The globally known incident in the Suez Canal recently involving the ‘Ever Given’ was an incredibly isolated incident. Yet the ramifications to the sea freight trade, businesses, and their supply chains are significant.
This sadly joins many months of chaos already experienced due to the impacts of COVID-19, Brexit and oil price rises. Which has insnared 90% of the world’s trade in turmoil.
This ‘Perfect Storm’ was first predicted back in October 2020, and since November it has continued unabated. Demand for imported goods in the UK and Europe remains strong. However, with little or no improvement in container availability or a reliable shipping schedule expected for some time. Costs will continue to stay as high as ever.
Shipping container prices increase by over 600%
So where are the issues…Currently, marine traffic updates have shown bottlenecks of vessel clusters unable to iron out. There are hundreds of vessels queuing to navigate the restricted route west of the Suez, as soon as possible. Numerous carriers have taken the decision to route vessel’s south to sail around the Cape at a significantly greater cost. Just to avoid sitting in a backlog position where timeframes on a resolution are still unknown. Such massive diversions of circumventing a continent the size of Africa could displace even more ships, crews and containers that could have a knock-on effect on future availability and scheduling.
25 million containers are now displaced from their normal routes
The number of containers in the West is incredibly high, which inevitably creates issues with congestion. The ships and their cargo are simply not being docked, unloaded, and returned to the East fast enough to meet the demand.
Border checks and backlogs at the docks have increased due to Brexit. When combined with equipment displacement and staff shortages due to COVID restrictions, has resulted in massive delays in receiving goods from the ports. A process that once took 2-3 days is now taking up to 2-3 weeks. Producing an imbalance in the shipping flow from East to West that has only worsened with the Suez Canal incident.
Voyage pattern disruptions expected to continue
No shipping line can boast great performance when serving Europe considering the current voyage patterns and expected time frames. There are now clusters of vessels departing and arriving together. These swells of traffic create an unwinnable battle in some areas. Leaving little solution but to offload more containers at ports other than those originally intended.
This has destroyed the normal loop patterns of sea freight. And as lockdown measures starting to ease in the UK, with rebound demand expected to be high well into the summer and beyond. Industry leaders such as Rolf Habben Jansen, CEO of Hapag-Lloyd now believe that disruptions and elevated container prices could stretch all the way into the third quarter.
Airfreight acting as a pressure relief valve
The ‘Ever Given’ may be unstuck, and the canal unblocked, but the disruption to sea freight is expected to last for quite some time. Some shipping lines are even refusing to take new bookings. Forcing importers to seek alternatives to avoid port congestion and delays.
As the impact spreads across industries and markets, more and more businesses are scrambling to transport their goods via air freight. Aiming to recover lost time in their supply chains and offering some welcome relief.
However, researchers say this relief valve is unlikely to last. As available aircraft space is struggling to keep up with the record levels of demand. A situation that is only set to worsen as brands and importers of all forms race to restock, ahead of further lockdown restrictions being lifted.
The unsettling reality is that no individual or business is likely to escape the impacts of this perfect storm in some form. Whether as a consumer awaiting significantly delayed goods or a supplier unable to fulfil their order books on time. A little compassion and a lot of patience will be required by all as the distressed freight industry slowly navigates to normality.