Maritime logistics today
Being able to carry out a sea shipment today has become a real feat. To the problem due to the lack of equipment (containers) and the unreliability of bookings, we must add the unstoppable rise in maritime freight that is reaching all-time highs.In front of this panorama, organizing shipments and meeting customer requirements has become a challenge for exporting companies.
Being able to carry out a sea shipment today has become a real feat. To the problem due to the lack of equipment (containers) and the unreliability of bookings, we must add the unstoppable rise in maritime freight that is reaching all-time highs.
In front of this panorama, organizing shipments and meeting customer requirements has become a challenge for exporting companies.
Let’s analyze a little more these three reasons that condition the shipment of the merchandise on time.
Bookings canceled due to lack of containers
The first reason, the lack of containers: what is the use of having a confirmed booking if there is no equipment to load?
Some shipping companies offer the possibility of paying a supplement (it ranges from USD 500 to USD 1,500 per container) and they ensure your equipment, but you must have made the booking with this modality. Therefore, the supplement must be paid in advance and, even so, in many cases neither equipment nor space is found on the boat. The reasons for this lack of containers are not entirely clear. It seems that the main problem is that there is not the same outward flow as in return: the containers sent to the West hardly return to Asia.
We can say that the amount of goods to be shipped decreased during the pandemic. Many factories closed or stopped their production due to the decrease in workforce caused by restrictions due to the coronavirus. These closures affected ports and cargo warehouses across the United States. Without the proper personnel, the containers began to fail to come out and to accumulate. It must be taken into consideration that, according to the data we have, out of every hundred containers that arrive in the United States, only 40 are re-exported. Important data if we consider that each month more than a million containers are sent from China.
According to statements by Rafel Cascales, executive president of the Spanish Association of Foreign Trade Professionals (Acocex), exports have remained active since the summer recovery, therefore, it could have been used to send empty containers, as has been done forever. Cascales believes that shipping companies are taking advantage to be able to recover what they have lost in the first half of 2020.
Rafael Cascales is an experienced importer in the Asian market, and in his opinion, shipping companies have been responsible for not having intentionally replenished travel frequencies or the number of containers prior to the pandemic.
Shipping companies, on the other hand, insist on blaming problems external to them since measures to contain the pandemic affected global supply chains by reducing the number of ships and containers available. According to shipping companies, productivity was affected in ports all around the world, in warehouses and in dry ports, they assure from Maersk.
According to statements by Nils Haput, from his German competitor, he agrees, and recalls, that both the personnel of the ports and the transport by truck and other routes have suffered due to the casualties caused by the covid, quarantines and work of disinfection.
This fact has contributed to increasing waits to unload merchandise – of up to ten days in ports such as Los Angeles in the US, at whose entrance 40 ships have queued up with tens of thousands of containers on board. The delays have pushed shipping companies to raise prices for that overtime. “Now everyone wants containers. Customers ask and ask. The whole system is under a lot of pressure at the moment, but we need much more time than before to return to China with empty containers,” says Haupt.
The second variant, the unreliability of a booking by the shipping companies
There are currently many delays with departure dates that have become very unreliable. There is also an increase in blank sailing. It means, the ship that was scheduled that week does not make a stop at the planned port, in this way, sometimes, the containers can stand for about 15 days in port before being able to get on the road. Departure dates do not stop moving continuously and scale omissions are at the order of the day.
Currently some shipping companies are already beginning to charge for canceling the bookings, in order to avoid having ghost reservations on the part of the freight forwarders.
The third reason: the unstoppable rise in freight
This fact is conditioning the life of companies. The report prepared by the UNCTAD (United Nations Conference on Trade and Development) makes it clear that, after the Ever Given incident in the Suez Canal, there has been a new increase in the prices of freights and containers “.
According to statements by Jan Hoffmann, UNCTAD Director of Trade and Logistics, “the Ever Given incident that happened a few months ago reminded the world how much we depend on maritime transport, because approximately 80% of the goods we consume are transported by ships, something we easily forget. “
Container prices have a huge impact on world trade, as almost all manufactured goods are shipped in containers. “The consequences will affect the majority of consumers,” says Hoffmann. “Many companies will not be able to bear the brunt of the higher rates and will have to pass them on to their customers,” he concludes.
It must be taking into consideration that many companies are reducing their profit margins, but many products have such tight margins that it is impossible to continue to maintain the price that is offered to the consumer. According to data provided by the Spanish Association of Loading Companies (Transprime), in the last year, the prices of maritime transport have increased up to 300% on average, which in some traffic has reached 500%.
We can conclude that this situation requires, more than ever, to be proactive with the logistics calendar, for example: currently the Asian route is being slower than usual to reach its destination. A ship can take up to 60 days from Barcelona to Tianjin, for example.
We are hoping that the evolution of the situation is optimistic and that among all the players we can have a better result by updating the information between sectors and being prepared for any eventuality and having the capacity to adapt to change.