Ocean Freight’s perfect storm

Posted by Chris Houghton

Sky-high FCL rates plus sky-high surcharges, plus offloads, delays, no space, no equipment etc…the situation with ocean freight delays and rising costs had already seemed to have hit the perfect storm, then a hurricane, now a typhoon.

This is our latest update about the ongoing volatile situation which is affecting all UK import ocean freight. The widely reported delays and increased costs are adversely impacting customer supply chains as you are likely already well aware.

There are multiple factors behind this, including tight capacity management by ocean carriers, unexpected demand, cost management by ports, ripple effects, and increased COVID-19 related health measures.

New bookings at origin are now very tricky, leave it too late and there is no space, the book too early and lines don’t want to commit in case they get a higher bid, get it just right and you might get space but only know the rate with moments to decide.

Arrivals at UK Ports are subject to delays in both vessels arriving and offloading of containers to the quay. This combined with reduced terminal productivity and driver shortages have impacted on inland haulage and some lines have completely withdrawn their own haulage; meaning the use of merchant haulage at a higher cost and subject to availability can also result in quay rent and demurrage.

Carriers advise that their operational costs have significantly increased in all terminals over the past weeks and combined with the surge in demand they have imposed higher freight rates, cancelling agreed contract rates, and introduced surcharges for all containers arriving or departing the UK.

Equipment shortages at the origin, as empty containers in China are prioritised for the more lucrative transpacific lane, fewer containers are available on other lanes. This capacity shortage contributed to rates from Asia to North Europe spiking 30% in November, up by more than 80% year on year and worse in December. As a result, and in order to maintain the integrity of our service to you, we have to pass on at cost all the rate increases and surcharges incurred on your individual shipments.  

In response to these events, we are constantly adapting our processes to manage the specific situations for each of your shipments and will advise of any delays and additional costs as they become known. 

The expectation is that after CNY with no pre-Christmas, pre-Brexit, or post-Covid demand, stability could return and rates soften. But, trouble could also persist. Recent consolidation has seen three big shipping line alliances now dominate the market, and it has been their capacity management efforts and increased blank sailings that continue be another contributory factor in the recent rate hikes.

We will continue to keep you posted and please let us know should you any questions.