Global Shipping Disruption – Our Advice For Customers
5 minutes to read
Global shipping is currently subject to major disruption, following the partial closure of a key port in China due to the Covid-19 pandemic. Added to the blockage of the Suez Canal by the container ship Ever Given in March, plus an enormous spike in online shopping, many in the industry have described the situation as a “perfect storm”.
Meanwhile, the release of hundreds of container ships following the re-opening of the Suez Canal has caused congestion at major ports across Europe, including the Port of Felixstowe.
What is the situation in China?
In late May, Yantian International Container Terminal, the world’s fourth-largest container port, was partially shut down after five crew members on a container ship docked at the port tested positive for Covid. Full services from the port didn’t resume until 24 June, with the knock-on effect of the closure felt at numerous smaller ports in China and around the world.
A build-up of freight traffic waiting to dock at the port has caused significant delays to shipments, anywhere between four and eight weeks in many instances. It has also led to a shortage of empty shipping containers worldwide, with increased demand for equipment ramping up the rates charged by shipping lines per container. Before the pandemic, a 40-foot container would cost around $2,500, but some rates have now rocketed to $18,000.
For UK importers, the disruption comes at a critical time, with peak shipping season just around the corner. And with industry experts expecting delays and price hikes to continue into 2022, there’s also a risk of goods not arriving from China in time for Christmas.
Here at Hemisphere, we are monitoring the situation daily, while advising our customers to plan ahead wherever possible. This is particularly important for firms who will be up against huge retailers bringing in Christmas stock from August onwards.
How customers can minimise costs and delays
Despite the disruption caused by the situation in China and the Suez Canal, there are still steps that you can take to keep any delays and costs to a minimum, ensuring your supply chain isn’t impacted dramatically throughout the peak shipping season.
Encourage suppliers to book ahead
If you’re importing goods to the UK, the arrival date of your goods is ultimately in the hands of your supplier. Given the overwhelming demand for container space and shortage of supply, you could be waiting at least four weeks for a sailing if your supplier attempts to book container space on the day the cargo is ready.
That’s why we are encouraging customers to ask their suppliers to place bookings with their local Hemisphere office at least two weeks prior to the cargo ready date. This will give us time to approach shipping lines for vessel space and equipment to secure sailings close to when the cargo is ready.
Approve your shipping quote promptly
With freight costs rising on a daily basis, approving your shipping quote within a day or two of receipt will give us the best opportunity of securing the lowest rates and equipment on a suitable sailing. Typically a rate may stay the same for a month, but in the current climate, it could change the same day. That’s why same-day approval is critical for ensuring you secure the lowest price possible for your shipment.
Tell us your budget in advance
Alternatively we would encourage customers to inform us of their budget for shipping costs per container at the start of each month. This allows us to be proactive and respond immediately to the shipping lines and our origin offices, so we can secure space immediately without having to seek individual approval per shipment. We value our customer base, and should we procure rates and space below the budget set, we will always pass on any cost saving to our customers accordingly.
Approach transshipment with caution
Transshipment involves shipping goods to an intermediate destination, and then onwards to the final destination. There are currently a number of transshipment options being proposed to try and reduce rates within the market. However, it is important to note that these services will be very short-lived as such changes simply move the demand issue to other regions and prices will rise sharply to reflect this.
Transit times are also significantly longer – typically 25 to 30 days – and there is more likelihood of customs delays at transshipment ports as cargo moving via those ports tend to attract more attention from local customs authorities. This is because transshipment services are regularly utilized by importers attempting to avoid customs tariffs or trade embargos.
What we’re doing to help
Hemisphere is taking all necessary steps to protect our customers’ supply chains. Working with overseas partners, we have been able to purchase our own container equipment to avoid equipment shortages and ultimately procure better freight rates. This means we aren’t as reliant on shipping lines to provide the equipment, while offering cost savings of approximately £4,000 compared to the current shipping line rates.
Rest assured we are doing everything we can to ensure your goods can be delivered promptly and cost-effectively. If you need any advice on your shipments, we would be more than happy to help, so please don’t hesitate to get in touch with our team today.