What’s the Latest in Ocean and Air?
Things in the international shipping industry are as hectic as ever, but there are some positive signs with air cargo volume decreasing worldwide, forwarders negotiating rates for UNICEF’s vaccine distribution, video evidence of California’s box-ship traffic jam emerging, and container lines ordering new vessels to keep up with demand.
Over in the ocean shipping sector, the U.S. Coast Guard’s latest video footage showing the pileup of container ships anchored across California’s San Pedro Bay revealed just how intense the congestion has become due to unavailable capacity, labor limitations, and increasing delays. While major carriers have been profiting despite these setbacks, they’ve been using their newfound capital to invest in more than $10 billion of container ship new-build contracts as a way to replace aging ships and potentially raise contract rates. Based on data compiled by Bloomberg, “The number of container ships on order rose by 23 to 201 last week, the biggest weekly gain in two years.”
According to The STAT Trade Times, both air cargo volume and capacity declined by 1 percent worldwide between this week and last. The news source went on to state that “on a regional level, origin Africa did best with a volume increase of 6 percent week-over-week, while business from Europe showed the largest decrease (-4 percent).”
After 16 airlines recently committed to support UNICEF’s COVID-19 vaccination program, many are wondering how other air cargo will fare once the vaccines start receiving scheduling priority. With the pricing power left in the hands of 6 forwarders, there are a lot of remaining unknowns surrounding UNICEF’s efforts to secure more reliable, cost-effective capacity.
And that doesn’t even begin to cover the other important events that made headlines this week, like post-Brexit trade barriers, Maersk’s plan to deploy the first zero-carbon container ship, and the IMO’s World Maritime Theme for 2021.
Check out the following article highlights to learn more:
The Aftermath of Brexit on Supply Chains
Britain’s decision to leave the European Union (EU) back in 2016 set off a series of events that have impacted supply chains ever since, and now seem to be reaching their peak as companies learn to live in the post-Brexit world. Now that the transition period has come and gone, many companies are still struggling to adapt to the absence of the added trade perks that come with being an EU member.
In an attempt to avoid the harsher realities of failing to form a new agreement, the United Kingdom (UK) brokered the Trade and Cooperation Agreement (TCA) with the EU on Dec. 24 at what was effectively the fifty-ninth minute of the last hour. Although any deal was better than no deal, new challenges like longer delivery times and more extensive export documentation have shown how businesses in the transportation industry need to start rethinking what supply chain efficiency means in the aftermath of Brexit.
Here are some of the surprising and not so surprising outcomes of the new border control practices we’ve noticed since the UK’s exit at the end of last year:
- Delivery Delays
Manufacturers were hit hard by the overwhelming and costly customs declarations, health checks, and certifications Brexit introduced. Exporters in the food and beverage sector are particularly struggling to get their perishable products to buyers in time while they’re still fresh because it’s simply taking too long to complete the paperwork process.
Despite the efforts companies are making to find a solution for these delays, “about a fifth of small and medium-sized businesses that export to the EU have temporarily halted sales,” according to Reuters. Some food producers are even avoiding the process altogether and going directly to other markets.
- Higher Logistics Costs
With surges in taxes, tariffs, and additional customs fees, it’s becoming increasingly expensive for logistics service providers to bring goods into the country. Lofty tariffs, for example, are forcing firms to switch up their sourcing strategies. Rising trucking costs are pushing customers to EU competitors, while stricter COVID-19 testing requirements are removing the incentive for drivers to accept shipments coming from the island.
Trade with Ireland is also on the rocks as gaps start to emerge throughout retail supply chains, and they may only get worse once the three-month grace period for supermarkets in Northern Ireland ends. Some “Northern Irish logistics groups have warned that prices are rising as trailers return from Britain empty, without a return load to cover the cost,” based on Reuters’ findings.
- Rules of Origin Complications
A lot of traders were under the impression that trading with the EU post-Brexit simply involved filling out some forms, so the new rules of origin requirements came as a surprise to many companies. Although the government released 60 pages worth of guidance on the subject, some believe that the information failed to help forwarders and shippers in light of the current capacity shortage and marketplace conditions.
The UK has responded to these complaints by defending its Border Operating Model and stressing the other ways it has been offering support for companies — e.g., export helplines, trade advisers, policy exports, and the Brexit Business Taskforce. Many in the industry, however, have expressed frustration over when the publication was released since it went public a mere 6 months before the transition period came to a close and any deal was made.
What’s Next?
If the delays and inconsistent pay continue to keep EU drivers from coming to the UK, the driver shortage could very likely turn into a serious capacity crunch, which would only place more pressure on spot rates and European supply chains. The risk of spoiled produce is also leading shippers to hold on to their goods instead of moving them, which could increase congestion in warehouses. These disruptions will hopefully ease up over time as the industry adjusts to the new changes, but there are still quite a few bumps in the road ahead that need to be addressed before goods start flowing freely again between these two trading partners.
Will Things Get Better in the Spring?
With no letup in sight for the COVID-fueled cargo boom, large ocean container lines are raking in the profits, while shippers struggle to manage the overwhelming demand surge.
It’s interesting to look at the breakdown of revenue and costs for a carrier like Maersk (see chart). And, based on the Maersk Q4 2020 key performance indicators, the carrier has successfully kept operating costs under control through all the market volatility of the past 12 months. According to Freightwaves, “Maersk reported ocean revenues of $8.26 billion for Q4 2020, up 15.5% compared to Q4 2019. Revenue growth was driven by a 3.2% increase in volume, but primarily, by a 17.7% spike in freight rates.”
This marks yet another record quarter for the carrier, and if market conditions continue to follow the current trends, the industry giant expects to end the first quarter of 2021 on an even better note. Despite all of the present uncertainty, Maersk’s CFO Patrick Jany believes spot rates and container volumes should start to ease up in Q2 2021 — hopefully alleviating some of the intense port congestion and container shortages we’ve been experiencing.
But even with that optimism, shipping delays persist and even some Christmas deliveries still have not been made.
As everyone impatiently waits for contract season to arrive, many are working on their strategies for upcoming carrier contract negotiations in an attempt to address the significant supply chain stressors causing chaos at ports everywhere. One crucial move shippers should look out for, especially those involved in Trans-Pacific trade, is the efforts carriers plan on making to reduce contracted free time.
This could mean shippers will have to make some serious adjustments to cut down on the time it takes to return containers, or this could mean that shippers will have to accept higher per diem charges, depending on how negotiations shake out ultimately. As companies prepare to negotiate terms to optimize equipment flow and enforce preventive measures, many industry leaders are also fighting to mitigate the pandemic-driven dockworker shortage by pleading with U.S. regulators for better access to vaccines. Without that critical classification of “front-line worker,” some cargo terminals may have to shut down operations temporarily at the rate that employees are getting sick right now.
To learn more about these issues and other key events going on in the international shipping industry, including electronic BOL’s, an air cargo update, and news about Vietnam’s market-resilience against the pandemic, check out the following highlights:
The Supply Chain Stress Continues!
In this week’s global freight updates, we’ve got harbor truck disputes, increasing congestion and delays, shipping container accidents, and more. As pandemic-driven import volumes continue to overwhelm ports worldwide, the resulting supply chain stressors are exposing the cracks underneath the surface and further escalating detention and demurrage charges in the trucking industry.
Despite efforts on the FMC’s part to ensure that carriers aren’t taking advantage of the current situation, the organization’s inability to legally create new regulation has allowed most supply chain stakeholders to essentially ignore the FMC’s guidelines. And the process of disputing these charges is pretty time-consuming as well, with little hope for trucking companies coming out on top. These fees are only going to increase as port congestion intensifies and dwell times grow longer.
The ports of Los Angeles and Long Beach are displaying just how much of an impact the current container crisis is having on the international shipping industry. According to The Loadstar, some of the 41 ships (as of the article’s publication date) at anchorage could be forced to wait up to two weeks for a berth, which equates to roughly 336,500 TEU of idled capacity. Port authorities are now strongly advising carriers to avoid contributing even more traffic to this port lockdown chaos by pushing them toward other gateways in the Pacific Northwest.
As if these conditions aren’t stressful enough, let’s tack on the problematic shipping accidents that have been piling up over the last couple of months. Based on the Wall Street Journal’s recent take on this issue, also known as “parametric rolling,” the sheer size of today’s ships combined with the weight of stacks and stacks of boxes have both ultimately decreased the stability of ocean vessels, which is why we’re seeing a spike in the number of container losses.
To learn more about these events as well as this week’s other top stories, like Brexit trade disruptions, air charter contract extensions, and Jeff Bezos’ impending replacement, check out the article highlights below:
The fight for shipping containers continues!
Shippers are stuck between a rock and a hard place right now. And the only ones getting their freight on ships are those that can still reach their wallets.
As shipment delays grow out of control and shipping costs skyrocket, the critical lack of ocean containers is forcing companies to pay premium prices after waiting weeks to get their hands on the necessary equipment. Spot rates from Asia to the U.S. West Coast are up 145 percent YoY, while rates from Asia to North Europe are up 264 percent YoY, and at the center of the problem lies carriers’ aggressive return of empties back East.
Some companies are reporting that 3 out of 4 of the containers coming from the U.S to Asia have nothing in them, and the U.S. isn’t the only one experiencing this issue. Ocean carrier schedule reliability is also at an all-time low, which likely won’t change any time soon if demand remains the same and the resulting bottlenecks keep clogging up trans-Pacific routes. According to JOC, the average delay for late vessels on the West Coast reached 7.99 days in December, while on-time performance fell by 70.9 percent YoY.
Many regulators are already well aware of the situation due to the increasing number of shipper complaints lodged against low service levels and excessively high freight rates. Some hope that the current repositioning of containers will eventually lead to a turning point, especially with the Chinese New Year approaching soon. No one expected consumer spending patterns to take off like they did, and this pandemic-induced spike in demand revealed just how many inefficiencies were lurking beneath the surface.
Similar to the decline in ocean freight capacity, air cargo capacity has also dropped by 16 percent over the last two weeks in comparison to this same time last year. Despite the growth trans-Pacific trade lanes have shown, other crucial routes around the globe are still struggling to support the sustained influx of cargo demand.
To read more on topics like 17-foot wave woes and problematic box spills, check out the following article highlights:
Ocean Freight: Let’s Talk About the Elephant in the Room
In this week’s global freight updates, we’re bringing readers an ocean freight-heavy report that provides views and news on the current situation, including spikes in rolled cargo, record-level imports, a potential ocean freight rate cap, a challenging shipping container market, and more.
Right now, it’s hard for shippers to even get cargo onto ships. 75 percent of the 20 transshipment ports Ocean Insights surveyed experienced an increase in rates of rolled cargo in December, with an overall 37 percent MoM increase as well. According to Sea-Intelligence, blanked sailings are anticipated to make up between 13 and 11 percent of overall capacity in the third and fourth week of this month, respectively. Carriers are making efforts to add vessels to their networks, however, as a way to combat these issues, so capacity is projected to rise by 21 percent and 34 percent YoY for those same weeks.
According to a recent JOC article, U.S. imports from Asia reached an all-time December high, indicating that the surge in container volumes that’s been overwhelming U.S. ports since June shows no signs of slowing in the near future.
With 1.626 million TEU on the books last month, we’re seeing a 29.9 percent YoY increase in container volumes between December 2020 and December 2019. This also marks the third-highest monthly volume of 2020, which totaled 16.6 million TEU overall. Because of the strong demand for PPE, medical supplies, and e-commerce merchandise, intermodal traffic and port congestion were also a lot more intense in the eastbound trans-Pacific than they normally would be for this time of year.
As for the regulatory measures that are being taken, China’s Ministry of Commerce and the U.S. Federal Maritime Commission are both keeping a close eye on FAK market conditions. There’s even been talk that the former may be looking to start enforcing some antitrust measures to help control container shipping’s excessive rates and equipment shortages.
This help could not come any sooner though because there are essentially no TEUs available to anyone unless they’re willing to pay three times the typical going rate just to get their goods out of the ports of Los Angeles and Long Beach. And those who refuse to pay FEU prices for TEU containers are just getting rolled over and over until air freight becomes their only option, while the number of empties returning to China is up 55 percent YoY. With global demand significantly outpacing equipment availability, added surcharges are only serving to kick shippers and their logistics service partners while they’re down.
To learn more about these ongoing problems and the other top stories of this week, check out the following article highlights:
A big shoutout from the JOC!
In a field where competition is killer and you’re up against advancing e-commerce platforms and various tech startups, the key to surviving lies in investing in new forms of automation.
According to JOC’s Senior Technology Editor, Eric Johnson,
“Individual forwarders and non-vessel-operating common carriers (NVOs) are tackling the mandate to be more technologically proficient head-on … New York-based Jaguar Freight is using a mix of in-house-developed systems and off-the-shelf software to build a framework that helps it attract and retain customers.”
Not only are we happy to receive this shoutout, but we’re also excited to see how far the industry has come as a whole in its embrace of digitization.
Shoutouts aside, here’s what else we’ve found that’s noteworthy this week:
As we encounter cargo-ship charters equating to $350,000 per day, saving on shipping costs is now arguably more important than ever, so it’s no wonder companies are hopping on board the tech train. Not to mention the fact that supply chain risks seem to be amplifying as ocean carrier networks grow smaller and smaller.
With global container capacity and port congestion the most prominent issues facing the ocean shipping industry, one initiative that will theoretically ease some of them for Europe – the Silk Road – is seeing some success. But, it’s not without its own challenges.
And European-based exporters are getting the worst of things between the tight conditions in Asia lanes and Brexit continues to cause problems for the region. With increasing equipment imbalance surcharges, added security checks, complex documentation, and new taxes, the costs of transporting U.K. goods are at an all-time high. According to Bloomberg, the additional fees that are being placed on “flight trucks” can reach up to 3,000 pounds.
To learn more, check out our article highlights below, and click the last link to view some important dates you should keep in mind for upcoming key trade events in 2021.
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With short-term freight snags, limitations against EU regulators, U.K. lockdowns, an avg. of 30 vessels at anchor waiting at the Ports of LA/ Long Beach all last week, increasing supply chain debt, decreasing blanked sailings, and a tight air cargo market 2021 is already off to a rocky start for supply chain all over the globe.
It’s been over a week since public officials finalized the Brexit trade deal otherwise known as the European Union-United Kingdom Trade and Cooperation Agreement. Because of the last-minute nature of the deal, many European manufacturers (especially those in the automotive sector) were given very little notice to adapt their processes to the deal’s lengthier documentation requirements. As border delays continue to get out of hand, the U.K. remains the only country to offer a 6-month grace period.
Unfortunately, the European Commission is pretty limited when it comes to what it can do right now. These limitations are also affecting the organization’s ability to respond to the complaints shippers are lodging against carriers who are violating their shipping contracts. And demand for goods like exercise equipment shows no sign of slowing amid Europe’s recent coronavirus lockdowns and the unprecedented lack of blanked sailings for the Chinese New Year, which is only pushing up shipping rates.
Speaking of high rates, epic delays are continuing for the Ports of LA/Long Beach. And the premiums paid by importers in the Asia/ U.S. trades are unprecedented. From JOC.com:
Spot rates in Asia-North America trade are about $4,000 per FEU to the West Coast and $5,000 per FEU to the East Coast, although carriers and freight forwarders say importers are paying as much as $6,000 per FEU to the West Coast and $8,000 per FEU to the East Coast when the cost of premium equipment and space guarantees are added to the base freight rate.
Shipping demand and rates aren’t the only things in the industry that are spiking, however. According to Bloomberg, bad supply chain loans equating to 25.5 billion euros, or $31.3 billion, are on the rise due to the European Banking Authority cracking down on lenders in the region. Since larger companies typically pay their bills late, the new standard stating that receivables booked on a firm’s balance sheet will be considered past due after 30 days poses a pretty big problem for many businesses.
On a more positive note, what has been a pretty tight market for air freight seems to be finally improving as various airline carriers continue to add more capacity to their fleets. To learn more, check out our article highlights below:
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In the first Weekly Roar of what’s going to be a great new year:
The EU continues to wheel-and-deal, wariness remains for some persistent global supply chain roadblocks, blockchain continues its uphill fight for relevancy, why rail is cool again, and the obligatory international doom and gloom (with a little positive thrown in.)
It’s 2021, so let’s go!
With Brexit checked off the to-do list (sort of), the European Union has struck a trade deal with China. There is a lot of opposition to it, however, both internally within Europe and from the U.S. Notable is that China edged out the U.S. as the EU’s largest trading partner with $590B in two-way trade in 2020 based on the latest figures.
The pandemic is easily the top news story impacting supply chains in 2020, and will continue to be in 2021. But, other issues and opportunities exist as well. A tough global economic outlook, as well as political unrest in many regions mean this year will be anything but easy. But, new technologies, such as 5G, seem poised to start fulfilling their promise.
Speaking of technology and potential… for the first time in a while, there’s been mention of blockchain in the news. It’s not good news, unfortunately, especially for those holding out hope a blockchain-related technology would find its place in the supply chain. A long-standing concern for many tradeable tokens has been if the U.S. Securities and Exchange Commission would flex its muscle, and it’s recently done so with one of the more well-known shipping related offerings. It appears that for the time being, blockchain will continue facing the criticism of being a solution in search of a problem – at least as it relates to shipping.
The underappreciated workhorses of global supply chains are the railroads. And in the U.S., rail is seeing a resurgenc
e, thanks in large part to the growth of e-commerce.
And finally, as much as we want to just make it go away, the rate, congestion, and capacity challenges remain around much of the world. We’ve got JOC’s 2021 outlook for the air cargo marketplace with a little bit of positive news from some California ports.
For more details on all of these topics, see the articles below. And, Happy New Year!
Last Call for those who haven’t received it, we’d like to offer you our 2021 desktop calendar: Claim your 2021 Jaguar desk calendar – click here
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This week’s global freight updates mark the last critical events of this year as we start to officially countdown to 2021. With a Brexit deal done, relief for hundreds of stranded truck drivers, ocean freight madness, soaring airfreight rates, unpredictable freight costs, strong container spot rates, and megamax boxships we’ve got a lot in store for you.
The big news in Europe is a draft EU-UK Trade and Cooperation Agreement is in place with 0 tariffs and quotas on goods shipped (a.k.a the Good.)
And it appears freight madness like this is only going to spill over into 2021, according to The Loadstar’s recent supply chain radar analysis. While many believe that the pandemic-induced disruptions of 2020 have completely altered the industry as we knew it, some anticipate a swift recovery for maritime trade in 2021 in the form of 4.8% growth. One question that’s on everyone’s mind though is: How will the current elevated spot rates end up affecting next year’s contract service negotiations?
For those who haven’t received it, we’d like to offer you our 2021 desktop calendar: Claim your 2021 Jaguar desk calendar – click here
As for the airfreight sector, rates from China to the U.S. have reached $8.02 per kilogram, spiking 58% (a.k.a the Bad) over the last couple of months despite the fact that demand was down by more than 6% YoY in October. With the release of the new COVID-19 vaccine, some expect air cargo demand to increase by 2% YoY, which could potentially raise rates even more over the next six months.
After a new variation of COVID-19 was discovered in the U.K., other nations began closing their borders to the country, at one point leaving more than 1,500 trucks (a.k.a. the Ugly) stuck in empty ports and airports across Britain. Depending on travel restrictions, some fear the strict coronavirus precautions could produce major supply chain disruptions and even lead to food shortages throughout Europe. There appeared to be some improvement in the situation in the past few days, fortunately, but a backlog persists.
To wrap up the last freight updates of the year, we’ll end on Hapag-Lloyd’s $1B investment in six massive LNG container vessels that individually hold 23,500+ TEU container capacity. The carrier will receive these eco-friendly, modernized ships as early as April 2021 and plans to use them to gain a competitive advantage on Europe-Far East routes.
On that note, we hope you enjoyed our Weekly Roars, check out the article highlights below to read more. Happy Holidays!
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EU carbon charges, UK port congestion, surging container freight rates, a whirlwind peak season, the South African Airways lockout, and the new U.S. Transportation Secretary, oh my! We’ve got a lot to unpack in this week’s global freight updates.
But first – We’d like to offer you our 2021 desktop calendar – kindly let us know where we can send it and it’ll be on its way! Claim your 2021 Jaguar desk calendar – click here
Let’s dive in by starting with the European Commission’s plans to make big changes in the shipping carbon market.
As of right now, the Commission remains undecided on whether or not it will include international trips in its ambitious emissions trading scheme plans. Many in the sector, however, are protesting what they believe to be an overreach on the Commission’s part to regulate the industry as it works toward its goal to reduce net emissions by at least 55% over the next 9 years.
Next up, we’ve got the port chaos that’s currently wreaking havoc on UK supply chains for 45% of manufacturers. With the severe strain caused by the impact of leading issues like COVID-19 and Brexit, the nation’s factories are reporting steep rises in lead times and stockpiled goods.
The UK certainly isn’t the only one struggling to overcome massive transportation complications though. Countries around the world are scrambling to manage the distribution of the new coronavirus vaccine alongside the huge spikes in e-commerce imports primarily from China. And the U.S.-China trade war is only making matters worse.
Some ocean shipping lines have even refused to transport U.S. exports in an effort to prioritize taking back empty containers to China. Not to mention the fact that spot rates are continuing to soar everywhere, especially for Asia-North Europe lanes receiving quotes up to $5,000 per TEU.
And airfreight doesn’t have it any easier either. For instance, after declaring bankruptcy and then being forced to ground many flights last year, South African Airways recently put a temporary lockout into effect against 383 pilots due to reluctance over the airline’s new employment terms.
Last, but not least, U.S. President-elect Joe Biden has officially nominated Pete Buttigieg, former mayor of South Bend, Indiana, to lead the country’s Transportation Department. To learn more, check out the following article highlights:
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As we prepare to say good riddance to 2020 and leap into 2021, there are still no dull moments for many parts of the shipping industry. Year-end, peak season, Brexit, and the impact of the pandemic are all (hopefully) coming to a head. We’ll know if this means calmer seas in 2021 soon enough.
In this week’s global freight updates, we’ve got record-level spot rates, port chaos, a commodities slump, thousands of stranded seafarers, outrageous air freight prices, and rising market tension.
According to Sea-Intelligence Maritime Analysis, 2021 base contract rates for Asia-Europe shippers are expected to increase by 23 percent as a result of a surge in spot rates. With freight prices sitting at $2,091 per TEU, unwavering demand, and severe capacity contraints, the tension between shippers and carriers is only growing.
These conditions paired with the impending end of Brexit recently forced Honda to shut down its entire UK plant because of the country’s overwhelming amount of bottlenecks and transportation delays. Britain isn’t the only country experiencing some major setbacks, however. Africa’s exports to China have fallen by 23.6 percent YoY due to COVID-19’s impact on the nation’s economy and a drop in commodity prices.
Because of travel restrictions, the cornavirus has also left roughly 400,000 shipping and transportation workers stranded on ships for over a year and a half. While agencies like the U.N.’s International Labour Organization are working tirelessly to get these people home, crew changes ultimately can’t happen without additional support from countries around the world.
Ocean container shipping isn’t the only sector that’s facing some serious coronavirus-related issues though. As shippers race to secure air freight capacity for medical equipment like dry ice to transport the new vaccines, some airlines are quoting up to 20 times more than the average going rate for this time of year. Despite all of these struggles, one thing that’s for sure is that there’s never a dull moment in this business.
Check out the article highlights below to learn more:
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Worried about recent cyber-attacks? Can’t find containers? Concerned over the Panama Canal’s congestion? Frustrated with rate increases and carrier service? Want to learn more about canceled flights to LA? Dreading the post-Brexit logistics nightmare? Don’t worry. We’ve got the inside info to help you better understand the most pressing issues the shipping industry is facing right now, and there’s no shortage of them!
To start off, here are some ocean container stats we believe are pretty telling for the Port of Long Beach’s 2020 operations provided by Cathy Roberson, President of Logistics Trends & Insights LLC:
“For the July-September period, loaded inbound TEUs to the Port of Long Beach increased 22.6% YoY.
According to USA Trade Online data, some of the biggest YoY gains in terms of volumes (Kg) for Asian import commodities, based on harmonized 2-digit codes, to the Port of Long Beach were:
Miscellaneous chemical products up 404.4%
Tobacco up 368.9%
Wadding, felt, specialty yarn, twine, ropes up 247.8%
Food industry residues and waste 279.5%
Arms & ammunition, parts and accessories 207.2%”
Next up, we’ve got Acronis’ new in-depth review on the risk of cyber threats in the supply chain, which includes detailed analytics on ransomware spikes, 2021 cybersecurity trends, key takeaways, and more. This report makes it clear that ransomware attacks will increase, especially against remote employees; however, traditional solutions won’t be able to provide sufficient protection against advancing malware tactics.
And, the struggle to find containers continues. From the article we’ve included below: “All carriers report severe shortages of the popular 40ft high-cubes (HCs) at their depots, and there has also been a run on 40ft standard boxes – even 20ft containers are sometimes showing as unavailable.”
Not only do we have to deal with rising threats to data security and a container shortage, but we’ve also been facing some pretty major transit delays in the Panama Canal as COVID strikes again and shippers without reservations fight for limited capacity. Adding to that, rates and surcharges on trades from Shanghai to the U.S. West Coast, Australia, West Africa, the East Coast of South America, and Singapore are at all-time highs while carrier service levels have fallen to all-time lows.
And COVID isn’t only impacting ocean freight. According to Loadstar, Air China and China Southern have canceled all flights to LA until Dec. 10 because of the city’s recent coronavirus outbreak, with expectations of other airlines following suit. Last, but not least, we’ll end on the U.K.’s fear of Brexit’s potential to create a domino effect of severe supply chain bottlenecks across the country’s ports and highways. All in all, the industry appears to be right on track to reach its boiling point, but with insight like this on your side, you’ll have a much better chance of preparing your company to take on these challenges.
Check out the article highlights below to learn more:
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Whether you’re interested in ocean freight rates, the race to return empties, cargo rollover ratios, the state of airfreight, international trade deals, or Brexit’s role in logistics (and really, who isn’t?) we’ve got it all.
Here are this week’s highlights of the most influential events that are shaking up the shipping industry:
It looks like ocean freight rates are finally settling down, according to the CEO of Maersk, Soren Skou.
“Global supply chains had quite a lot of bottlenecks and they have driven up prices,” he said in a Bloomberg Television interview on Wednesday, describing the whiplash effect of a steep decline in seaborne cargo in the second quarter followed by a sharp rebound.
This news offers a lot of hope for the many shippers on the other side of the pricing equation that have been dealing with unusually high costs for this time of year, especially on trans-Pacific lanes. While rates appear to be evening out, container volumes are only piling up at the Port of New York and New Jersey.
As trucking demand continues to increase, drivers are having to spend at least three hours just to return an empty container to a different terminal. The sheer amount of congestion at major U.S. ports is causing drivers to run out of time before they’ve even had a chance to touch an import load, resulting in detention charges that are spinning wildly out of control. The increases in cargo rollovers over the month of October serve as further proof that ocean container capacity has simply reached its limit.
Airfreight hasn’t had much luck escaping the whiplash that is 2020 either. Earlier in March when airlines were grounding passenger planes due to a shocking drop in revenue, the sector experienced a 44 percent YoY decrease in cargo capacity. Then came the scramble to transport PPE as quickly as possible, which produced a shift from typical passenger planes to cargo-only flights.
To sum up, with concerns surrounding the ability of supply chains to effectively manage Brexit and the recent formation of the world’s largest trade pact, it’s safe to say that 2020 is not quite done leaving its mark.
If you want to learn more, check out the links below:
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In this week’s international freight updates, we’re covering everything from the shortage of shipping containers, to the transition from ocean to air and rail, to research on supply chain risk management, to El Paso’s new role in trade, to the concerns surrounding COVID vaccine distribution, to efforts to limit detention and demurrage at key U.S. ports. Well, that was a mouthful. There’s clearly a lot going on, so let’s get to it.
Here’s our timely take on the most important issues that are currently affecting the day-to-day lives of logistics professionals everywhere around the globe:
We’re sure you’re already aware of the major container capacity crunch that’s going on in the ocean freight marketplace. While demand remains strong and volumes soar, shippers are pleading with authorities to help them as carriers focus on backhaul empties and rates on less popular lanes climb. Thanks to Chinese regulators discouraging any further rate increases, however, prices on China-U.S. lanes have continued to stay relatively untouched for over two months.
These equipment shortages are even impacting China-Europe rail capacity due to those who are jumping ship as a result of canceled sailings and rising air freight rates. According to JOC, “Rail demand is being driven by shippers balking at the sky-high air freight rates on Asia-Europe with most of the long-haul passenger fleet — source of half the available capacity on the route — still grounded. And unexpectedly high and ongoing peak season demand on the ocean trades is limiting Asia-Europe container shipping space.” Let’s also not forget about the significant disruptions many, especially those managing pharmaceuticals, will face once companies start distributing COVID-19 vaccines.
With their complex cold chain storage and transportation requirements, industry leaders are striving to proactively improve shipping visibility and efficiency by developing strategies that will address critical logistics gaps and stressors. Even if you aren’t directly dealing with these pharma problems, it’s probably a good idea to start reevaluating your shipping reliability and risk management based on the findings of a recent report on manufacturing costs in a post-pandemic world.
A topic every shipper hates is detention and demurrage and it turns out some shippers have finally decided enough is enough. A coalition has gotten the attention of the FMC and the situation at several U.S. ports is being investigated.
Last, but certainly not least, El Paso well-positioned as a key trade portal between the U.S. and Mexico. With a focus on improving logistics infrastructure, many large industry players are making big investments in the area. There is a lot going on at the border.
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Maher Terminal NJ Port Tour
Our team at Jaguar Freight visited the Maher Terminal in New Jersey. Our experience there helped us to see firsthand the inner workings of Maher Terminal. The tour was very informative and impressive to see how the containers are moved around the terminal.
Maher Terminals is one of the largest multi user container terminal operators in the world. As a vital link in the container cargo movement chain, they are responsible for helping customers effectively compete in the global marketplace by handling their cargo as expeditiously and economically as possible. Maher takes this responsibility very seriously and has developed North America’s largest marine container terminal in the Port of New York and New Jersey.
This highly efficient container terminal operation strategically located in the heart of one of the world’s most affluent consumer markets provides ample container throughput capacity to efficiently meet and exceed the current and longer term operating requirements of their ocean carrier customers. The scope and flexibility of their highly automated multi user marine terminal operation truly makes their facilities a “Port within a Port.” This is best supported by the many ocean carriers that have been utilizing Maher’s facilities for decades, ranging from single trade lane operators to the world’s largest global alliances.
The Jaguar team at the Maher Terminals
Maher Terminal Models
Containers at Maher Terminals
Vessel docked at terminal being discharged.
Founded in 1993 in New York and London, our roots are in logistics. As we’ve grown with our customers, we’ve developed state-of-the-art technology expertise that transforms logistics and shipping services into world-class supply chain solutions.
Clear supply chain leadership, expertly coordinated around the globe, backed by an exceptional degree of customer care. That’s what Jaguar delivers.
