Unfortunately, as predicted in our previous bulletin, shipping conditions have continued to deteriorate, further COVID-19 Outbreaks in Southern China have caused more disruption than the Suez Canal Blockage and renewed industrial action at Australian Ports has fuelled concerns in the market about a repeat of port omissions and bookings not being accepted to some Australian East Coast Ports.
COVID-19 Cases in Guangdong, Southern China has resulted in reduced capacity of Yantian, Shenzen, Shekou, Chiwan & Nansha Ports and had significant flow on effects to most other Chinese Ports. Guangdong counts for 24% of Chinese exports, as well as being home to the 3rd & 5th largest Ports in the world[1]. At one stage Yantian Port was operating at only 30% of capacity and currently vessels have had to wait up to 16 days to berth[2]. The well-publicised Suez Canal Blockage only lasted 6 days, this has been ongoing since at least the 25th May, it will have a flow on effect to all Chinese ports, creating new bottlenecks reducing Global Shipping reliability and will continue to push prices upwards.
New Industrial Action in Sydney, Brisbane and Perth, has raised concerns that if the two parties do not come to an amicable solution shortly their will be a re-occurrence of issues seen in late 2020. The action will lead to delays in vessels berthing at the port and discharging containers from vessels. If this continues, a repeat of 2020 could happen in which vessels omitted Sydney Ports and shipping lines introduced a Congestion Surcharges. We will keep you up to date as we continue to monitor this situation.
In positive news, there has been reduced congestion at Auckland Port, with increased train services meaning that delays between Tauranga & Auckland have reduced from in excess of two weeks to three days.[3] Unfortunately however, Shipping lines are still arbitrarily charging an Auckland Port congestion Surcharge.
In California, delays and congestion have reduced at Los Angeles and Long Beach Ports, however wait times have increased in Oakland to as much as three weeks[4]. As a result multiple lines have stopped calling Oakland, Maersk suggests that these delays in berthing have reduced effective capacity by up to 20%.[5] As a result of these delays and ongoing congestion (even if easing in LA/Long Beach), shipping prices continue to increase to record levels, up 200% on this time last year, and increases into USA of 6% a week.[6]
To ensure a smooth supply chain for our customers, Redox employs a dedicated team, with hundreds of years of combined experience in international freight. We hold contracts with all major shipping lines and can source stock from multiple different countries. It is important that you keep your account manager aware of future requirements as soon as you become aware.
If you have any concerns at all, please contact your account manager.
Since our previous update, shipping conditions have not improved. The widely reported Ever Given Suez Canal issue has caused a further deterioration in the global shipping market. Global prices have continued to increase, reliability reduce & further outbreaks of COVID-19 have disrupted both local and international supply chains.
‘Global supply chains will remain unreliable and container shipping prices and profits high for the rest of the year’ – AP Moller Maersk CEO
Globally, increased consumer demand for retail products, in conjunction with normal shipping demands has meant that there are not enough ships, nor containers in the world to meet demand. Together with reduced reliability & port congestion this has caused global prices to significantly increase. Global shipping price remains 278.4% higher than this time last year[1].
Unfortunately, no one, and no one company are immune to these charges, Kmart, the biggest importer of shipping containers in Australia, was experiencing higher freight costs because it needed to tap the spot container market to meet rising demand. “We get pretty good rates than others but it’s still substantially higher than agreed rates,” [2].
Further to this Auckland Ports are still arbitrarily charging a port congestion fee. Vessels are waiting offshore for 10-11 days before being able to berth[3] or alternatively containers are waiting at Tauranga for 2 – 3 weeks before being able to catch the train to Tauranga. We would actively encourage you to speak to your sales representative about strategies to ease the delay, including unpacking & storing within one of our multiple Tauranga storage & handling facilities.
Container Ships have continued to be at levels not seen in the past 10 years. Only four in ten ships arrive at their port on time, with the average ship being 6.16 days late[4]. A container coming from China to Australia/NZ can easily be on two or three ships, potentially intensifying delays in excess of three weeks.
Across the past 18 months, every region of the world has been affected differently by COVID-19. At Los Angeles Port up 1800 staff or over 10% of staff have been on leave at anyone time as a result of COVID-19.[5] This has caused congestion and delays in excess of 30 days importing and exporting from the USA. In India, there have been similar staffing issues at ports, on top of regional transport prohibitions & suppliers facing government restrictions on operations.[6] These issues are replicated across all countries to varying degrees. However Redox have quality assured suppliers across all corners of the globe to minimise disruptions caused by regional COVID-19 cases and restrictions.
There are suggestions that shipping pricing & reliability will not normalise again until Mid-2023, when ships ordered this year will become operational and be able to meet growing consumer demand mentioned earlier.[7]
To ensure a smooth supply chain for our customers, Redox employs a dedicated team, with hundreds of years of combined experience in international freight. We hold contracts with all major shipping lines and can source stock from multiple different countries. It is important that you keep your account manager aware of future requirements as soon as you become aware.
If you have any concerns at all, please contact your account manager.
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