The situation at the UK main ports can only be described as nothing short than complete chaos. Port of Felixstowe severely under estimated how much traffic would come through the port after the initial Covid 19. This has had lasting impact on trade which has resulted in berthing issues and slow discharge of vessels. Combined with a shortage of transport has meant containers having to have the haulage booked over 14days before arrival in order to get a delivery slot. Even doing this is difficult as vessels find they have no berth on arrival and so either wait or the shipping line having to change their port rotation meaning, or being slow to discharge. This all means containers which have had the freight booked out in China are regularly running out of free quay time due to most only having 5 or 7 days free rental.
Even when hauliers have got a Vehicle Booking Slot (VBS) they then end up having to wait may be a couple of hours on the quay to get their container loaded or off loaded. This then results in delay to customers warehouses, which in turns delays the next job the haulier has planned. Overall the delays progressively get worse and worse throughout the week and then start again the next week.
This has not just effected full container load shipments but has had a significant impact on LCL operations through Felixstowe. Normally LCL shipments are devanned within a few days of arrival. It is now taking up to 14days for containers to be devanned at Felixstowe/Ipswich ERTS and the delays keep building up as the consolidators struggle to get their containers off the quay.
Just to compound all of this the strong winds we have had in the UK over the past few weeks has made the situation even worse as the ports have had to shutdown all operations,which has added even more berthing and loading issues. As a result of these issues at Felixstowe more and more container traffic has been diverted into London Gateway and Southampton. These ports are struggling significantly due to the increased volumes. This has lead to some shipping lines and consolidators introducing or planning to introduce congestion charge fees. These can be as much as £150 per 20ft Container (so £300 for a 40ft or 40ft HC container).
Customers should be aware that despite this issue being entirely down to the ports being unable to manage the shipping traffic they will still be charging demurrage and other related charges which will unfortunately have to be passed on to you. There is no ability to claim back any of these charges from the ports. Several freight forwarders have been in contact with BIFA to see if they can intervene in the situation but they have been so far had little success in being able to get matters to improve.
For both importers and exporters in the North of England the alternative use the less congested feeder ports such as Immingham, Liverpool and Grangemouth. While it adds additional transit time of around 5 days and extra cost this is easily now being offset by all the delays and charges at these ports. Use the contact form to send us details and we will see how we can assist you.
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.
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.
- Ensure the daily death rate shows a constant decrease
- Ensure that the infection rate was slowing to a manageable level
- Personal Protective Equipment and testing would be available to meet any sudden increase in infections
- As mention above, ensure the NHS would cope with the lock down being reduced
- Information proving removing the lock down would guarantee a sudden bigger second peak of infections
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.
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.
Another weekly round up of the effects of the Coronavirus on the Logistics and Supply Chain Industry. The airfreight industry is particularly suffering. Despite the high demand for airfreight the actual airfreight volumes have dropped significantly in March particularly towards the end of the month as airlines shutdown their passenger network. This meant a massive cut in airfreight bellyhold cargo capacity across the world. The freight press has widely reported that in the UK Swissport, dnata, Menzies and WFS cargo handling agents have written a joint letter to the UK government highlighting the extreme pressure the sector is under. They are warning that as the majority of flights are not operating, they are receiving no income and will struggle to remain operational over the lockdown period. They are concerned if they have to begin to wind up operations, shippers are going to face difficulties in moving goods during the Coronavirus pandemic. Once the pandemic is over and industry attempts to return to normal there will then be the issue if the handling agents are able to meet the demands required of them. If they cannot ramp back up fast enough this will result in supply chain collapsing and ultimately hampering the recovery efforts of the UK.
East Midlands airport however is one airport bucking the trend in the UK. It has reported significant increase in adhoc flights and diversions from other airports which had reduced operations or closed them altogether. The airport has reportedly had the least reduction in normal flights of any major airport in the EU. This is also in part as it is a key distribution hub for DHL, Royal Mail and UPS. While e-commerce has had a big increase in the past couple of weeks due to the lockdown in many countries and initially increased the demand for airfreight. Overall the airfreight sector is expected to start seeing a drop off in April as the worldwide economy begins to slow down and demand for goods in some sectors such as clothing falls off due to workers being laid off and then reducing what they spend their money on.
Many companies who offer ocean freight services are actively encouraging the use of Telex/Electronic bills of lading. Many are warning that the use of paper bills may incur delays for the shipments as couriers and the royal mail are experiencing slower delivery times and with a lot of the office staff now working from home, the processing time is much longer.
Shipping lines are being asked to try and help with container detention charges in light of the pandemic closing factories and making other deliveries more difficult. MSC are now introducing a SUSPENSION OF TRANSIT (SOT) service for shippers from China. The SOT is designed to allow shippers to start moving goods from China whose buyers may be unable to receive them due to the lockdown. As Chinese production begins to ramp up and they can ship the goods but have them held in certain transhipment hubs before delivery to the final port of discharge. This new system aims to achieve several goals:
- Shippers can keep moving goods out
- Congestion is avoided at port of loading and port of discharge
- Allows the shipping lines to keep running services
- Shipping line can calculate and anticipate the requirements for final delivery once pandemic restrictions are reduced
- Helps to avoid high storage and detention charges at the port of discharge.
Overall this may be a service that will equally benefit not just the shipping line, but the shipper and the final buyer. More details can be found on the MSC page here.
This is our weekly update on the effects of the Coronavirus and its impact on the logistics sector. The current status of the coronavirus is still very serious. The latest news from the Chinese is now they appear have the Coronavirus under control in China. The news is reporting new transmitted cases for the last two days. Logistics operations within the country are slowly return to normal with many restrictions outside of Wuhu being lifted and factories increasing production. However our agents are reporting a large drop off in export bookings which will no doubt continue to cause ripples through out international supply chains.
Unfortunately the rest of the world is still attempting to get the virus under control. More and more of Europe is restricting people’s movement, with borders being closed and people being asked to stay at home. Currently though freight is being allowed to move to try and reduce the impact on supply chains. In the UK there are currently 3269 reported cases with 65 cases reported full recovered. It is expected this is to grow exponentially over the next few weeks until the various isolation measures take effect. From today all schools are closing for all pupils apart from those whose parents are working in jobs classed as essential. The one advantage of these containment issues will be reducing traffic on roads considerably. This is at least going to make essential deliveries to shops and other stores easier for transport operators.
Within the UK the government is looking at a series of measures to help move freight around the country. One of these measures is giving freight trains and their routings priority over passenger trains for the first time since the second world war. Normally this would not be possible as it would result in major disruption to passenger services. With passenger services being reduced from Monday, this will means the effect from the change in policy will be reduced making this a viable option. This should help central distribution centres being able to get more goods in and then have the ability to send goods out. The government has announce a temporary relaxation of vehicle driving hours for trucks delivering foods products, cleaning supplies and medical supplies. This again is to try and increase the frequency of deliveries to shops and other outlets.
The industry body, the Association of Pallet Networks, which represents the networks including Palletways and Palletforce have offered their combined distribution network to the government for the movement of urgent medical goods. The association feels it is uniquely positioned to handle this any urgent distribution demands due to the large existing network of warehouses and trucks covering the country.
Multimodal 2020 has as most people would expect been cancelled and moved to November. If all the events currently being moved to this period do go ahead it is going to be one of the busiest periods, with people just going from event to event for several months. Finally while the government says it is serious for everyone, if you are normally heathy adult if you catch the virus you would be expected to fully recover from it. There is plenty of food in the UK supply chain network, so panic buying is not required either.
Our weekly updates on the effects of the Coronavirus on logistics services and supply chains. The virus is continuing to have effect across the world. On Wednesday India pro-actively decided to cancel all tourist visa’s from Friday 13th March until the 15th April. This will mean a dramatic decline in the number of air passengers into and out of India. As a result expect airlines to cut back on the number of services they operate to the major cities. This is going to have a similar effect on airfreight as happened in China, with a big reduction in capacity. While India is not as big in the world as China is in company’s supply chains, this will still have an impact. While India has not put in any place movement restrictions internally for the moment, the flow of goods to and from the ports remains unaffected. However if the authorities are forced to take action then shippers should expect to face a similar situation to that what happened in China. The USA has now enacted a travel ban for all movement from EU countries apart from the UK and Ireland starting from this Friday. It is to early to speculate what kind of effect this will have on airfreight demand between these two regions.
Currently the total number of people infected in the UK stands on Friday at 590. However officials are speculating that the true figure may be higher than this. More and more sporting events are being cancelled including the UK Football Premiership cancelling all matches now and the F1 Australia Grand Prix. Panic buying is still taking place in some countries especially effecting toilet paper supplies. Of all things people fear the most about the Coronavirus, it is running out of toilet paper.
Ocean freight is continuing to feel the fallout from the China shutdown. Chinese ports are now back operating at levels pre the Chinese new year before the virus countermeasures had been put in place. However container yards are still very busy and as mentioned previously shipping lines still have blank sailings planned for the rest of March. Overall the supply of container equipment is proving very difficult for the shipping lines. Empty containers are not where the should be at, resulting in some locations having very low supplies. This is then having a knock on effect on other non-chinese services as shippers are unable to get the equipment they need. This means no loaded containers for the service which then sails only part full. Then at the destination port there is insufficient equipment available to reload and send back. The overall effect means that supply chains all around the world which are normally totally independent of China are being impacted because of the shutdown which occurred there.
UK hauliers which operate out of Felixstowe, London Gateway and Southampton are starting to feel the effects of the drop off from China as first blank sailings reduce the amount of vessels arriving. For a lot of road hauliers and rail operators this is going to result in a significant down turn and will be financially expensive. For any transport operator a lorry or locomotive not working is not making money and just incurring costs. This will be unfortunately be going on probably till the end of April once all the blank sailings have worked through. However disruption to supply chains in other countries may then have a further impact.
Additionally logistics are not yet facing the effects of the economic slowdown the Coronavirus may cause in the world’s economy. The full fallout is not likely to be seen until the second half of the year and may in the worse case scenario have the same effect on transport services as the actual virus. Overall the situation is very fluid. Peak infection rates have not yet been reached in many countries yet and so the effect on logistics and the supply chains which they support are going to continue to face disruption.
The Coronavirus is continuing to be the number one topic and how it is continuing to spread around the world,with country after country reporting new cases. In several countries panic buying has occurred resulting in supermarkets and wholesalers struggling to be able to restock shelves. This is despite there is currently no issue of food shortages in any developed country. It is the actual panic buying which is the cause of empty shelves in supermarkets. The financial stock markets are taking a considerable battering with all markets across the world overall down this week. The Dow Jones in New York has been experiencing the biggest point swings in its history. This is likely to continue for at least the next few weeks as investors continue to asses the fallout from the virus and how much of a slowdown it is going to cause to the world economy. In the UK Flybe is the first airline to go bust due to the Coronavirus. The airline was already facing serious financial issues and the sudden down turn in passengers was enough to push it into administration. Unfortunately as the virus continues to effect country after country, it will probably not be the last airline to fail.
Within the logistics industry things are beginning to very slowly return to normal in China. A lot of Chinese logistics offices are now fully staffed and able to process bookings. However container yards in most of the major ports are very full with both full containers and empty containers as there continue to be a backlog. Better news is the ports though are now operating fairly normally. Shanghai has reduced the number of health checks for lorries coming in and out of the city. It though looking that shipping lines will have cancelled around 25% of all Chinese sailings by the end of March. Most lines saying that even if the demand fully rebounds they will not be restoring the cancelled shipments as the vessels will be out of position.
As China at the moment slowly begins to return to normal, attention moves to the knock on effects on other ports around the world. Several of the major USA ports on the west coast expect a reduction in the next few weeks to create the worst quarterly drop in container through put since the 2007 financial crisis. Currently apart from Italy there are no movement restrictions on freight in the EU so vessels which arrive at a port are getting discharged without any issues and containers which are at the port for export are being loaded. While the virus is being contained and only a limited number of people are infected this situation is unlikely to change but is very fluid.
The one logistics sector which is still being hit hard is airfreight. With a lot of airlines cutting flights not just to China, but to other countries it is becoming a struggle for forwarders to locate an operational service and then once located actually be able to book space on it. A lot of supply chains are running short of components and while they may now finally have manufacturing restarted and containers moving to a sea port, for shipments to Europe there is still another 4-5weeks to get the goods finally delivered. All these buyers then are turning to airfreight, and if they cannot get the components shipped we are going to see a lot of USA and European manufactures are going to have to shutdown temporary which will have a further impact on the worlds economy.
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.