The recent peak season months for the Industry have been more challenging than ever with significant road freight shortages impacting supply chain productivity. There is also considerable unease within the Industry created by the Government seemingly no closer to agreeing terms for departure from the European Union. Despite the circumstances, PFE remain best placed to continue to provide our customers with the highest levels of service.
- Volumes increased in the latter part of the Summer as freight demand rose in anticipation of the Golden Week holiday in China. Since then the market has continued to be buoyant due to increased imports for Christmas.
- The industry continues to be impacted by the rise in fuel costs. The results in Q2 2018 for shipping companies were poor once again as a direct reflection of the increases in fuel costs.
- The global sulphur fuel cap is beginning to make an impact with many shipping lines announcing plans to separate the bunker (fuel) element of the freight rate from the freight cost in 2019. This is in readiness for compliance with IMO 2020.
- While the teething problems with the new operating system at Felixstowe Port have been mainly resolved, the UK’s ports have experienced a testing time over the last months with Southampton being particularly hard hit. Delays have been suffered as a result of many external factors including vessel diversions, port congestion and shortage of truck drivers as the crisis in the UK haulage sector tightens its grip.
- The UK, among several other European countries, is experiencing major driver shortage issues. The reduction in haulage availability has resulted in delays on import collections particularly in this seasonal peak, negatively impacting productivity at ports.
- Air Freight volumes have picked up substantially compared to previous quarters in 2018 and as a result market rates have risen accordingly and created capacity challenges.
- The seasonal increase in volumes has been exacerbated by the lack of progress on Brexit leading to uncertainty in terms of ordering stock to come by sea, adding to an overall increase in Air Freight volumes above the seasonal norm.
- Apple caused an initial rate spike in October after they left it late and then suddenly booked huge volumes due to launches of new iPhones, iPad Pro and new Macbooks.
- Heathrow cargo terminal is reaching maximum capacity by mid-afternoon daily. This is causing huge queues and a backlog of freight as a result.
We anticipate that the recent challenges felt across all of the UK’s ports will continue throughout the peak season until later in the year. The crisis in the UK haulage sector will continue to be a particular challenge for the Industry. Fortunately for PFE’s customers we manage to reduce the impact by planning ahead. We also employ our own drivers and have high driver retention rates as we recognise their value to our business. As such we are best placed to ensure that your shipments are collected and distributed in a timely manner with delays being limited as much as possible.
As we approach 2019 we anticipate that all shipping lines will begin preparations for the change in sulphur regulations, resulting in similar announcements designed to limit the exposure of fuel cost escalation. At PFE we are acutely aware of the need for cost certainty and will endeavour to keep you informed of any further industry announcements as and when information becomes available.
Brexit will no doubt continue to create uncertainty. The industry viewpoint is that a scenario in which the UK leaves the EU without agreement remains unlikely given the mutual interests of the UK and the EU in securing a negotiated outcome.
The impact of Brexit may be far reaching, we will work with our customers to ensure the impact is minimised and clearly communicated. As the Brexit picture comes into focus we will facilitate our customers to comply with the new regulations that will be required.
We will keep you updated as the year progresses on any further industry news.