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.
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.
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.
Want to go straight to the source? We understand. Check out the article highlights below:
Hello! This is the news and information you can use to get your Monday off to a strong start and have a great week.
What’s happening NOW:
From the Transpacific container crunch, to an inventory ratio roller coaster, to allegations of ignored U.S. exports, to the release of a zero-emission shipping blueprint, there’s A LOT going on.
Here are the highlights in the news that could be impacting your international shipping operation.
As Chinese exports and consumer demand in the U.S. continue to surge, the resulting lack of capacity has doubled the cost of leasing and purchasing new containers. With longer waits, added equipment fees, and some major port congestion, managing this year’s peak season will be no easy feat. When you factor in the FMC’s reports of U.S. shippers claiming that carriers are prioritizing container returns over their exports in order to profit off of high rates, it appears the market is left with a pretty serious imbalance.
The airfreight market is showing consistent improvement after a challenging early part of the year. Volume is down for September according to the latest figures available from the IATA.
Retail inventories haven’t had much luck with stability, either. According to the U.S. Census Bureau, the total business inventory-to-sales ratio recently reached a new low after hitting a record-high earlier this year in April, leaving retailers struggling to streamline their inventory flow in the wake of the coronavirus. Given these pandemic-induced struggles, many are wary of what’s in store for shipping as we head into 2021.
Despite a call for caution, more than 120 shipping giants are working towards decarbonizing the industry, while the impending U.S. Maritime Administrator nominee offers a similar opportunity for reducing global shipping’s carbon emissions. Such environmental initiatives help provide a brief glimmer of hope amid all of the chaotic disruption the industry is currently facing.
With a COVID-19 vaccine likely on the horizon, the massive work now begins for the global supply chain to get it distributed. It’ll perhaps be the biggest, most important, and difficult GLOBAL supply chain challenge, ever!
Here’s a more in-depth breakdown of this week’s curated content:
