So, have you ordered your Christmas presents yet? If not, you may want to seriously consider doing so. Covid-19’s impact on the world of shipping has put a significant strain on supply chains in myriad ways. All of which could result in fairly meagre offerings under the tree this year.
Whilst the breakdown of supply chains and the bottle necks this is causing around the globe could greatly diminish your chances of ordering and receiving a new flat screen TV from Japan anytime soon, there is one big winner from all this chaos: the shipping industry. A recent report from Drewry Maritime Research predicts that the shipping industry is on track to record $100 billion profit for the year 2021. To put that into context the industry posted $12.8 billion in profit for the 10 years prior. With the cost of a container being shipped from China to the US increasing from USD2,000 to USD12,000 it’s not hard to see why profits are on the rise for the big players in this industry.
So, what are the main causes for these dramatic price increases? Fundamentally it is a supply and demand issue. With so many people caught up in lockdowns around the globe the demand for services such as restaurants and cinemas has plummeted whereas that of consumer goods has skyrocketed. For the West Coast ports of the US this has resulted in a 40% increase in the volume of imports arriving by sea from 2019 levels. This has put a considerable strain on ports that have simultaneously been hit by Covid-19 outbreaks, greatly reducing staffing numbers with workers either sick or isolating.
Another issue affecting supply is a distinct lack of containers in the right place at the right time. At the start of the pandemic containers of personal protective equipment were sent to Africa and South America, but the decision to increase the number of vessels on the most lucrative routes have left those containers laying empty in the wrong ports.
To further compound the shortfall of containers, more than 4,000 have been lost overboard in the last 2 years. As super cargo ships take ever increasing loads with containers stacked higher than ever before, changing weather patterns and the demands of consumers to have their goods yesterday, the threat of losing containers has increased at an alarming rate. And whilst the ship, Ever Given, that blocked the Suez Canal was freed more than 8 months ago the repercussions were felt for months after, further stressing a supply chain at breaking point.
Many industries affected by the spiraling costs of shipping goods are trying to determine when we can expect a return to pre-pandemic freight rates. The short, and unwelcome, answer is that it is unlikely we will ever see such low prices again. Lars Jensen, CEO of consultancy Vespucci Maritime has stated that “freight rates will come down substantially from where they are today, but they’re not going back to anywhere near where they were pre-pandemic. They will definitely tumble compared to where they are now, but it will still represent a sizable increase compared to where they came from.”
Whilst global mobility teams are struggling to manage the impacts of delays to their employees’ belongings those who have relocated with Grace can be assured that everything is being done to ease the issues around delays and the extra charges that can be incurred as a result. Grace’s International Services Manager is on the AIMA (Australian International Movers Association) committee and is dealing with the senior echelon of the freight companies to tackle these issues. We work closely with our global partner network to put pressure on the shipping lines at both origin and destination to rescind unfair detention charges and boast a 75% success rate.
Grace also has an effective container reuse program that mitigates against some of the delays that come from hiring and de-hiring containers from the shipping lines. By taking an imported container from a specific shipping line and reusing it for an exported shipment we eliminate the chance of detention fees applied to containers stuck at port saving our clients considerable fees that would generally be passed on.
Thanks to our strong partnership with the shipping lines and the high volume of freight that we move around the nation and the world we are well placed to help our clients navigate these very troubled waters!
If you’d like to discuss this article or learn how Grace’s Employee Mobility Solutions can help you, contact Shane on 0422 056 565 or email firstname.lastname@example.org.