11th January 2021
High levels of demand, shortages of equipment and congestion at container ports and transhipment hubs continue to present major challenges on the Asia to North Europe trade.
General Market Overview: Asia – Europe Trade
The big three shipping Alliances continue to manage their capacity causing a spike in freight rates as well as increased or new surcharges. Together with the shortage of empty containers at most origins, this continues to drive up freight rates at an unprecedented pace. The high rates and shortage of equipment is now expected to last until well after Chinese New Year, with further rate increases being applied in January.
With carriers naming their own price for accepting shipments, we are now seeing shippers paying spot rates more than USD 12,000 for an Asia-Europe container. These prices still do not guarantee a trouble-free journey.
The recent consolidation in the industry has given unwarranted power to the big three shipping alliances, who are all reporting high revenue and profit in Q3 of 2020, with an improved forecast for Q4. The US Federal Maritime Commission (FMC), along with the regulators in South Korea, China and other countries are all looking very closely at the carriers pricing methods.
Since early November carriers were reporting they were fully booked for December. This prompted most carriers to suspend any new bookings for the remainder of the year to the UK, in part due to the continued congestion issues. With delayed shipments for December pushed into January, the challenges with space and sailing availability has been further exasperated.
Schedule integrity is extremely poor across all three major Asia to North Europe Alliances.
The increased volumes continue to cause difficulties for many ports in both Asia and Europe. This is largely a result of reduced productivity due to the consequences of Covid-19. The higher than usual volumes have contributed to longer port stays, causing knock-on delays at ports further along the route. This is causing a domino effect, with more days lost at various points along the voyage.
The arrival of Asia-Europe container vessels calling in the UK in September and October was on average 3.82 days late. In October and November this increased to an average of 6.60 days late.
Origin Bookings and Lead Times
The ETA given by the shipping lines at booking stage should only be used as a indicative guide. Schedule delays, port omissions and the carrier’s contingency and recovery measures may now add between 14 and 21 days to transit times. Based on the current market situation, it is expected this will continue until Chinese New Year. We recommend that an additional 21 days is added to your current lead-times.
Delays on Pendulum Loop Services
Services calling at the USA West Coast, prior to calling in China remain negatively impacted. In some cases, port stays in the USA have increased to approx. 8-10 days, causing delays in vessels returning to China. In some instances, this has resulted in vessels leaving China ports without all planned freight or to omit some calls altogether.
Delays at Transhipment Hubs
The transhipment hubs at Colombo, Singapore and Tanjung Pelepas are all suffering from congestion. This affects shipments headed Westbound towards Europe as well as Eastbound towards China and contributes towards poor schedule integrity at both ends.
Container Equipment Shortages
Equipment shortages continue within the industry, with significant shortages of empty containers in China, India-sub-continent and Asia in general. This is delaying numerous bookings as carriers struggle to find containers to match demand.
Carriers are repositioning equipment as quickly as possible, although a large part of the problem is that the USA, UK and Europe has huge stocks of empty containers that await shipment back to the Far East. In Europe, the cancelled inbound sailings and now the vessels omitting UK ports because of port congestion are adversely impacting attempts to evacuate the empties. We expect that this will not improve until well after Chinese New Year.
Port of Felixstowe
There is little to no improvement with Felixstowe congestion, and it appears the current poor performance and reduced productivity will continue for some time.
Some Felixstowe carriers are again exceeding their empty container storage capacity and are asking for containers to be diverted to other ports or depots, such as Liverpool, Grangemouth, Teesport or Immingham.
Port of Southampton
Southampton port has struggled with volume over the last several weeks, particularly following a systems failure at the end of November. This brought the port to a standstill for the best part of a day and prevented hauliers from picking up or dropping off containers. Southampton port remains very congested and largely full for empty container restitution with most carriers offering the option of drop off as far away as Manchester, Liverpool, London, Tilbury and Portsmouth. Some carriers have now suspended the return of empty Containers to the port.
Port of London Gateway
London Gateway suffered the same system issues as Southampton in November, contributing to the existing congestion. Vehicle booking slots have been limited and the port is said to be at capacity for empty container storage.
For the ports that are full for empty restitution, we must take empties to the nearest location provided by the carrier. Our teams will continue to consult with customers regarding the impact and associated costs.
When we are unable to offload an empty in the planned location, the impact on transport is considerable and usually results in planned work for the next 24 hours being affected.
UK Port Congestion Surcharge
As advised in previous updates, UK port surcharges are being applied by carriers and will be passed on as and when appropriate.
The high volumes of cargo, late changes to vessel arrivals and general reduced port productivity are continuing to impact our UK transports solutions.
Booking FCL Deliveries
There is a significant amount of daily and late ETA changes from carriers due to berthing availability at the port. This is causing additional work for all parties managing the impact, creating a continuous need to arrange new deliveries.
Off Dock Storage
We have limited off-dock storage availability; however, we will continue to assist our customers where possible.