Road Archives | Page 14 of 14

2021; a year of supply chain challenges

Dec 21, 2021 | Air, Brexit, China, EU, Metro, Road, Sea, Sea/Air, Supply Chain

All around the world, companies have been impacted by supply chain challenges in 2021. With the pandemic’s disruption exacerbated by ‘Black Swan events', from Brexit, to the Suez Canal blockage, we have been working tirelessly to help our customers overcome these challenges and share critical information, so that they are always informed of what lies ahead.

Ensuring the right product is available for delivery, to the right customer, at the right time, in the right quantity and in the right condition becomes increasingly difficult when supply chains are pressured and unforeseen events impact operations.

To keep our customers and followers informed during 2021 we have been approached for our opinions regularly by the trade and national press, contributed to countless articles and shared breaking supply chain news, guides and insights, including:

40 supply chain bulletins, to a combined audience of 32,000
200 news updates on our web site attracting >100K page views
1000+ social media posts, reaching over a quarter of a million users

Our first bulletin of 2021 highlighted early Brexit-related issues and outlined the rates, vessel space and equipment availability challenges that lay ahead.

A few bulletins in and we were considering the supply chain impact of the UK’s vaccine programme and, in preparation for the anticipated volume increases, were adding new personnel in key operational departments.

US port operations, particularly on the West Coast began to buckle under relentless volumes in early March, while European, North American and UK ports were anticipating a lull after the Evergreen EverGiven blocked the Suez Canal for six days, from the 23rd March.

Lockdowns continued to ripple across Asia from April and container equipment shortages really began to bite, exacerbated by the ‘Suez Effect’, driving desperate shippers to move urgent cargo to air freight, with massive rate increases impacting many trade lanes and Metro’s Sea/Air services proving very popular with increasing numbers of smarter shippers.

May; and the same week we’re urging shippers to start planning their Christmas shipping schedules, the key Chinese port of Yantian stops accepting containers, after a coronavirus outbreak in the port area. Within weeks and the impact of the port’s closure has spread way beyond southern China, with carriers recording their worst ever transit times and rates at historic highs - 1,000% higher than 2020!

News of the heavy goods vehicle (HGV) driver shortage made mainstream news in June and Yantian finally opened, though Ningbo was to close just weeks later, after a single port worker tested positive for COVID-19, contributing to further sea freight rates increases, pushing increasing quantities of ‘distressed’ ocean cargo to air freight.

Throughout the year, while air freight has been uncertain, it has proven stable in comparison to shipping, with airlines being reactive and agile, switching on flights quickly to meet demand, where they have perceived a reasonable return on the investment and we have been ready to add charter capacity, to ensure that our customers’ expectations are met and delivery deadlines achieved.

Into the 3rd quarter and vessel space and the container equipment crunch continues, with market demand exceeding supply and rates skyrocketing. HGV drivers are considering strikes for better conditions, while demand for haulage is more than twice the 2019 level and 70% of hauliers are concerned about EU border checks due to come into force at the beginning of next year.

Metro’s technology team, meanwhile, have been integrating HMRC’s Customs Declaration Service (CDS), which will serve as the UK’s single customs platform, with our market-leading MVT supply chain platform and the CuDoS system, which automates and submits customs declarations in line with HMRC and EU regimes.

Our team also supported the development and adoption of emerging technology, across the shipping industry, by participating in the successful testing of new e-Bill of Lading (eFBL) standards, with FIATA , the trade association for 40,000 freight forwarding and logistics firms in 150 countries.

The final quarter of 2021 and the HGV driver shortage is intensified by further losses to the retail sector, factories in China are forced to close, due to power shortages, container carrier reliability drops to all-time lows, with ports subsequently omitted, to try and restore schedules.

Passenger airlines finally begin to convert and reduce the number of aircraft operated in ‘preighter’ configurations and return to flying scheduled passenger services on European, transatlantic and long-haul routes.

As the year draws to a close, experts warn that the UK may run out of warehouse space, many shippers are still not ready for full UK border controls, manufacturing costs reach a three decade high, Omicron makes its debut and we share some Critical Christmas considerations.

This year we have also welcomed 60 new colleagues, to our Birmingham HQ and expanded our operations and platforms significantly, to ensure we deliver continued excellence, proactive communication and essential planning to customers. It’s what we do, to ensure we remain at the forefront of the industry, leading the evolution of freight and the dynamic solutions that benefit your supply chains.

However this year ends and whatever next year brings, you can rest assured that we will be available and ready to keep your supply chain running. Let’s keep talking and evolving as partners in an unpredictable environment and world. You are in safe hands!

Thank you for your support, Merry Christmas and Happy New Year.

Road freight costs up over a third

Dec 9, 2021 | Road, Supply Chain

Market data suggests that road transport pricing may be stabilising after record increases, but is likely to remain at elevated levels for some time, due to continuing shortages of freight transport HGV drivers and limited capacity.

UK road freight prices appear to be stabilising after rising by more than a third in 12 months, with increasing calls for more action to address the 100,000 HGV driver shortage, which has led to spiralling labour costs in the freight sector. And despite government action to attract EU drivers to the UK with short-term visas, and changes to HGV testing, the driver shortfall will continue until next year.

A new transport industry index highlights the spiking demand for UK courier and haulier services, with the sector experiencing the highest price-per-mile average across all vehicle types in September 2021 — a 21.8-point increase compared to September 2019, and a 26.1 point increase on September 2020, with road haulage rising 37%.

The TEG Road Transport Price Index, compiled by the Transport Exchange Group since January 2019, from over four million aggregated and anonymised transactions, reveals the haulage industry has experienced the steepest rises, year-on-year (October 2020 to October 2021) with prices surging by 34.2 points, while courier services have jumped 15.8 points.

Key indicators for the price index will include the sharp increases in the cost of diesel, up 30p a litre and consistently high demand levels for road transport. Driver pay will also have been an element contributing to the rise from Spring 2021 onwards; but it does look as if potential overheating of transport rates is now abating, although further pent up demand could reverse this.

The European road freight rate benchmark for Q3 shows that prices have hit historic highs across Europe, driven by a mix of robust economic growth, global supply chain bottlenecks, rising costs and scarce capacity.

And let us not forget the highest ever cost of Petrol and Diesel on record.

Q3 2021 is the 5th consecutive quarter of rate increases and a 4% rise from the rates seen in Q2 2020, with freight rates expected to rise further in Q4 2021 as demand increases and capacity remains tight.

Although there is some evidence that shipping rates may have started to stabilise, the past 18 months have seen rates rise exponentially resulting in record profits for shipping lines and record high prices for companies moving goods.

Other modes are also up in price, with air freight getting more expensive and overall rates 37% higher than a year ago, according to figures from data monitors.

The reality is rates are stabilising, but at hugely inflated levels, to what could ever be imagined. The good news, when you actually look at it, is not quite so good.

Road transport cannot be avoided, as part of the international movement of goods, with drivers critical for container movements, international and domestic haulage.

We work with a select number of strategically located long-term haulage partners, to give us access to the widest pool of equipment and driver resource, where and when it is required.

To learn more or to discuss any requirements, please contact Elliot Carlile or Grant Liddell (or Simon Balfe, who leads our UK multimodal transport operations) to talk you through the options.

Liner haulage is effectively broken

Sep 29, 2021 | Road, Sea, Supply Chain

Multiple issues are negatively impacting container haulage operations from ports across the UK, with inevitable financial and service impacts, which are likely to impact every importer of full containers. In the worst cases, if no action is taken, importers may face very significant additional charges, with no guarantee of delivery.

Full load importers are facing unprecedented challenges, and while these are great, we believe they can be overcome and mitigated to some extent by taking the proactive actions we describe below.

The loss of HGV drivers to roles outside the freight sector has removed swathes of capacity from the container haulage sector, which is already struggling to deal with inefficient port operations and the lowest vessel schedule reliability in history.

Carrier (liner) haulage is usually a cost-effective option, as it does not not attract a load-on load-off (LoLo) charge. However, the current market situation, haulier cancellations, delays with deliveries and collections and the challenge of matching resource with unpredictable vessel schedules, means that 30% to 40% of haulage moves are failing and shipping lines have very few – if any – bookings until the middle of October or later in November.

Despite the lines extending their haulage booking time from one week to over a month, they are not waiving port storage and demurrage charges, which will be charged in full at each carrier’s tariff and means shippers will be liable to these charges at £75-£95 per day for a 40’ container, which can escalate to £150-£175 a day.

For the 30-40% of failed delivery bookings, some lines are providing additional free time, of between four and seven days, but OOCL and Cosco will offer no additional free time, while Maersk will offer free time up to the point of re-booking.

Merchant haulage may attract additional costs of £150-£300 per container, to ensure we can attract haulage at short notice and absorb the LoLo costs, but it does offer the opportunity to avoid storage and demurrage charges and it is a more flexible alternative, which is particularly critical given the increasing incidences of carrier and merchant transport bookings being cancelled, often without notice, for more lucrative jobs.

We are leveraging every haulier relationship and partnership, to help our shippers and would recommend flexibility on delivery windows, with bookings for afternoon collections and deliveries more likely to succeed.

Regular delivery forecasts mean that we can book delivery slots in advance of vessel arrivals, which increases the possibility of achieving container deliveries in line with your expectations.. However if vessels arrive off schedule, late or bypass the UK altogether, then this will create further impact and issues regardless of slots - containers have to be landed to be delivered.

With post-COVID demand and associated supply chain disruption continuing, we anticipate this issue will continue for the rest of the year and are consequently implementing alternative solutions to traditional container haulage:

- Unloading containers at ports/ railheads for delivery in standard commercial vehicle

- Dedicated delivery/collection slots with contract vehicles and regular drivers

- Swap and containers

Switching your transport requirements away from the carrier option to alternatives, with immediate effect, is the only way to mitigate rent and demurrage charges

We receive no benefit or reduction from carrier support on additional port charges that will be applied as a result of the failure of their arranged transport. Swift action and agreement on costs is required.

Please contact your account manager, operations handler or any of the Metro team to discus your situation, the solutions we have outlined and the cost implications, so we can agree immediate actions and timelines going forward.

Thanks for reading this advisory – it is not what we want to be reporting, but it is the best guidance we can offer in the circumstances.

We will continue to update you regularly, as the situation changes, and hopefully improves.

HGV crisis hidden for years

Sep 22, 2021 | Coronavirus, Road, Sea, Supply Chain

The HGV driver crisis, which has been gathering pace over the last two decades, has been largely hidden due, in no small part, to effective transport management by the freight forwarding community. But the situation has been exacerbated by Brexit and tax changes which encouraged 20 thousand European drivers to return to the continent and the loss of 30 thousand driving tests, during lockdowns, which has critically elevated the shortage of HGV drivers to 100 thousand.

The impact of the HGV driver shortage is being felt increasingly by the general public and in every business vertical and is particularly pronounced for the freight sector.

With driver shortages hitting local collections and deliveries, it is impacting air freight and there are significant capacity issues for pan-European transport. But it is the sea freight sector and in particular the movement of containers that has been hardest hit.

Hauliers have been increasing driver pay rates, offering retention and loyalty bonuses and improving working conditions in a bid to halt the outflow of experienced personnel, which is being reflected in the costs incurred and may reflect a longer term trend to make the industry more attractive to a new generation of drivers.

Changes to the HGV driver testing process, recently announced by the government, will speed up the process and could mean an extra 1,600 drivers joining the industry every week. But there are lots of caveats attached to that figure and its benefits will only become evident over the long-term.

The challenge remains, too much demand and insufficient capacity, and managing the potential impact of this equation on supply chain operations. In the short-term the situation is very likely to worsen, before it gets better and, even if young people and women can be attracted to the profession, it may take up to two years to reach equilibrium.

With over three decades of shipping line and forwarding transport experience, Metro’s transport team is led by Simon Balfe, one of the most knowledgable volume movers in the UK.

Despite the breadth of experience, haulage contacts and relationships across the Metro team, they are increasingly challenged in locating sufficient haulage resource, with ‘merchant’ supply often going to the highest bidder and line haulage becoming increasingly unreliable.

Prior to the pandemic Metro’s on-time delivery KPI hovered around the 99% mark. Today, despite the best efforts of Simon’s team, it has slipped to 80%, which is still far higher than the industry average of 50%.

A significant factor in this fall, is the failure of line haulage reliability. Historically (right or wrong) shipping line controlled collections and deliveries (line haulage) has been perceived to be the ‘gold standard’ in container transport and costed accordingly.

But the pandemic is tarnishing even this ‘gold standard’ as lines increasingly stop offering a ‘to-door’ service, or fail to honour confirmed bookings, which is having a profound impact on unlucky shippers, who are often left facing additional and unexpected charges.

We are increasingly called on to assist shippers who have had line haulage cancelled, or have received no prior notice of its withdrawal and have been offered new bookings, several weeks forward, leaving them to wait for their goods and the likelihood of rent and demurrage charges.

Even though the extended time is a direct result of the line’s own actions, they are not sympathetic to writing off these charges, as the shipper always has the option to arrange their own transport.

Although this option does incur lo/lo charges and can be more expensive than line haulage, merchant haulage can potentially offset the rent and demurrage of an extended wait on the quay or terminal.

We work with a number of selected long-term haulage partners across the UK to give us access to the widest pool of equipment and driver resource at the UK’s primary container ports, to offer cost-effective and efficient merchant haulage services.

To learn more or discuss your situation, please contact Elliot Carlile or Grant Liddell (or Simon Balfe, who leads our UK multimodal transport operations) to talk you through the options.