While the world’s biggest shipping lines grow weary of Felixstowe and the UK’s primary ports, due to continuing congestion wrecking their vessel schedules, Europe’s hub ports are strengthening their market positions through giant mergers, in moves that may actually benefit UK shippers.

Over the past few months, shipping lines have increasingly refused to quote direct shipments to UK ports, loaded UK freight rates, or imposed congestion surcharges. And even when vessels have been scheduled to call at UK ports, they have frequently cut-and-run or omitted scheduled calls entirely, unloading UK-bound cargo at continental European ports, leaving shippers to repatriate their cargo.

UK ports are likely to continue to suffer from the impact of COVID-safe working practices on their operational capability and the continuing high volumes of traffic, caused by lockdown driven demand and the shift to working and consuming more from home.

In 2020 Felixstowe took 46% longer than the average port to move a container, with vessels typically spending more than 32 hours in port, compared to 18.5 hours for the quickest port. This ‘average’ snapshot does not necessarily reflect the worst of the delays and dire situations, which exceeded these figures at many points in the year.

While the trade press fret that the shipping lines will cut the UK from direct Asia sailings and relegate the country to feeder status - if true - this particular cloud might have a silver lining.

European ports like Rotterdam, the world’s 10th largest, can be cheaper and quicker to ship to and, with super-efficient terminal operations and effective on-delivery to the UK, could be a more successful supply chain solution than shipping direct to inefficient UK ports.

The continent’s hub ports are strengthening their market positions, with Belgium's Antwerp and Zeebrugge merging and the French ports of Le Havre, Rouen, and Paris joining forces, in two giant mergers, that will close the gap on Rotterdam.

With their advanced handling and storage of containers, breakbulk, and chemical products, the Belgian merger is potentially interesting. Antwerp-Bruges could be one of the largest breakbulk ports in the world, with the largest vehicle throughput in Europe, as well as Europe's most important chemical hub and a supremely efficient RoRo service for swift on-movement of UK-destined containers.

With 40 commercial ports in the UK and hundreds across continental Europe, offering a blend of feeder, short sea, RoRo and unaccompanied services, we can potentially ship direct to a range of European ports, with swift on-delivery to the UK by RoRo services through local and potentially quieter ports, to avoid congestion and suit every supply chain requirement.

If our article on freeports is also considered for the future there could be many real benefits to using regional ports. We continue to review and assess and will share developments as they continue to happen.

We would encourage full load shippers from Asia to consider the potential of shipping direct to Europe, for a less-stressful, simpler cost comparable experience than shipping direct to the UK. 

With 40 commercial ports in the UK and hundreds across continental Europe to choose from, we select the optimum mix of European arrival port and regional UK ports, to blend the most cost effective port-pairs, to complete your transit in the shortest possible time.

Leave vessel stress, space shortages, port disruption, haulage scarcity and congestion surcharges to the others. We have a myriad of options, to safeguard and fine-tune your supply chain.

Please contact your Metro account manager for further details and to discuss your situation and the options available.

After a massive spike in fuel prices, in the run up to IMO 2020, marine fuel prices collapsed as the COVID pandemic took hold, but have been increasing rapidly in recent weeks, raising fears of BAF increases.

The IMO’s global emissions regulations - IMO2020 - which impacted the global container fleet at the start of 2020, mandates that ships without scrubbers cannot burn 3.5% sulphur fuel known as high sulphur fuel oil (HSFO) and must burn 0.5% sulphur fuel known as very low sulphur fuel oil (VLSFO) or 0.1% sulphur marine gas oil (MGO).

With the industry anticipating a £10 billion marine fuel bill in 2020, by switching to low sulphur marine fuels in order to meet the sulphur content caps of 0.5%, attention was on which shipowners had got it right - scrubbers and HSFO, or the VLSFO users.

Instead, due to the global economic impact of COVID, the price of oil and consequently marine fuel collapsed and all shipowners actually saved money on fuel last year, against all odds further adding to their coffers.

This year, the trend is moving in the opposite direction, with the price of marine fuel increasing to levels that “scrubbers” - the equipment that allows ships to use cheaper, high-sulphur fuel - are starting to repay their installation costs.

The price of oil has recovered to pre-pandemic levels, rising over 50% in the last few months, driven by expectations for economic and oil demand recovery amid signs that the coronavirus may finally be in retreat, as vaccination programmes expand.

The increases in marine fuel prices, driven by those higher crude oil prices, will mean the lines will likely be seeking to pass more cost on to shippers, who should prepare for future BAF increases.

Demand for fuel from airlines has seen the most dramatic fall and while many travel curbs remain in place, demand has picked up in other areas, driven in part by the shift to working and consequently consuming more from home.

With consumers buying more goods online, the fuel demand for the supporting supply chain has grown exponentially, creating a spike for plastic packaging, which is made using oil products.

Oil demand is still lower than pre-pandemic levels but the strong economic recovery expected by many, would trigger a full and sustained rebound in world energy demand for years to come, with accompanying impact on vessel operating costs.

The shipping lines operate different BAF mechanisms, which means they do not adjust BAFs simultaneously. Some do it monthly, based on average fuel price with a two-month time lag, while others adjust it quarterly, so we could see recent oil price rises affecting monthly BAFs by March and quarterly adjustments in April. 

We will be watching calculations carefully, particularly if the BAF is based on the VLSFO price, while ships using scrubbers and HSFO, which is the case on the Asia-Europe trade, will be operating at lower cost and the spread growing.

Metro often adopt a ‘blended’ approach with the BAF mechanism for consistency and simplicity which we always ensure is clearly understood by our customers. 

It is worth noting, that while nothing is certain in terms of BAF outcomes at the current time, we are predicting and sharing the changes that may occur for transparency.

For further details please contact Ian Barnes or Grant Liddell for the latest update on market conditions and intelligence and how we are offering solutions to ensure that we stay ahead of the unravelling and volatile situation in global logistics.