The logistics industry has been facing an era of unprecedented disruptions. The effects of large scale disruptions can be seen in all freight modes across the globe. No immediate relief can be seen in the near future, which makes the situation even worse to bear. Shippers also continue to feel the pain of runaway sea freight rates as China – North Europe breaches the $20,000 per 40ft mark.
The logistics industry, especially sea freight shipments, have faced an era of unprecedented disruptions. The latest of the lot is the operational difficulties in the port of Yantian. Even though the port resumed full operations last week, cargo backlog clearing will take some time. Being one of the main harbours of China, the disruption has also affected the global supply chain. The ripple effects of the incident are still largely unknown, but many experts agree that they are expected to be greater than the Suez crisis. For example, the situation has already triggered another spike in volumes and rates for China-Europe rail freight, causing delays and equipment shortages.
On a more general level, the China-Europe sea freight market is still volatile and hard to forecast. Short-term freight rates from China to North Europe have breached the $20,000 per 40ft mark. Even with these rates, shippers still face situations where their cargo still got rolled, and the carrier wanted more.
China´s Ministry of Transport insists it has taken significant steps to ease the impact of tight container shipping capacity by boosting the production of new units. The Ministry has also asked the major liner operators to add more calls to Chinese ports to increase capacity on export routes. The current trend of tight space and high freight rates will almost certainly persist throughout 2021. The market is still signalling that the recovery of rates to pre-pandemic levels will be stretched far off to the next year.
The same kind of upward sea freight rate pressure is also felt in India. Indian forwarders report being quoted high freight rates by carriers who are not willing to honour contracts. For example, 40ft container rates to Europe have increased from $1,200 to $5,000.
The air cargo industry recovered from the depths of the pandemic earlier this year. Still, industry experts have mixed views of the current market situation. Economic fundamentals and supply chain bottlenecks across all transport modes strongly indicate the airfreight market will run hot for the rest of the year, without the usual spring and summer lulls.
Many businesses are still shifting to air and rail from ocean freight because of extreme shipping delays from port congestion and overwhelmed vessel operators. Shippers should be prepared for rate hikes and delays.
Demand for road transport remains high, and the situation poses capacity challenges for transport operators in both continental Europe and the Nordic countries. In addition to the equipment, there is also a shortage of drivers. The numerous public holidays and other holidays in European countries in June have shortened the working weeks and further increased the transportation challenges.
There are additional heavy traffic restrictions on European roads during the summer months on weekends. For example, Germany, which is also a transit country for a large proportion of goods transported by other countries, has 1.7. – 31.8. a ban on heavy traffic on motorways on Saturdays from 07:00 to 20:00 and in addition a “normal” ban on Sundays and public holidays from 00:00 to 22:00.
Driving bans of varying lengths also occur in other countries. For example, weekend driving bans affecting the countries of Central and Eastern Europe in Poland are in force on 25 June. – 29.8. on Fridays from 6 pm to 10 pm, on Saturdays from 8 am to 2 pm and on Sundays from 8 am to 10 pm.
Delays in Nordic traffic may also be possible, due to limited space in the ferry traffic between Finland and Sweden.
The challengin situation in European road traffic should be taken into account when planning orders and deliveries and be on the move as early as possible.
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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