The global shipping industry is still struggling. Supply chains are driven to their limits as logistics operators try to keep the freight flowing. The current fragile nature of the global supply chains can cause even minor operational issues, such as minor accidents and mishaps to spiral out of control and have massive ramifications. To add to the messy situation, the looming driver shortage in European road freight has started to materialise. Many EUROPEAN road freight operators are raising prices in order to balance out the situation.
Because regular air freight capacity from China and Hong Kong is still “missing” due to Covid restrictions, the industry is forced to rely on charters to get through peak season.
Cathay Pacific released its August traffic figures, revealing a 9% month-over-month increase in cargo volumes, but volumes were still only 66 per cent of August 2019 levels. While August is traditionally a quieter month for cargo due to the summer holidays in the Northern Hemisphere, this was not the case this year, and demand remained buoyant.
The COVID outbreaks in various parts of the air network have created a constantly changing operating environment. For example, in Shanghai, where authorities have increased quarantine requirements for ground personnel to contain the situation.
Scheduled flight capacity is still very limited, and rates are high. Toward the end of the year, we see an increase in charter flights. And, if the governments tighten quarantine requirements, there will be even lesser capacity, whereas the herd immunity approach would increase trading and the economy.
Amazon, Alibaba, JD, and even some medium-sized players all want to run their charters. Large exporters are convinced that they cannot rely on established capacity during peak periods.
The world’s port congestion problems have worsened yet again.
The liner market is approaching peak season, and after a period of ‘disrupted’ ports around the world, port congestion is once again affecting the industry. Unlike in ‘normal’ years, 2021 will not have a conventional ‘peak season’ because the liner market is already sold out and carriers are largely unable to procure the additional tonnage required to launch any true peak-season service.
The liner markets continue to operate at near-full capacity for much of the year, peak season or not. As a result, supply chains are massively overstressed, and even minor operational issues, such as minor accidents and mishaps, can spiral out of control and have massive ramifications.
As the holiday peak approaches, the impact of congestion in Bangladesh and Shanghai has become more acute, prompting “urgent” efforts to source alternative modes and routes to market. Congestion is not limited to Bangladesh and China; it is prevalent throughout the world at the moment.
In Europe, the situation is less evident, but many major routes are also overstressed due to high cargo demand, a reduced workforce due to the summer vacation season and COVID-restrictions, and extended container dwell times, all of which combine to wreak havoc on overall terminal efficiency.
It is more of a COVID-19-related cascade of smaller problems and local instabilities all over the world – temporary lockdowns, ad hoc port closures, crew change issues, shipyard delays, and so on – that combine to affect overall supply chain efficiency.
Maersk anticipates “early signs of a pre-Chinese New Year rush in December,” and advises customers to plan their supply chains “well ahead.”
With all the updates on the air and sea freights, the condition of the road freight isn’t very different. Driver shortages are becoming more severe in Europe. Europe’s transportation industry has long struggled with a growing driver shortage. According to a recent TI (Transport Intelligence) study, Europe is facing a driver shortage of approximately 400,000 people. The most difficult situation is in the United Kingdom, followed by Germany, where approximately 30,000 drivers retire each year. The situation in southern Europe is also challenging.
The following are some of the causes of the driver shortages:
- Due to the corona pandemic, new drivers have not received sufficient training or driver tests.
- Eastern European drivers, in particular, are increasingly preferring to drive only within their own country. The Eastern European import and export market is expanding, and drivers can now return home every 1-2 weeks. At the same time, the cost of living in Eastern Europe is significantly lower than in Western Europe.
- During the early stages of the pandemic, many drivers became unemployed as many industries slowed, forcing them to switch to other jobs, such as construction in their home country. Only a small number are returning to the transportation industry.
The situation invariably creates difficulties in terms of transportation schedules, creating a capacity crunch for the road freight as well.
Wiima Logistics is a provider of fourth-party logistics (4PL) and project logistics services. We provide our customer with a complete solutions for supply chain management, administration and outsourcing.
If your companies supply chains are suffering from the problematic freight market situation, we are more than happy to help. Our world-class experts are at your service, willing to provide you with creative logistics problem solving where and when it´s needed the most. Extraordinary times require extraordinary measures, and we are up for the job.
We can arrange special solutions in all freight modes:
- Or combinations of all of the above
Our global offices are more than happy to advise you on logistics related matters.
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