Schedule reliability remains low for Sea Freight services but container availability at origin is improving. Air Freight rates soar due to further Covid-19 outbreaks at airports in China.
Sea Freight Schedules Remain Unreliable
Congestion at ports the world over have pushed sea freight schedule reliability to its lowest level yet. It is being reported that there are over 300 vessels waiting outside ports mainly in the US, but also at North European ports, in China and other locations in Asia. The congestion is being driven primarily by lack of labour in the ports and, particularly in the UK, a shortage of truck drivers to move containers away from the ports. Ports that are full of cargo are causing carriers to skip port calls. These factors are impacting schedule reliability with shipping lines limiting booking acceptance as a result and with continuous vessel delays, schedule reliability is very low, and rates remain high with the latest SCFI rate at $15,274.00.
On a more positive note, the severity of equipment shortages at origin is improving. We are seeing greater availability of empty containers for loading due to a combination of new containers being built and carriers being forced to return containers from European and US ports to alleviate the landside congestion experienced there.
Continued high demand from retailers in both the US and Europe means that unfortunately there is unlikely to be any improvement to global port congestion imminently. As a result we expect schedule reliability to continue to be low for the months ahead.
Air Freight Rates Surge Due to Covid-19 Restrictions in China
In response to new cases of Covid-19 being identified at airports, Chinese authorities are implementing strict restrictions to ground staff operations resulting in flight cancellations and the limitation of services. Overnight, the Chinese Government has imposed isolation policies at Beijing airport with the cancellation of 70% of flights. Due to the resulting increased pressure on capacity, there has been a big jump in air freight rates on flights out of China which have risen by 35% over the last week. Other regions are also experiencing similar rate rises. While availability of space is squeezed and demand for the Christmas retail season remains high, air freight rates may continue to rise.
In the UK, handling delays as a result of staff shortages at Heathrow continues to be a problem with slower than usual processing of shipments arriving at the airport. We are still experiencing cargo waiting at the airport for up to a week before being discharged. As such, customers should be aware that their cargo is unfortunately likely to incur delays.
Port of Felixstowe Reopens and Closes Again for Empties
Increasing congestion at the Port of Felixstowe, in part as a consequence of the shortage of drivers to remove import containers from the ports continues to be a challenge. There are increasing numbers of ships waiting to berth and dwell time remains significantly higher than usual.
To mitigate the situation with rising volumes of containers on the terminal, the Port of Felixstowe has been periodically refusing empty containers in an effort to clear the congestion backlog. Over the last week, empty 40ft containers have been shut out of the port, the port has since reopened but we have learnt that it has been closed once again today. We expect that cycles of refusing empty container restitution will be used as a tool for managing congestion as we continue through peak season.
Civil Unrest in Myanmar is a Potential Threat to Supply Chains
The position in Myanmar has once again become more volatile with increasing civil unrest being reported in recent weeks. While at this stage there has been no impact to shipments from the region with airports and ports remaining open, there is a potential threat to supply chains in the region should the situation further escalate. We get regular updates from our partner in Myanmar on the status of Yangon port and will keep you informed of any changes to the situation regarding shipments from Myanmar and the South-east Asia region.