Weekly Update – 30.07.2021

Weekly Update – 30.07.2021
July 30, 2021 Hannah Marshallsay

Typhoon In-Fa disrupts China to Europe shipments, the sea freight capacity and equipment crunch continues. A new Covid lockdown in Bangladesh forces factories to close and UK haulage rates rise due to ongoing driver shortages. Here is a summary of this week’s main industry news.

Typhoon In-Fa Disrupts Shanghai Area Ports and Airport Operations

There were more delays on shipping lanes from China this week, after typhoon In-Fa forced the closure of Shanghai’s container port, airport and rail hubs last weekend. The ports of Ningbo, Changzhou, and Nanjing were also affected by the extreme weather and experienced temporary closure. Road transport across the whole region and China to Europe rail freight has also been affected by heavy rain and flooding.

Shanghai airport, plus the terminals and depots at affected ports have since resumed operations. We expect to see a continued impact to both sea and air freight services in the Shanghai region in the coming days with vessel berthing delays of four to six days at each port.

No End to Sea Freight Disruption Ahead

Although the situation at South China ports continues to ease, the backlog of containers at the affected ports remains a significant challenge. The acute lack of available equipment at Yantian, Ningbo and Shanghai also remains a serious problem. Capacity in the market is being squeezed with strong pre-Christmas demand from retailers in both the US and Europe bringing forward the usual peak season.  

As such, the space and equipment crisis is expected to persist for months. As market demand exceeds supply, rates will remain high. Carriers are fully booked and are limiting booking acceptance for new shipments and schedule reliability will continue to be low.

Covid-19 Resurgence in SE Asia Adds to Market Volatility

Covid-19 surges and the resulting restrictions imposed by governments of key regions of Southeast Asia including Malaysia, The Philippines, Indonesia, Vietnam and Thailand are adding a further element of volatility into already fragile markets. Reduced productivity, disrupted manufacturing and supply chains are creating order backlogs and shipping delays. Congestion at South Vietnam ports is a rising concern along with lockdowns in Malaysia significantly impacting manufacturing at factories in Selangor and Kuala Lumpur.

Bangladesh Lockdown Closes Factories for Two Weeks

Bangladesh is currently in a full lockdown until 5th August 2021. During this period, all factories are closed and therefore all cargo delivery has ceased until the lockdown is lifted. Factories are expected to reopen from 6th August 2021 and will attempt to catch up on the production of overdue orders. We will keep you informed as more information becomes available. 

Ongoing Driver Shortages to Increase Transport Rates

The combination of the Covid ‘pingdemic’, Brexit and other factors means there are not enough HGV drivers in the UK to distribute goods from ports. Because the haulage industry is struggling to find enough drivers to meet demand, transport rates are on the rise. 

Transport companies are finding that their drivers are being attracted away by offers of better pay and conditions notably from retailers offering less hours, no night working and better pay including bonus sign-up payments. Hauliers are responding to the situation by imposing surcharges to offset the cost of retaining their drivers. We are already seeing some hauliers imposing surcharges on each load and expect the practice will be adopted across the industry in an attempt to prevent the loss of drivers. Regrettably the cost of road transport in the UK will continue to increase while demand remains high and driver shortages persist. 

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