Sea Archives | Page 61 of 70

Metro environmental focus not impacted by pandemic

Shipping lines act to support rates by cancelling sailings from Asia

May 6, 2022 | China, Sea, Supply Chain

Across the major shipping trade lanes a total of 56 sailings have been blanked over the next four weeks - so far - representing an 8% cancellation rate.

The halting of factory production, following the continuing lockdown in Shanghai, is resulting in a drop in export bookings from China, the ‘worlds factory’, of up to 40%, while numerous containerships are waiting at anchor off Shanghai port for berths and cargo to be loaded, many are waiting for orders from their head offices.

Despite seemingly diverging in strategic direction, the carriers response to market conditions is to implement blank sailings, that will keep supply aligned with demand and therefore freight rates elevated.

Up to w/c 30th May The Alliance has announced 21 cancellations, followed by 2M and Ocean Alliance with 14 and 6 cancellations, respectively. That is a fair chunk of capacity to be withdrawn.

Asia-North Europe freight indexes suggest that carriers efforts to increase bookings have had little effect and the impact on spot rate indices has been minimal and are in keeping with the usual situation in the period after the Chinese New Year and before the start of the peak season.

Industry consensus is that rates would stabilise, or soften slightly if demand keeps falling, before starting to pick up again towards peak season – and when China ‘opens up’ there could be a huge spike in demand – resulting in spot/ FAK rates rebounding back to 2021 levels very quickly.

The number of import containers arriving at the port of Los Angeles was down 20% this week, compared to last year, reflecting the fall in Chinese export bookings and reducing the waiting times for vessels to berth to 2.7 days.

Our sea freight experts have highlighted the threat of a surge of containers, that will follow Shanghai’s reopening. Their primary concerns is that any surge may arrive on the US west coast when the ILWU are still negotiating their new current labour contract, with the threat of industrial action leading to massive disruption.

Maersk, now the world’s 2nd largest container shipping line’s 1st quarter net profit was $6.8bn, with expectations for Q2 to be better still.

Maersk’s loaded volumes declined 6.7% over the quarter, compared to a global market volume decline of 1.2%, which points to a significant decline in market share.

MSC, the world’s biggest shipping line, remain in private hands and do not publish detailed financials, but their focus has been on massively growing the MSC fleet with acquisitions and new ship orders.

How much this rush to become the biggest carriers has cost is impossible to know and we don’t know what capacity may be added to 2M services in 2023/2024, but there could be big implications for deployment, capacity and pricing. However it is reported widely in the trade press that this year is expected to be a huge year for the mainstream container shipping lines profits with $300 BILLION cited as the expected 2022 record return.

We are working closely with our network partners, carriers and own offices across China, to monitor the evolving blanking situation and find solutions for our customers, including time-sensitive shipments.

We maintain long-term contracts with a selection of shipping lines across all three alliances that secure space and rates, to provide the best alternatives and options, whatever the situation.

Metro aim to keep you advised daily of the latest developments in the industry, across all trade lanes, all modes and all methods of transport – always giving options and the best alternatives available. Please call Chris Carlile or Andy Smith for the latest advice and recommendations – bespoke and tailored services are what we deliver…

China supply chain pressures relentless

May 6, 2022 | Air, China, Sea, Supply Chain

Despite talk of restarting manufacturing and a tiered reopening of Shanghai and the surrounding province, the situation remains challenging and delays are increasing in Ningbo as the volume of cargo diverted from Shanghai continues to grow.

The Shanghai lockdown remains for a fifth week, with offices, workplaces, and public transport closed. Airport and container terminals remain operating, though restricted by the availability of transport to deliver and remove cargo, along with manpower and access issues caused by the current related restrictions.

Drivers are still subject to daily PCR testing (with additional ad-hoc testing imposed at short notice) and Shanghai and local road permits are required to enter cities in Jiangsu province and the local permit must be applied by the exporter, it can’t be the agent or haulier.

A number of major airlines continue to serve Shanghai, but restrictions limiting transport to and from the airport mean that cargo is diverting to other airports in the region and beyond.

The current issues look likely to remain until mid-May, at the earliest. In the meantime our team are re-routing cargo where it is possible and cost-effective, ensuring all available options are utilised.

Shanghai container terminals, in Waigaoqiao and Yangshan, operate as normal, but again they are affected by local transport availability and terminal handling capacity is limited due to availability of workers and COVID-safe working.

The situation is being further impacted by blanked sailings, delays, and longer waiting times, though the availability of ISO tank containers is improving and some carriers have lifted a stop on bookings for dangerous goods cargoes.

When transport can be allocated we continue to move FCL cargo through Shanghai ports, with the option of diversion, when appropriate. Though with increasing quantities of cargo diverting from Shanghai and Zhejiang province, Ningbo has become very congested and the announced blank sailings will very likely worsen the situation.

With Beijing expected to be the next major lockdown area, Shanghai is unlikely to see any relaxation of the rules and the "zero-virus’’ approach is likely to be pursued until the very end, which could be throughout the rest of 2022 in some form.

Guangzhou is on the COVID watch list, with the city’s airport, which has been handling large volumes of cargo diverted from Shanghai, cancelling all domestic flights due to suspected cases.

Local areas in Shenzhen are operating under different measures with factories and offices open or closed, based on the local conditions. Air and ocean facilities are operating, but the situation for local transport capacity and availability varies and drivers require a cleared 24 hours PCR test. The situation is very dynamic and changing daily with localised interpretations of regulations and requirements.

Cross-border trucking between China and Hong Kong is still struggling with capacity limitations due to long waiting times for control and restrictions. Large volumes of cross-border traffic continues to be transported by feeder services.

Reduced land-side trucking capacity continues to be a limiting factor, with significantly reduced capacity available for cargo collections and deliveries, which means factories may not meet planned delivery schedules.

We will continue to closely monitor the situation and update you as changes occur, but we do recommend checking with your vendors, to clarify the status of your orders, and whether they have actually been manufactured.

When China does begin to lift lockdowns it is not inconceivable that the manufacturing bounce-back could happen within weeks, as the government will be very focused on getting production up and running again. It is widely understood that this could have a serious impact, particularly if it coincides with the start of the traditional ‘peak season’. Spot/ FAK rates are expected to head north very quickly, as demand returns through product being made and logistics loosening up internally, within China’s transport systems.

We hope to see supply chains start to flow freely again quickly, as the pent-up demand for delayed goods could quickly create congestion, if operations are not running optimally. With the long term fixed price and capacity agreements we have in place with our partner carriers we are well positioned to continue to deliver resilient, consistent and reliable supply chain movements throughout the year. This has been our recommended model during the pandemic and continued challenges experienced over recent months.

Metro’s cloud-based supply chain management platform, MVT, simplifies the most demanding global trading regimes, by making every milestone and participant in the supply chain transparent and controllable, down to individual SKU level.

To discuss how our technology could support your supply chain, please contact Simon George our Technical Solutions Director or Elliot Carlile.

Blanked Shanghai sailings slow to materialise

Apr 21, 2022 | China, Coronavirus, Sea, Supply Chain

As Shanghai enters the fourth week of an indefinite lockdown, container shipping lines are skipping calls at main Shanghai terminals, with more blank sailings anticipated as vessels waiting at Chinese ports double.

Until the lockdown situation is resolved, which appears challenging when putting the Omicron variant against zero-tolerance, we expect drops in export demand, port omissions and more blank sailings, as well as Shanghai-bound cargo increasingly being discharged elsewhere, while trade press reports that the number of container vessels waiting outside Chinese ports has grown by 195% since February to over 500 vessels in April.

Some carriers, including Maersk, have already stopped accepting reefer and dangerous goods cargoes into Shanghai and while the port remains operational, the severe shortage of trucking capacity means the port is slowly being filled with import cargo that cannot be collected, while widespread factory closures are likely to hit export volumes.

Ocean Network Express (ONE) confirmed that trucking remains limited, with terminals congested and while reefer yard plug capacity remains stressed, there is a possibility that reefer containers may not be discharged in Shanghai until the situation eases.

In Hong Kong the number of new COVID-19 cases dropped below 1,000 on Friday for the first time in more than two months, but Shanghai could be facing a protracted lockdown, as more new cases continue to be reported.

China has been keeping ports operational during lockdowns using a closed loop system where the workers live on site, but container yards have grown congested as trucking capacity has dropped.

Compared with the shutdown at Shenzhen’s Yantian port last July, the Shanghai lockdowns have not yet resulted in widespread blank sailings on Asia-Europe, trans-Pacific or Mediterranean services.

In Shanghai in 2022 there was a small initial blanking spike, which was entirely driven by demand to America’s East Coast, prior to the lockdown, as a result of general market turmoil and the level of blank sailings has since dropped below the 2021 level.

According to current carrier schedules there is a slight reduction in the number of blank sailings, though this is likely to reflect the carriers not yet knowing, or at least not publishing the updated schedules of the sailings they will have to blank.

The shipping lines have been cautious in blanking sailings following lockdowns, but not loading as much cargo as planned in Shanghai and not blanking any capacity could erode export freight rates, so shippers should anticipate an increase in blank sailings in the coming weeks, should the Shanghai lockdowns continue.

Lockdowns are limiting available labour for factories and supply chain infrastructure, with reports of empty-container depots being shut, and even where they are open, there is a lack of available equipment. Particularly in the north, affecting the ports of Ningbo, Qingdao, Shanghai and Tianjin.

With bookings from China significantly reduced for the coming weeks, there are bound to be more blank sailings and not just for the lack of exports, but also the operational headaches with not being able to discharge import reefer and dangerous goods containers at some terminals.

Despite talk of a “slight easing” of restrictions in Shanghai, the number of new cases of omicron continue to rise, which means the government’s strict general lockdown measures are likely to continue.

Regardless of the challenging situation in Shanghai, we are working closely with our network partners, carriers and own offices across China, to monitor the local and regional situation and find solutions for our customers, including time-sensitive shipments.

The situation develops continuously and we will keep you updated as new intelligence and insights are received from our colleagues in China.

We maintain long-term contracts with airlines, carriers and shipping lines that secure space and rates, to provide the best alternatives and options, whatever the situation.

US east coast port congestion continues to build

Apr 21, 2022 | Sea, Supply Chain, United States

Reacting to fears of labour disputes and disruption at west coast ports, many US importers diverted cargo from Asia to the east coast – only to find that Atlantic congestion may be worse than on the Pacific.

Importers on the west coast are getting their cargo quicker than their peers on the Pacific coast, with wait times of less than four days at Los Angeles and under two days at Long Beach, but nine-ten days at Charleston and three-four days at Norfolk.

Ports on the US east coast have been battling waves of congestion for the past year, with overwhelmed terminals leading to intermittent vessel backlogs outside the ports of Charleston, Savannah, New York and New Jersey, and Virginia. This is despite government intervention and assistance in alleviating the issues which are now embedded throughout The USA.

The pile-up in the east began building in the second half of last year when eastern gateways received more mega-ships on their berths, as congestion on the west coast prompted shifts of imports.

In February, carriers warned that dwell times had gone up at several east coast ports, including Newark, Virginia and Charleston, with delays expanding by several days and some expect the situation to deteriorate further, with expectations that the east coast could be the next hot spot for congestion.

The migration of imports from Asia to the east coast gained momentum as contract negotiations between longshoremen and terminal operators, due to start next month, have previously led to labour disputes that have disrupted cargo flows.

Analysts remain hopeful that the likelihood of a strike or shut-out in California is relatively low, given the pressure on the union from the Biden administration to avoid disruption.

The problem is that while ports on the eastern seaboard do not have labour contract negotiations looming, they face many of the same issues as the west coast and in particular the lack of space and labour shortages.

MSC informed customers this month it would temporarily stop calling at the port of Charleston on its route to South Asia because of extended wait times.

Traffic is moving from the east coast to the Gulf of Mexico, increasing container imports to Houston, which increased container volumes 27% in January, with observers noting it was already getting swamped with containers.

We would ask that customers shipping to, or importing through, the west coast speak to us at the earliest opportunity so that we can review their situation and prepare their supply chain.

We have set up contingency platforms for customers to ensure that product is delivered to market in the USA, without the delays experienced with alternative providers.

For further information please call your established account manager, who will share all current options. They will take you through the alternative services and solutions, that we are able to offer, to ensure that your product reaches its destination, within vital deadlines.