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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.

 

Sources:
[1] https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry#:~:text=The%20average%20composite%20index%20of,of%20%241%2C838%20per%2040ft%20container.
[2] https://www.afr.com/companies/retail/grounded-kmart-eyes-10b-in-sales-20210419-p57kiv
[3] https://www.stuff.co.nz/timaru-herald/news/124594274/global-freight-disruptions-impacting-exporters-and-cool-store-operators
[4] https://www.maritime-executive.com/article/first-signs-of-improvement-in-shipping-reliability-and-reduced-delays
[5] https://www.latimes.com/business/story/2021-01-20/covid-surge-hits-la-ports-increasing-need-for-vaccines
[6] https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/042621-pandemic-tears-through-indias-agriculture-commodity-demand-exports-show-resilience
[7] https://www.seatrade-maritime.com/containers/newbuild-over-investment-could-shorten-container-shippings-bull-run
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