null Challenges in global sea logistics business
Global trade routes and supply chain networks are currently facing numerous challenges. We would like to share how the continuing pandemic and record cargo volumes are compounding these.
Equipment availability Germany
The equipment situation throughout Germany gets more and more challenging. Not only inland depots but also seaports are facing a serious lack of available dry boxes and special equipment, which leads to much longer lead times for bookings. This low availability is mainly due to high demands and massive volume shifts to transpacific trades.
Due to the situation in transpacific market, the vessel capacities are very limited in nearly all trades from and to Northern Europe. Vessels are mainly fully booked 4-6 weeks in advance. Pre-bookings are highly recommended in order to secure long term vessel space. In regards to Chinese New Year most of feeder services from and to south China, Fujian and Hong Kong will be suspend within January and February 2021. Blank sailing from Asia to Europe will further reduce capacities from Europe back to Asia further until March 2021. This will cause more delays, backlogs, possible storage and costs for demurrage and detention at the expense of the goods.
Development of freight rates vs. record cargo volumes
The situation with empty equipment and available vessel capacities on the one hand and port authorities worldwide reporting record cargo volumes moving through their facilities for consecutive months on the other hand, leads to an imbalance in offer and demand, which is constantly increasing the level of freight rates. Global Port Tracker reported that in October alone the U.S. imported 18% more containers compared to October 2019. This unfortunately makes negotiations with carriers very difficult for long term agreements.
Terminal storage capacities Hamburg
Congested terminals and delayed vessel departures in most European ports are currently also causing disruptions in container handling at the HHLA terminals in Hamburg. Especially CTA is affected and secures the operational process by a time limitation for delivery of full export containers, 48 hours prior vessel departure only. At this stage an end to the limitation is not predictable.
Besides the general situation out of Northern Europe, especially the transatlantic trade and import processes in Canada and USA are affected by the current situation, tackling the complete supply chain.
Current challenges in the United States and Canada
Labor shortages and container trucking capacity
The pandemic has severely impacted the availability of labor. Terminals in Los Angeles (LAX) and Long Beach (LGB) for example are unable to secure enough dock labor to manage vessel operations within normal time. Availability of truck drivers is extremely tight throughout the nation as well, especially at the ports. The standard availability in LAX/LGB is currently 3-4 weeks out. Similarly, for East Coast (EC) ports there is at least a week before driver capacity is available and it is going to get worse as volumes shift from WC to EC ports. Driver availability at Mid-West rail ramp locations is slightly better but considering Railroad‘s only allow 2 days free time, a lot more critical. The situation is expected to become even worse in California with new rules recently put in place to combat a surge in COVID cases.
Chassis and Railcar shortages
The availability of chassis in relation to container volumes is at an all-time low. This is caused by loaded containers on chassis not being unloaded as quickly as usual, also due to extremely tight inventory levels in warehouses around the nation. Manufacturer´s lead time for ordering more chassis is approx. 6-9 months. Furthermore there are reports of a shortage of railcars at the major ports/terminals, which is causing extended dwell times for cargo. In addition, some ramps are experiencing a backlog of railcars to unload.
Port, Terminal and Ramp congestion
Some ports are offering Saturday gates in order to alleviate congestion but this only works out by availability of drivers, chassis or warehouse capacities. The congestion also partially causes vessels to be delayed with berthing or even being diverted to other terminals due to lack of capacity.
Demurrage, detention and rail storage
Marine terminal operators, railroads and ocean carriers do not waive demurrage and storage charges unless they are unable to make available containers when truckers enter their facilities. They are also being impacted by the same shortage of drivers, chassis or warehouse labor. These are risks exporters and importers take when moving cargo internationally and these risks ultimately have cost implications that need to be addressed by the exporters and importers.