Instead, I wanted to take a little time to update you all personally on the current situation in China, and the global effect it is having on the marine and shipping industry, especially into the UK and Europe.
If you’ve tried to move any goods in recent weeks you’ll be aware that the industry is dealing with some serious challenges. We are certainly facing some difficult times when it comes to the handling of containers - as has been clear for all to see in the recent media coverage!
All Freight Forwarders Large or Small are facing the same ongoing problems:
Shortage of containers
Shortage of Vessel space
Containers being rejected due to no space on vessels
Extremely high ocean freight costs
I know this is very frustrating for you, our customers, and it’s incredibly frustrating for us here at Millennium Cargo too.
What’s Causing The Problems?
A combination of factors is responsible for the struggles our industry faces right now. As we are all aware, what we would call “normal” development of international trade and logistics has been disrupted by the pandemic.
The demands on China’s export market is very strong now, but there are also many problems in the maritime market at the same time, which is somewhat compounding the issue.
If we break it down simply, the problems include:
1 - The Pandemic
The pandemic has had an unprecedented impact on the current development of the world economy, trade and the operation of supply chains. The backlog created by the lockdowns, port closures, company liquidations and general disruption worldwide is now starting to show.
Not only is the world still struggling to catch up, but reduced staffing along the supply chains due to isolation, combined with more intense quarantine procedures for ships upon arrival means that things are moving much slower than normal.
2 - Port Congestion
As heavily reported in the media, many places in the world, including the UK and China, are struggling with port congestion. The result of this is that many ships are having to wait before they can unload their cargo. This has a knock-on effect - as the ship is delayed in getting back on route to pick up/deliver more cargo.
The congestion of ports outside China makes the punctuality rate of all routes unstable. We only have to look at Felixstowe in the UK to see for ourselves how big an impact the congestion and operational issues can have!
3 - Container Shortages
Due to the congestion and delays, the industry is now suffering from a shortage of available containers. This is pushing up the pricing and increasing the wait time before you can get anything onto a ship.
Export bookings at Chinese ports are facing cancellation of bookings and delays of shipments, due to shortage of containers and all of the above factors. As many countries are experiencing the second outbreak of the Pandemic, it is estimated that the shortage of empty containers will continue for several months.
4 - Increased Demand
As well as decreased capacity due to the disruptions, we’re also seeing an increase in demand due to the holiday season. This just compounds the issue.
What Can Millennium Do About It?
As always, the team here at Millennium Cargo are working around the clock to try to support our customers, find spaces on vessels and negotiate competitive pricing. But, I’ll be honest, that’s a tough job to do right now.
While we will continue to do our best to meet your needs, it’s likely that the freight rates are going to continue to increase due to basic supply and demand economics.
Freight is high demand with low supply.
This is completely out of our control - and we are not “hiking our prices” or “cashing in” on this crisis in any way. Here at Millennium Cargo, we are still doing our best to find you the best solutions. The price hikes come from above - not us.
I’d love to tell you this is a short term problem, that it will be resolved in a matter of days, but in reality, this is an issue that will continue for several months to come - long into 2021.
So, I make this promise to you - Millennium cargo will as always do everything we can to serve you through this challenging time.
But please be patient with us - we’re dealing with forces well beyond our influence or control.
Let’s face these challenges together!
We thank you for your patience and your continued support in these difficult times.