This is our 20th update highlighting issues the Covid-19 virus is having in the world of logistics and supply chains. In general news the UK is continuing to re-open with pubs, hairdressers, cafes can re-open from the 4th July and it looks like in a few weeks you will be freely be able to travel to many countries around the world. This is despite Leicester having to go into a local lock down due to an increase in cases, and it is possible that several other cities face the same prospect in England. It may turn out that all the restrictions being lifted have to be put back in place. Worldwide the virus is still continuing to cause havoc. Brazil is very badly effected and is struggling still to get the virus under control. Despite this the country is reopening as it simply cannot afford to keep lock down running. The USA is also facing a continuing increasing number of cases. California has reversed recent openings with bars and indoor dining areas being made to close again. Cases have significantly jumped in this region over the past few days.
Returning to the world of logistics the China authorities have released figures for rail freight from China to Europe. It showed that in April alone there was an almost 50% increase on the mount of train movements compared to 2019 and May shows a similar figure. While these services have been running for almost a decade it appears that the Covid-19 crisis has finally brought them to the attention of a much wider range of supply chain planers and it is expected demand though not continuing to double once this crisis is finally over they will continue to capture freight which would have previously move by airfreight or by ocean freight.
Aircraft belly freight capacity is likely to begin to rapidly increase along certain trade routes around the world as governments lift restrictions on passenger flights, and airlines begin to reinstate services. The UK is going to announce this week all the countries from which people can return from and not have to go under go 14days quarantine. This will no doubt trigger a massive stampede as people book holidays. The virus may be as hazardous as before but the majority of people are more than willing to risk the own lives, if the alternative means delaying holidays for a few months. This does mean freight capacity will be increasing, whether this will just mean a decline in airfreight rates as the capacity bottleneck eases and there is no additionally freight to fill the capacity or manufactures will increase production to fill the additionally capacity is going to depend on how severe the expected economic downturn is going to be.
Shipping lines are still increasing container freight rates on trade lines,particularly those to North America. General rate increases (GRI’s) are ranging from 200USD per TEU to 400USD per TEU which is a considerable surcharge. This is all down to the PPE demand once again impacting on capacity and making non-PPE goods shipping costs much more expensive than in 2019. With the coronavirus still having a significant effect in the USA this is demand is not going to disappear in July.
In our nineteenth update on the effects of coronavirus we are once again covering the impact on the logistics and supply chain sector in the UK and around the world. England has now moved into full post Covid recover. Most shops have now re-open and there are plans in the next couple of weeks to allow cafes and bars to reopening. The UK government is rumoured to be preparing to drop the social distance from 2m to 1m with the next couple of days. Both Scotland, Wales and Northern Ireland are also decreasing their lock down restrictions. This does not mean the pandemic is over however, with other countries are still having major problems and reporting increasing cases. The USA has had large increase in cases in the “Sunshine States” as lock down was reduced, and other countries keep having localised groups of cases. This is showing it still possible for there to be another full second wave of infections in any country.
Ocean container freight demands are impacting pricing again on trade routes. 40ft Container rates from China to the West Coast USA ports have reach rates not seen for over 2 years, with East Coast rates following a similar pattern. However Europe is a different story with demand and supply more matched and rates on some routes have begun to drop slightly. This may be just a short term price movement or an indication of a longer down turn in rates as demand softens, but it is to early to say. Seafreight into India is still facing major issues with the main lock down being extended until the end of June. Non essential cargo which is being devanned in some port CFS warehouse are incurring long delays due to a shortage of staff, lack of vehicle operators and congestion. This is resulting in additional charges for LCL operators which is being passed onto consignees. There is little that can be done to avoid these delays at the moment other than avoid shipping non-essential goods into ports such as Mumbia for the moment. The issue will eventually be resolved as the Covid crisis here is managed.
Airfreight rates have gone lower and demand for space has dropped this week mainly due to declines in PPE equipment shipments. However despite this anybody thinking of being able to get a “normal” airfreight rate out of China to either Europe or North America is going to be disappointed. Rates are still well above what was being paid this in June 2019. Several companies which analyse airfreight movements have report that overall capacity has actually dropped as some airlines have pulled freighters from certain routes as there is less PPE equipment to be moved. If there is a second wave of infections or the the existing ones worsen then it may result in another sudden freight rate increase and no airfreight capacity.
Companies are encouraged to rethink their supply chains to allow for disruption in logistics due to sudden demands for PPE equipment if new waves of Coronavirus break out. Importers and exporters should be now getting their logistics or freight forwarders to offer full analyse of different routes which will enable the to keep goods moving even if PPE shipments take all capacity of a particular route so they can avoid having to attempt to move urgent shipments using costly ways or having to shut down as they have no parts to use or stock to sell. The post Covid-19 supply chain world will be different.
Welcome to our 18th update on the impact the Coronavirus is having on the logistics and supply chain sector. In non related logistics news, the UK number of reported deaths and cases has continued to fall. In the UK from Monday most shops which were classed as non-essential and so have been shut since the start of the lock down are being allowed to re-open but have to ensure their customers maintain the 2m distance rule. Other countries within the EU have continued to lift restrictions, several now allowing unrestricted travel between other EU states, with Greece allowing travellers from certain countries worldwide such as Japan in. Countries which are heavily reliant on tourism are desperately hopping that they can still salvage part of this years tourist season. Further afield India is still struggling to manage to contain the virus with cases still increasing. Places like Mumbai have been badly effected with higher rates than national average. It is hoping that increased testing and tracking will bring the virus under control. India cannot afford to have a further lock down so has to explore other ways of eliminating the virus.
Logistics is continuing at the moment to show increases in some sectors. China has released data that in May over 7 billion parcels where delivered representing over a 40% increase in deliveries compared to the previous year. Courier traffic in the UK is the one area which has shown a massive increase over the past three months. Last month alone courier traffic was up by almost 45% compared to the previous year. Supply chains dealing with products for home consumers have been busy in this period than the in the traditionally run up to Christmas. Most companies who had an online presence showed an up tick in sales, the biggest limiting factor has been the ability to get new stock in. It has been reported by several buyers that they are no longer able to source for certain factories in China as they have not re-opened. This has meant searching for potential new suppliers and then trying to get them integrated into new supply chains as quickly as possible. Buyers are finding suppliers have been cutting corners and skipping proper quality checks on products in order to try and catch up with the back log of orders. Those buyers which had already built proper independent quality checks into their supply chains have benefited in knowing the products being shipped out will be suitable for sale.
Ocean freight demand has remain fairly static over the past week, with still large demand for container space out of China which is helping to keep rates up, along with the reduction in capacity due to blank sailings by most of the shipping lines. Worldwide reductions in capacity for container traffic in June are expected across all trade routes and with a couple of exceptions some European trade routes all others worldwide trade routes are expected to have no changes in shipping rates or increase have slight increases. One charge which is appearing more and more from shipping lines on certain trade routes is an “Equipment imbalance charge” which has been added to cover the cost of re-positioning empty containers where demand has dropped off for shipments to that location.
Airfreight rates have continued to drop slightly, however demand is still high and while many airlines are now using passenger planes as cargo carriers the lack of belly freight is still a big issue. According to IATA is still expecting a bleak future for some airlines, but does see the increased airfreight demand to hold into 2021, with many industries using airfreight to meet sudden demands for certain goods and to control the amount of stock they need to hold if the world does enter a full recession towards the end of 2020.
AJF is here if you are a shipper or importer into the UK. Wether it is normally goods or PPE equipment have a variety of routings and costings available. Use our contact for to send us details an we will see how we can help.
This is another short article on the effect the coronavirus has had on the logistics and supply chain sector. In general news the number of deaths has continued to fall in the UK. More services are beginning to reopen with restrictions. May be a bit later but face masks are going to be made compulsory for anybody using public transport in the UK from the 15th June. Both the UK and USA stock markets have continued to rally at at an incredible pace, despite all the warnings the economy is going to suffer. The Nasdaq has already hit an all time high this week, and it looks like the DOW and FTSE may well join them in the next few weeks. Despite all this optimism as mentioned last week there are still reports being published saying that there is going to be an economic downturn, which means the logistic sector is still facing serious challenges ahead.
Drewery is reporting in its analysis which it undertakes each week is showing now at the end of June only 7 sailings are due to be cancelled compared to 115 sailings scheduled. According to Drewery this will be the lowest number of cancellations since April. However they are also still saying that they see no clear peak summer season pick up this year and shipping lines are still going to continue cancelling sailings into the third quarter. Reuters have been reporting on how shipping lines are using the longer Africa Cape route now fuel prices have declined to avoid the Suez Canal and save money. They report that this is having a negative effect on buyers who need their goods as quickly as possible, they have been left to fight for space on vessels and containers being rolled over from one sailing to another. However they also report some shippers actively using the slower routes as mobile storage. The shippers are aiming for the cargo to arrive at its destination as the Covid threat declines and economies re-open up, avoiding the need for costly local warehousing. Additionally those buyers who pay the supplier when the goods arrive at their destination have been able to delay payment and help control their cash flow.
IATA has issued a press release which shows the effect of Coronavirus on airfreight trade. Overall global demand fell by almost 30% when measure in cargo tonnes kilometres and belly freight had dropped by three quarters in April. This clearly shows why airfreight rates have dramatically risen in the past two months as despite the cargo downturn, due to the demands from PPE shipments there was simply not enough capacity in the market, even with the extra freighters put into service. IATA has highlighted in their press release how this is causing supply chains to suffer delays and increased costs. It will be interesting to see how May is compared to April.
Regardless of all the issues in the world and transport due to the Covid-19 outbreak, possibly the world’s biggest logistic company Amazon is continuing to expand its airfreight division, taking on a further 12 767 freighter aircraft. This will means once in service they will have a fleet of over 80 aircraft. More and more people are using e-commence and this means Amazon just keeps getting bigger and making greater inroads into the logistic sector.
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.
The middle east is often a turbulent region, however the countries which make up this area also have a long and rich trading history.The countries often included in this description are Bahrain, Iraq, Iran, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen. Currently the UK exports significant amounts to this region from machinery to humanitarian goods and is anticipating increasing this further after Brexit in December 2020. However both Syria and Yemen have been engaging in serious internal wars for several years making shipping into them difficult. Iraq is still very unstable in certain regions and Iran has significant economic and trade sanctions in place.
At AJF we offer export ocean freight services to most of these locations either directly or through our transshipment service in Jebel Ali, UAE. We can help with potential exporters with the action they need to take when looking at these markets. AJF can advise who they need to speak to help with documention and export licences.
AJF logistics services can handle full container load shipments
For consignments which require a shipper’s own container rather than using shipping lines container. We can either collect a shipper sourced container or AJF can arrange the supply of a fully plated container. Once the container reaches its delivery destination AJF can arrange the disposal of the container or the shipper can purchase it directly from us. We move a lot of humanitarian and medical equipment in shipper’s own containers to several countries in this region. It is particularly useful for clients who are transporting goods to unstable regions where the goods may need to be stored for a long period of time until required. It is also suitable where the end user want to use the container as a distribution centre, or plan to repurpose the container for another use, such as an on site office.
For smaller consignments of pallets, drums and machinery we operate weekly Less then Container (LCL) services from the UK. As with some of our full load services we tranship some of the consignments in Jebel Ali, UAE. At our agents warehousing we consolidate these cargoes with other ones for shipping on to their final destinations. We do offer the service of re-working the goods in Jebel Ali, including repacking and re-labelling the goods. We can also combine shipments who arrive from several different locations around the world in to one consignment for onward shipping to a final destination in the region.
We offer limited airfreight shipments to this region for urgent goods such as perishables or very high value cargoes. Most of our airfreight services go to Dubai, Airport for onward distribution. Shippers should be aware the Coronavirus going around the world is reducing the number of flights and this is threatening to make these services much more expensive with limited space over the next few months.
The Coronavirus is continuing to cause issues to global supply chains with many of the large manufactures around the world issuing warnings of potential hit to full year profits. This has highlighted how important China is in supply chains across the planet today. Many companies have urgently started to try and move manufacturing to other countries including Vietnam and India. Few of these countries have the capacity to available to meet the sudden demand, and even ones which can it is going to be many weeks before these products are able to get the end consumer.
In the UK one online furniture supplier warns that while they have sufficient stock due to the delays in factories restarting up they are facing the a break in their supply chain. They rely on a constant supply of containers from China manufacturers. They have additionally stock to cover the Chinese new year shutdown, however they expect to run out of the most popular items within the next few weeks. If they have to stop selling certain items not only does it mean a loss of sales, but also a drop off in Amazon, Ebay and Google rankings. As a result once the supply chain out of China is reestablished, it will take time to get sales back to previous levels. The owner does not expect to have to lay off any staff at the moment this may become required if the crisis continues.
Transport operators are not fairing much better. Both shipping lines and airlines (cargo and passenger) have lost large amounts of money over the past few weeks. Many shipping lines have added blank sailings into their schedules to prevent their vessels getting delay at Chinese ports. Airlines have cancelled virtually all services and are not accepting bookings till the end of March for many Chinese destinations. Additionally with the virus spreading to other countries many Airlines are reducing their services to these areas. Easyjet which is low cost operator in the UK, is taking drastic action to reduce it costs in the face of falling passenger numbers, these include pay freezes, reduction of administration costs and offering staff unpaid leave.
Despite all the bad news, for China the official line is amount of new cases being reported is dropping and if news reports are accurate then virus now seems to be effecting more people outside of China. This is reflected in the current port operations in the Port of Ningbo, China. This port has over 24000 registered truck drivers, at the height of the crisis it had less than a thousand actually working. This figure has now reason to over 7000 by the end of last weekend. This means container through put has gone from virtually nothing to 13000 twenty foot equivalent (TEU) units being moved per day at the start of the week. Other Chinese ports are beginning to clear through their container backlogs.
Shippers need to be aware that as factories begin to return to full operation and there is a rush to get goods to the ports, space will become a premium on the vessels and as result rates will be expected to rise and containers will sit on the quay longer than normal while awaiting a vessel with space. Price issues and space availability is effecting airfreight imports and exports as there is considerable reduction on available flights currently. Booking space as early as possible is currently the best recommend action for shippers.