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.
Transshipment in logistics occurs when cargo either individual pallets or full containers are moved from one transporter to another while being moved from the collection place to the delivery place. This practice is frequently undertaken by shipping lines in order to maximise the cargo loading of their vessels. Transhipping containers allows shipping lines to serve smaller ports which the large ocean vessels (often called the Mother Vessel) are unable to enter due to their draft,length or width. These are called feeder services and allow the small ports to connect to other ports all over the world. For container ocean freight services one of the biggest transshipment port is Singapore in the Far East. Other major transshipment ports are Rotterdam in Europe which has many feeder services calling at UK ports , Jebel Ali in the Middle East and Hong Kong in China.
Transshipment is a regular feature of multi-model shipments. Containers moving from an inland destination may initially move from a inland terminal to a port by rail, they are then transshipped onto a vessel and taken to the nearest destination port. Next they are transhipped onto a train, and sent by rail to the destination terminal.
For shippers moving containers which are going to be transhipped it does not mean any additional paperwork. Shippers should be aware that ocean transit times will normally always be longer compared to a direct service as the container has to be off loaded to quay and then wait for the feeder vessel to arrive at the port before being reloaded. Depending on how close the port is to the final destination this additional transit time may be offset as the final on-carriage by road or rail will be shorter. For shippers the main benefit for a transshipment service from a main country port to another main port is cheaper freight rates. So for low value, or non time sensitive shipments these routes are worth considering in any supply chain planning.
Co-loaders who consolidate part cargoes from many shippers may transship cargoes at strategic ports locations around the world. This allows the co-loader to increase efficiency and reduce transport costs for shippers. A co-loader may ship from 6 ports spread around the two different regions. The cargo from each individual port is insufficient to fill a full container for the other five ports. So the co-loader has a central port where all the cargo is consolidate. Now the co-loader has sufficient cargo to fill a container for each port. Neither the shipper nor the consignee is effected is still going being moved as contracted, but all parties benefit from the lower costs. Shippers should always ensure their cargo is suitably packed to ensure the shipment withstand being handle multiple times.
[This is part of logistics help articles]
AJF main operations in the Middle East are in Jebel Ali, U.A.E. served by our experienced agents. We offer a range of logistics services in this important logistics hub serving not just only the Middle East but also Europe, Africa, USA/Canada and the rest of the Americas in co-operation with them. Due to the U.A.E geographical location it can serve as a practical location to serve Europe and Africa and the Far East including Australia. Companies with manufacturing facilities and supply chains which start in China can have the goods transport to Jebel Ali from various China ports. At Jebel Ali the goods can be devanned and then the products can be picked to assemble the final shipment from the individual factories to the final consignees’ requirements.
Below are the logistic operations which can be undertaken in Jebel Ali.
- Cargo Consolidation
- Cargo Splitting and Distribution
- Product Relabelling
- Order Fulfilment
Our warehousing services are available to all our clients who need to rework their products, have them stored for later distribution, or quality inspected. Where containers have been handball loaded at the manufacture we can destuff the container, repack on pallets, shrink-wrap and then export to the final delivery destination.
Our transshipping services allow importers and exporters to change containers, packaging marks and shipping documentation where the shipper may not want the receiver to know where the goods original origin was. This service is particularly useful where the shipper is acting as an agent only and never handles the goods directly themselves and wants to avoid the buyer contacting the supplier directly. It is is also useful for companies shipping to politically sensitive regions where there may be restrictions on them.
The consolidation service allows clients who source from various factories which are exported from various ports in the far east and have a central location to consolidate these shipments before transporting them to their final destination in the Middle East, Africa, or Europe. We take either Full Container Loads or part loads, store them and once we have sufficient goods in store we then load them into one container, arrange the new paperwork and then export them. The consolidation service can be used for multiple shipments from Europe to go to a Far East country or Australia.
Cargo Splitting and Distribution is the reverse to the consolidation service where a client has one supplier but multiple receiving destinations. We take into our warehousing the shipment which can consist of one or multiple containers. The shipment is then devanned from the container. Following the orders given from the client the cargo is split and packed onto pallets, relabelled where required and then exported to each destination. This allows the client to export in bulk from the supplier at more cost effective rate and if required make if more difficult for them to know the final destination.
The order fulfilment services are suitable for clients with international supply chains which need a location with good links to all worldwide locations. We can pick orders to a clients specific requirements and they can then be airfreighted out immediately to be with the end customer within 24hrs or to a clients distribution centre for them to manage the final delivery. This allows stock to be held in one central location which allow clients to be able to manage seasonal demands or environment where there may be a sudden demand for one product type in multiple locations.