Port issues in China
Part of the problem lies in China’s drastic actions to prevent new coronavirus variants from spreading. These measures have included forcing port workers into lengthy lockdowns at the first sign of outbreaks.
China’s policies have been effective in keeping virus cases to a minimum, but at some economic cost.
One of the world’s largest ports, Yantian Port in the southeastern Chinese city of Shenzhen, partly shut down from late May through much of June. Shenzhen acted in response to fewer than two dozen coronavirus cases.
When the port fully reopened on June 24, shipping executives and freight forwarders hoped that trade would start returning to normal.
It has not worked out that way.
Behind schedule ⌛
Dozens of huge container ships fell far behind schedule when they had to wait weeks to dock in Shenzhen. That meant ships later showed up in bunches at ports in other countries, causing further congestion.
Chinese export factories also sent goods by truck to alternative ports, like Shanghai, leaving them overcrowded as well.
By mid-June, the freight yard was so crammed with containers at Shanghai’s vast, highly automated Yangshan Deep Water Port that the stacking cranes barely had room to lift containers on and off ships.
Shipping rates for containers have continued to rise steeply in the weeks since Yantian Port reopened.
The increase is widely expected to keep going as stores in the United States in particular race to restock shelves for returning shoppers and start preparing for the Christmas shopping season.
When it rains, it pours!🌧️
The 2021 holiday shopping season could be ruined by out-of-stock goods and shipping delays as the recent floods in China worsen already strained global supply chains.
China’s Henan province — a key transport hub and home to several major businesses — are grappling with the aftermath of devastating floods.
The disasters have damaged railways used for the delivery of goods and raw materials in many regions. Water rushed into industrial areas extensively damaging facilities, machinery and warehouses.
Flooding impact 🌊
Black Friday and the holiday season, for which products (and raw materials) are being staged, will face the burden of the impact.
Consumer electronics, dorm room furniture, clothing and appliances will all continue to be in short supply as back-to-school shopping starts up, and will trickle into the peak holiday shopping season.
Delays from the distribution of raw materials needed to produce goods will have a cascading effect and disrupt supply chains for weeks and even months.
Delay Delay Delay🚧
Waiting times for vessels to berth at the Yantian International Container Terminal in Shenzhen have skyrocketed from an average waiting time of 1 days to 16 days.
The backlog will have a compounding effect on other ports.The problem is already building up at nearby ports as carriers start to divert.
The port of Nansha in Guangzhou is experiencing an influx of cargo due to the diversions, and the congestion and vessel delays are expected to last another two weeks — if not more.
The knock-on effects will carry over to even neighboring provinces such as Guangxi, Yunnan, Hunan, Hubei
Brace yourself, shipping prices are still going up!
The freight market in July was marked by more disruptions – including fires in Canada, flooding in Europe, a typhoon in China, and virus outbreaks in Vietnam and elsewhere.
These natural disasters put additional pressure on an already stretched thin industry just as peak shipping season heats up.
Freight rates continued to climb overall, reaching $10,174/FEU, a 466% increase compared to last July.
High consumer demand for imports pushed transpacific rates up to new record highs:
• Asia-US West Coast rates reached $18,346 per container, more than 6x it's level a year ago
• Asia-US East Coast prices climbed to $19,620 per container, 487% higher than last July
•Prices from Asia to N. Europe spiked 22% since the end of June to $13,706 per container, more than 2.5 times their level at the end of 2020
Transatlantic rates also increased in July:
• Europe to N America East Coast prices climbed 6% to $6, 013 per container, triple their level a year ago
• Europe to S. America East Coast rates spiked 56% to $3,311 per container, nearly 4 times their level last year
Basically, freight is really expensive. And with high consumer demand and still-lagging inventory levels, prices aren’t going to let up anytime soon.
High consumer demand has pushed global air cargo volumes back to pre-COVID levels, with Asia-US rates climbing about 25% to most destinations in April and remaining elevated through the summer.
While rates remained stable on Asia-US lanes, prices are still double than a typical year.
However, air cargo is about six times more expensive than ocean freight.
Expectations are that air cargo peak season, normally in October and November, could start in September with importers rushing to make sure that holiday inventories arrive in time.
Trucking delays 🚚
With high demand from consumers, importers are rushing to replenish inventory, causing capacity in trucking to tighten and driving rates up.
Quarantine rules for returning truckers could cause significant delays even if goods manufactured over the holiday are ready to ship.
How to maintain your cool when the shipping price skyrockets and delays are abundant
Plan Plan Plan:
“The early bird catches the worm”. We cannot stress this enough. Book your shipments early.
Because of the container shortage and general delay caused by the pandemic, many shippers are unable to make last-minute bookings.
Make sure to book your shipments as early as possible, even a few months in advance, just to secure a space for your goods.
Communication is key:
The last thing you want is to wait for a shipment without knowing where it is or when it will arrive.
Make sure to communicate regularly with your shippers, if they are facing any delays, holds or storage issues. We believe in open and transparent communication between us and our valued customers.
Split your shipping:
Ever heard the saying, “Don’t put all your eggs in one basket”? We agree. Try splitting your shipments between various shipping methods.
An example would be to ship your smaller goods and quantities by air and the larger ones by ocean. This gives you options just in case there are any unforeseen delays.
Allow customers to pre-order your products:
Allowing customers to pre-order your products gives you the time to plan accordingly on how many products you need to ship from your supplier/manufacturer.
This decreases the chance of any surprise delays or shipping price surges.
Insurance is a game-changer:
This is a no-brainer. According to industry observers, cargo theft and loss estimates range from $10 billion to $30 billion a year.
Yikes!! Don’t get caught without a safety net, insuring your shipment is valuable.
Check out our article on how to save your cost on shipping
Don’t settle for less! A freight forwarder is ultimately a long-term business partner, and it is worth spending the time to find the right one.
If you have further questions, feel free to shoot us a message.
Local Digital Marketing manager and content creator at Bookairfreight. I am someone who loves literature, but here to simplify interesting topics within the logistics industry that are easy to digest.