanghai to Europe have reached nearly 9USD per kilo, with some spot rates approaching a staggering 15USD per kilo. Shipments out of Hong Kong have not be as severely effect with limited or no change in pricing in the past couple of weeks. With forwarders still reporting very high demand due to containing needs for PPE equipment in all countries around the world. In Europe there is continuing to be an active discussion over the introduction of handling surcharges by the airport ground handlers. Menzies Aviation report that this will not be applied to any goods classed as medical equipment or PPE. How long these surcharges will be in effect for are not know at the moment.
According to a new report put out by Shipping and Freight Resource, most of the forwarders asked believed they could fully recover from the effects of the virus. However almost half of them believed it was going to be a slow recovery with another third believing it will be a moderate speed recovery. One long term significant impact was over 67% of those asked planned to invest in technology to improve how they operated. The overall immediate picture is one of significant concern for some sectors. However it appears that once the crisis is eventually over, companies will be able to recover. This of course will depend on how long the crisis continues for.
Welcome to the 10th summary article on the effects the Coronavirus is having on the logistics and supply chain sector. In general news the Boris Johnson is now out of hospital and recovering at home. The UK on Thursday has decided to extended its lock down for another 3 weeks. There is still large concern that if the lock down is lifted there would be an immediate spike in cases which would leave the NHS struggling to manage. The government has set out at least five areas which must be met before any lock down could be consider to be lifted.
When these points will be met it is unknown. The worse case is it may be not fully removed until a vaccine is available which would be October at the earliest. Across Europe, Spain and Austria have begun to allowing the country to reopen. However France has decided to continue its lock down for another 4 weeks. Sweden the only country without any significant restrictions is showing an increase of cases but not at a catastrophic level that was predicted. This country is being closely watched.
Airfreight is still seeing very high import level not just from China but other regions. This is mainly due to the movement of urgent medical goods for the dealing with coronavirus. However not all forwarders are happy with their booking agents as some are getting charged additionally covid-19 handling surcharges. This is due to airlines using passenger planes to carry cargo in the main cabin as well as the main hold. Any cargo in the main cabin has to be secured to the seats. Handling agents are reporting that this is taking considerable time to achieve. Insiders in the industry are saying that the time delay incurred in using the main passenger cabin is offsetting any benefit in using it. Hopefully as handling agents and their workers become more familiar with these process then the situation will improve and it will be a benefit.
The demand for rail freight to Europe is continuing. China Post has now run the first of what it plans to be several mail only services to Poland and Latvia to help clear the huge backlog of items for Europe. The currently plan is to send the mail to central distribution points and then use trucks to deliver the mail across Europe to the relevant national post distribution point for final delivery.
Seafreight is continuing to have shipping lines introduce blank sailings to reduce and redistribute capacity across many shipping routes. Container booking cancellations are been reported by many freight forwarders. Goods are being cancelled as buyers do not want to be sitting on large amounts of stock which consumers either do not want, or with the continued lock down cannot be delivered. This is especially where two man deliveries are used. Furniture is one commodity which has been singled out as having large amount of cancellations, this observation can be confirmed by AJF. As consumer confidence falls and people spend less, buyers are going to be increasing these cancellations over the next few months.
March 2020 Department of Transport
March 2020 Department of Transport
March 2020 Department of Transport
Setting the Challenge
Replacing high emission vehicles with zero emission ones
Replacing high emission vehicles with zero emission ones
Replacing high emission vehicles with zero emission ones
Despite the Coronavirus issues the UK issued a new report at the end of March the challenges on the “decarbonising transport” in order to get to the country to a zero emissions by 2050 across all modes of transportation. This report sets out how the government plans to engage with individuals, companies and other stakeholders through a series of workshops and public feedback sessions on the decarbonising issues and the proposed government actions to address them. The government additionally wants feedback on any other issues not mentioned but may have an impact the decarbonising strategy and what actions should be taken in order to address them. The final report currently is planned to be issued towards the end of 2020, though it may will be delayed now.
According to the report the transport sector overall is now the largest emitter of Green House Gases (GHG) since 2016. This is since energy sector in the past few years has dropped dramatically, while the transport sector has remain fairly static over the past 25 years. This does show one positive in that while emission have remained static the number of vehicles has increased considerable in this period. This will be down to the drive in the commercial sector for reduced pollution in the form of EUR engine standards, increased electrification of rail lines and an overall improvement in transport vehicle efficiency.
There transport decarbonising highlights six areas it wishes to address in order to achieve a nett zero transport system in the UK.
Future articles will deal with the current situation and detail planned steps on how the conversation will be taken forward. The full report from the Department of Transport Decarbonising Transport, Setting the Challenge can be downloaded here
Another update on the effects of the Coronavirus on the logistics and supply chain industry. In related issues Boris Johnson, the UK Prime Minister is still in hospital but appears to be improving. The UK is still experiencing an increase in reported cases and deaths so it is most likely the lock down will continue. There was talk of it being lifted in some form next week, this will not happen and it likely to continue on until at least the end of April.
The World Trade Organisation sees a very negative impact of the virus on global trade. Their economists are forecasting that over the next year trade may fall by around 13% in best case scenario and in the worst where it gets out of control it may drop by almost a third. While 13% does not seem too terrible a drop, in global terms that is going to be ten’s of thousand containers not shipped. The WTO Director has issued a video on youtube to address this here. Consumer demand is going to drop off over the coming months as mass unemployment begins to have an effect, as consumers cut back on everything in order to save money. With a lot of the Western World facing a recession later in the year this is only going to get worse.
Shipping lines such as MSC are tackling this with increasing the number of blank sailings from Asia to Europe in April and May. They are also trying to find ways at smoothing out demands by offer additional services such again as with MSC offering to store containers at hub ports.
As mentioned in previous posts this reduction in sailings is going to have an impact on hauliers working out of ports such as Southampton and Felixstowe. It means fewer containers to be moved and unfortunately an oversupply of hauliers wanting to move them. The only two good thing for hauliers at the moment is the lack of traffic on the roads and large drop in fuel prices over the past couple of weeks. However this no doubt will leave some struggling and when the demand returns the risk is there are going to be too many containers and not enough hauliers.
Despite the current doom and gloom on the ocean freight sector, the airfreight is still experience strong demand and China-Europe rail sector is showing increasing demand. This is all down to the previous Chinese lock down which has created a gap in supply chains which need to be filled before the first seafreight containers arrive. Ii is expected by May for the airfreight demand to have passed its peak. Despite the overall slowdown in the world economy, the China-Europe rail sector may continue to grow as it offers much quicker routings than ocean freight and is considerably cheaper than airfreight. This has a benefit for many supply chains while it is around double the price of a container as it means buyers are able to react quicker to market demands and declines. Stock can be turned around much faster and ensure that the all important cash flow is not tied up. Companies which only ship pallets and part containers are now able to take advantage of the rail link as groupage services have been launched.
If you are interested in any of the these rail services then AJF can help. Feel free to drop us an email or you can still ring us.