Shipping Freight in Port

Yantian Port Congestion

The recent Covid-19 outbreak in Guangdong Providence in Southern China has meant that the region’s main port, Yantian is acutely congested, and this blockage could be worse than the Suez Canal blockage in March earlier this year.

Shipments have been delayed, and the fallout could take months to recover from, which means that there may be delays for Christmas. Another setback this soon after the Suez Canal blockage means that the shipping industry is in for a tough year. These affects are not just limited to the UK, the effects of the port congestion in China could have rippling effects around the world for months to come.

Yantian Port Congestion

Due the Covid-19 situation in China, many ports, including the Yantian International Container Terminal in the Shenzhen region, have been operating at a fraction of their overall capacity. Dozens of ships have already been waiting outside the terminal waiting for a berth to become available due to congestion. According to Ditlev Blicher from Maersk, the port is currently only running on a 40% capacity and that “We’re expecting that to continue for the next month with significant delays for vessels to be able to berth.”

The Yantian Port has an importance on a global scale, as the port handles 13.5m teu a year or about 36,400 teu a day. This means that any blockages in this port can have detrimental impacts on the shipping industry. The Suez Canal blockage only lasted for six days, while the delays at Yantian International Container Terminal have already lasted for several weeks, with no end in sight in the near future, meaning that this situation is significantly worse than the Suez Canal blockage.

Changing Destination Ports

Shipping line ONE (Ocean Network Express) has said that it is beginning to encourage customers to use a different destination port. “This may result in extended period of storage of inbound reefers at transhipment port or the discharge of reefer containers at an alternative port without prior notice,”

Delays

The delays in Yantian International Container Terminal can be 16 days or more now, compared to 15 days or more a day earlier. 121 sailings have omitted calls to the port or diverted to a different destination port. Project44 has said that over 32% of vessels that have been approaching Yantian have been delayed, with the situation expected to worsen over the coming weeks.

Disruption

The delays in Yantian mean that there will be an unprecedented amount of disruption to many industries, including many materials, and countries will struggle to top up on much-needed PPE. Part of the Yantian port has reopened by the Yantian port authority, but it is now only running at 45%, which is far from sufficient. Scheduling for calls to the port is going to suffer majorly for at least the next 16 days and counting. European and US ports are facing a huge challenge when the ports finally do fully reopen, as the wave of cargo hitting them, will challenge their already stretched landside operations.

Mr Hersham from The Loadstar has said that “Congestion will rise significantly, meaning that ports, and especially those already suffering such as Felixstowe, will be heavily impacted,” he said. “The scale of the issue in South China is already bigger than Suez.
“Two accurate metrics to measure disruption by are days of delay and teu; in both cases, Yantian far surpasses what happened with the Ever Given.”

If you have any questions about how these delays could affect your shipments, please do not hesitate to get in touch with us here at Supreme Freight for a discussion.

online buying

Pick and Ship: Dropshipping

Online shopping sales have increased dramatically in the last year. The January sales in 2021 on the internet alone made up over a third of retail sales in the UK. This was an increase of 81% from the year before. With the eCommerce industry at peak demand how can pick and ship and drop shipping businesses keep up with the pace?

Director of the Cigar Club, Paul Futcher, saw a 32% increase in his revenue between 2019 and 2020. Here he provides his guidance on how others can withstand growing customer demand and the higher standards that are now expected of pick and ship businesses.

The market growth in online sales in the last 12 months has risen significantly. The Increased demand has lead to Supreme Freight seeing a growing number of customers looking to import goods for resale, many of which are new to the eCommerce world.

We have seen a lot of new customers with enquiries around handling the import from drop ship and pick and ship warehouses from across the globe. Many new customers are either using services like alibababa.com or alternative drop ship and pick and ship warehouse. Initially this looks like a straightforward business model but it can be a minefield when you first enter into the import and export industry especially since leaving the EU. Supreme Freight is on hand to make sure that your air, sea & road freight are handled quickly professionally and effectively.

Below we have outlined a few pointers to look out for when you start selling products from pick and ship warehouses and drop shippers alike.

Refine your Delivery Process

With many advances in technology across the delivery process and so many eCommerce businesses needing to stay competitive, customers are coming to expect a top-notch retail experience. They expect to be kept updated from the moment they make their purchase to the product arriving on their doorstep. The quicker the company can make this process the better.

The Cigar Club considered each stage of a customer’s experience to improve how they could organise their orders and refine their pack and ship process.

Paul says: “It is important to us that our customers receive the product exactly as it is described on our website, in perfect condition and in protective packaging. We’ve tested out a variety of boxes over the years and have come to a size and shape that keeps shipping costs as low as possible without sacrificing quality or protection. We keep the line of communication between us and our customers strong, by being quick to respond to queries, and using delivery technology that updates the customers on the status of their package as well as exact delivery times.

Show Off Customer Feedback

Customer reviews are extremely important! According to Podium, 93% of consumer purchases were influenced by online reviews. There is a lot of choice when it comes to online shopping and people are looking for reassurance that they’re making the right decision before committing to the purchase.

The Cigar Club collected over 730 company reviews and 166 product reviews through using the platform ‘REVIEWS.io.’ Their efforts to ensure efficient delivery and the quality of products are up to a high standard have led to an impressive overall review rating with some of the most common phrases including ‘excellent service’, ‘efficient service’ and ‘prompt delivery.’
Once these positive reviews were collected, The Cigar Club created a widget displaying the reviews on their homepage of their website building trust with customers browsing their site. Actions like this really drive home the quality of service that customers can come to expect from your company.

Paul says: “These customer reviews have really helped us grow as a business, as with so many options for products to choose online, our positive reviews help communicate to new customers that we really do care about providing a high-quality product with efficient service. Also, by putting these reviews on our homepage we have been able to create a personal feel for those browsing our products. We’ve also tried to keep this personal touch there in all our transactions, as this is what makes our cigars unique. Particularly when online shopping is a wholly solo task, adding in real-life perspectives on our products really makes a difference.

Final Points

Implementing changes and refinements to business operations can be an intimidating task; however, by paying close attention to logistics processes and boosting online visibility, businesses can place themselves into a better position to stay competitive and successful.

sea freight

Shipping Construction Goods Worldwide

Shipping goods via sea freight internationally happens on a daily basis and enables us to obtain products from anywhere in the world with ease. You could say that shipping keeps world trade turning particularly for the construction industry.

The recent incident of the sea freight ship getting stuck in the Suez Canal may have prompted you to consider what goes into transporting construction products all over the world.

If you have ever considered setting up a shipping business of your own or extending your current business to offer this service, read on for a few things to consider.

1. What Products will you be Shipping

When creating a freight business, it is important to consider the items you will be shipping and the current demand for these them around the world. Identifying gaps in the market and establishing how your business can fill these gaps is an ideal way of establishing yourself in the shipping industry. New construction projects are started each day. The question is how is your business going to find them?

2. How will Products be Stored and Accessed

Businesses in the freight industry mostly own warehouses situated in various locations. Warehouse provide companies with storage solutions particularly when packing orders for shipping. It is important to consider the locations of your warehouses particularly when dealing with products significant in size like those of the construction industry.

3. The Legal Side to Opening a Freight Business

Once products and warehouse locations have been sorted, it’s time to focus of the legalities of your business. It is imperative that the relevant permits and licenses are acquired not to mention implementing insurance polices that will protect from potential issues and ensure that your business can trade effectively. One of the first policies to consider is contents insurance. The last thing that businesses want to consider are damage to stock resulting major losses.

4. Building a Customer Base

One of the hardest things in starting a business is increasing your retention and ensuring your customers are talking about you. Initially this can be challenging. Offering discounts and rewarding loyal customers will incentivise customers to return increasing your chances of achieving maximum profits!

How Sea Freight Works

Companies use freight companies for their extensive knowledge of importing and customs processes. Processes can be complex and mistakes are costly to fix. Having a shipping company taking the reins ensures that shipments get to their intended location as smoothly as possible.

Companies arranging a shipment to be transported usually go through the following process:

  • Find a shipping company and negotiate the price of the shipment
  • Collection of the goods from the supplier to the shipping company
  • Transferring the shipment from the port and into Customs
  • Goods are loaded into either FCL or LCL containers and loaded onto a cargo ship
  • On arrival in to the UK, the shipment is met by customs and released on receipt of duty paid
  • Delivery of the goods to their final destination.

Sea freight shipments are not hard to arrange assuming the shipping company is reputable and cost-effective. When ensuring shipments reach their final destination in good time, planning and organisation are required. Despite all of this sea freight is still the most cost-effective way of shipping goods all around the world.

What are the Advantages of Sea Freight?

There are many advantages to using sea freight to import your shipments. These include:

  • Cost – Businesses looking to import shipments significant in size and in large quantities find sea freight one of the most cost-effective ways to transport it. Sea freight has been known to be 4- 6 times cheaper than air freight. Additionally, taxes are calculated in a different way to air freight keeping the costs down in other ways.
  • The different options available with sea freight could suit a number of businesses. Sharing containers spreads the cost between companies.
  • Sea freight importing does not have as many restrictions of what companies can import, in terms of size and amount as other methods do. Bigger items such as furniture or vehicles isn’t going to be so much of a problem by sea as it would by air.
  • Sea freight is pretty much accessible from anywhere in the world.
  • Sea freight importing is much better for the environment than other methods.
Freight

Suez Canal Blockage Means Challenging Month For Forwarders and Ports

Ocean ports and freight forwarders are bracing for a challenging month as the aftermath of the Suez Canal blockage reaches Europe and Asia affecting space, equipment and other parts of the supply chain.

Ocean ports and freight forwarders are bracing for a challenging month as the aftermath of the Suez Canal blockage reaches Europe and Asia affecting space, equipment and other parts of the supply chain.

Analysis published by Sea-Intelligence indicated that the main impact of the blockage would last until early June, in terms of liner schedules on the Asia-Europe services. Freight sources are already reporting of some European ports filling up as container lines, that had been delayed due to the blockage, discharge cargo wherever they can in order to turn ships around as quickly as possible and return them to Asia. It is suggested that this practice is being prioritised over European export cargo.

Freight forwarder Flexport highlighted in its recent market update that there had been increased rates imposed on Asia-Europe services from most carriers in the form of GRIs from 15 April “as a result of tight space and equipment due to Suez Canal situation.”
The forwarder recommended at least 21 days booking notice prior to the cargo ready date for Asia-Europe services. Flexport added that the ripple effect from the Suez Canal blockage “will become very visible in the next few weeks, with quite a number of blank sailings from Ocean Alliance and The Alliance.” It added that capacity was “severely reduced in weeks 16, 17, 19 and 21, noting that the “equipment shortage has become very serious again, especially out of Shanghai and outports. Both space and equipment will be very challenging in the coming month.”
They reported similar findings on the services from Asia to the East Coast of the US which was impacted by Suez Canal capacity issues and had also seen a GRI on 15 April.
Flexport also added that carriers were now “starting to look ahead to the 2021 contract year in the midst of extreme challenges to the USEC and inland locations. Premium remains the entry point to the market on almost all lanes. Transloading services are becoming more essential to avoid challenges to the USEC.”

Flexport noted that Europe-North American routes were also severely impacted with a GRI implemented on 15 April and another likely from 1 May. It recommended advanced booking notice of at least 5 days prior to cargo ready date. This market was “expected to remain dynamic through Q2 as capacity stays heavily constrained,” urging customers that, “booking early is key to securing space. Use premium products for the urgent cargo needing higher reliability.”

Port of Felixstowe Operational Update

In a weekend update from the Port of Felixstowe, it stressed that they were currently “fully operational,” adding: “This week will be very busy s vessels delayed and diverted due to the recent Suez Canal blockage arrive at the same time as scheduled vessels, although no significant delays are expected.
“To help manage the extra volume, extended Sunday opening hours for collection and delivery of containers will be available up to and including Sunday, 9th May.”
European intermodal operators have reported congestion at some European container ports with wait times for the handling of barges taking 41 hours in Antwerp and 34 hours in Rotterdam. As a result of this European freight forwarders have outlined preparations in anticipation of the challenging weeks ahead.

Forwarders Make Preparations

Norman Global Logistics mentioned last week that it was anticipating congestion in North European major ports that were likely to reach critical levels over the next four weeks as terminals try to work through the backlog of fully laden ships. They noted that some lines had stopped taking new bookings entirely for the moment.

The company was block-booking delivery resources in an attempt to clear the containers as quickly as possible after the vessels arrived. “Our ops teams are working tirelessly to keep supply chains optimised and all NGL customers can use the live tracking links on their daily nForm shipment report to see status summaries and precisely where their shipments are.”

Metro Shipping, a UK freight forwarder last week explained that lockdown restrictions easing in England attributed to predictions of a steep rise in sales with data confirming that consumer confidence was at an all-time high.
“And with global supply chains likely to suffer ‘Suez related’ disruption for several months, orders will need to be expedited and replenishment assured, using a blend of modal and transit options, if they are to maximise the revenue potential of this opportunity.”

Potential Delays Due to Suez Canal Blockage

Metro Shipping reported that although lines such as Maersk had reopened its online bookings for spot shipments and short-term contracts, bookings could only be accepted subject to port capacity and equipment availability.

They added: “The hope is that the post-Suez impact on ports in Europe and the UK will pass quickly, but shippers should expect delays and equipment shortages at Asian ports to continue, because we have already missed two weeks in terms of getting equipment back to Asia. Asian ports will feel the effects of the Suez disruption far more, with schedules affected later in the second quarter, making it even harder for carriers to get their schedules under control and empty containers positioned to regions that need them for loading – this situation is already becoming critical again and to a similar situation experienced before Chinese New Year.”

On the Asia-North Europe trade lane, Metro said “the volatility being experienced with capacity was more significant and longer lasting than on the Mediterranean, with the full effects expected to be felt in Asia in the week beginning 24 May – over a month away, which demonstrates the longevity of the situation and time it will take to recover anything like a normal service situation.”

They also noted that “Global supply chaines will continue to be impacted by the fallout from the Suez Blockage for some weeks and possibly months,” highlighting the recent launch of a real time GPS application on its MVT supply chain visibility platform, “which is monitoring all Suez-impacted vessels, with consignment view to SKU level.”
Metro added: “We are flexing, updating and adding alternative solutions and recoveries, across all modes of transport and geographies to keep supply chains fully functioning.” It said that interest in its air freight services had increase massively as a solution to ocean freight delays encouraging shippers to contact the company without delay if they are looking to critically import or export pending Asia shipments.

Containers

£40 Million Investment in Southampton

DP World have announced that Southampton, Britain’s second largest container terminal, will be benefitting from a major investment which will raise its significance as a premier international freight and logistics hub.

DP World Southampton is a part of DP World and a leading global provider of smart logistics. One of their two UK deep water ports were awarded Freeport status by the government last month. The new £40 million investment intended to improve infrastructure will provide customers with increased speed, security, reliability and flexibility. Changes to infrastructure will include:

  • Dredging and widening of the berths to ensure accommodation of the world’s largest ships. With the partnership of Associated British Ports, this project was completed before Easter and will provide flexibility for their customers with immediate effect.
  • An investment in a new class of eleven hybrid straddle carriers totalling £10million. The vehicles are used to lift containers moved by the quay cranes and then service onward forms of transport via road and rail. This new class of machines will be the most sustainable in the world consuming up to 40% less fuel than its diesel-electric counterparts.
  • Currently £3m is planned to be invested in the redevelopment of the yard for the storage and delivery of empty customer containers. This will increase capacity of the yard by 25% on completion, creating more flexibility for port users.
  • A new Border Control Post (BCP) which includes UK Border Force and Port Health inspection facilities. This will enable multiple government agencies to improve the time they are taking on cargo checks entering the country.
  • A £1.5m quay crane rail extension of 120 metres to ensure that all berths at the terminal will be serviced. In addition, other quay cranes will either be relocated or decommissioned to maximise efficiency, speed quayside loading and save time.

Ernst Schulze, Chief Executive of DP World in the UK said: “DP World Southampton is the most productive port in Britain, turns container trucks around faster than any of its competitors and at 30% also has the highest proportion of its containers moved by rail.”

“At DP World we think ahead to create smarter trade solutions and this £40m programme of investment will ensure that our Southampton terminal continues to grow as a major freight and logistics hub. Our aim is to partner in our customers’ business success and we are already seeing a surge of interest from companies which want to take advantage of the customs zone and tax benefits resulting from Southampton and London Gateway becoming Freeports.”

This investment into the port of Southampton is a welcome arrival to the logistics industry that has faced some gruelling battles with the COVID-19 pandemic and Britain totally breaking away from the European Union at the end of last year.

According to Logistics UK’s 2020 report the logistics industry made an astounding effort to deliver for the nation that year despite setbacks including HGV driver shortages, economic and financial hardship and significant disruption to operations.

Elizabeth de Jong, Logistic UK’s Director of Policy commented: “Despite facing significant operational and financial disruption since March 2020, the logistics industry has stepped up to ensure it continues to supply the nation with the goods it needs, including food supplies and PPE. The COVID-19 crisis has highlighted how critical our industry and its people are to the success of the economy; Logistics UK is proud of the way in which its member businesses, and the wider industry, have worked together to service the needs of the nation during this critical time.”

“To deal with the COVID-19 crisis, logistics businesses managed risks by scaling back operations, taking work back in-house and reducing their reliance on third party services; many also focused activity on their core fleet of vehicles to save costs.”

France roads

UK’s Road Transporters Should Be Ready for Vehicle Safety Changes in France

UK Logistics businesses are being warned to comply with new French safety regulations introduced on the 1st January or risk facing fines.

The legislation states that all vehicles weighing in excess of 3.5 tonnes driving in France must display stickers indicating driver blind spots. This extends to passenger transport and commercial vehicles. Additionally, all vehicles should be fitted with at least one indirect vision safety system, such as mirrors with a field of view that allows for no blind spots that are likely to obscure a vehicle about to overtake it. It also states that control devices must be in reach of the driver to use when the vehicle is moving.

This comes as welcome news to road safety campaigners and experts but have also issued the warning that mirrors are not sufficient to eliminate blind spots.

Emily Hardy from market leading provider Brigade Electronics UK, commented: “This legislation is a welcome change; however, it is important for operators to understand that mirrors alone do not eliminate blind spots. Therefore, they could still be fined according to the legislation’s requirements. We recommend fitting a range of vehicle safety technology such as Brigade’s DVS Safe System kits, to ensure operators comply with legislation across Europe and that drivers have full visibility of their vehicle’s surroundings.”

These kits are available in two different types; for rigid and articulated vehicles and include side cameras, ultrasonic sensors for the nearside of the vehicle and an alarm that activates when the vehicle is turning. Both kits are compliant with London’s Direct Vision Standard as well as EU law which gives drivers peace of mind when crossing the border.

Lafarge is one of the many companies to have benefitted from installing the kits to its fleet of concrete mixing trucks. With road safety being a concern for all of the construction industry, the company took progressive action to ensure the safety of their vehicles.

As well as the kits, Lafarge also installed Brigade’s bb-tek White Sound reversing alarm and Brigades Backeye 360, a camera designed to provide drivers with a 360-degree view of the vehicle.

President of Trans Route Béton, Othmane Jennane said: “With just one look, drivers have a complete surround view of the vehicle without any blind spots and the added peace of mind that pedestrians will also be warned by the white sound alarm. It provides absolute safety.”

This could potentially spell out further bad news for UK Logistics companies and driving within Europe as many changes to Customs regulations are being made as a result of Brexit.

Another challenge that firms have desperately tried to mitigate before 31st December was the sourcing of a sufficient number of customs clerks to be trained up and ready before the implementation of the new trading regime. Speaking last Autumn, Barney Weston, managing director of Oceanic Resources International warned that serious shortage was unavoidable.

On the current situation, he said: “I think most (firms) managed to get the bulk of their teams in place before the end of the year, but training and ‘filling the gaps’ continues. In most cases a Customs and Compliance Manager/ Brexit Head is in place (in firms) giving the strategic lead on how to handle the UK’s new trading relationship.”

He went on to say: “I know that in many cases training and upskilling is on-going, and there is still high demand for people to fill customs clerk positions, but it’s hard to accurately quantify this in numbers. Certainly, anyone who has ever sniffed a customs clearance in their career history is still worth their weight in gold!”

“I think the whole industry will have a clearer picture on the situation by the end of the month; so much was unknown heading into Brexit. I think that shortly people will know if they can handle demand with the current staff levels or if more will be needed.”

Air Cargo

Global Air Cargo Volumes Recover to Pre-COVID levels inside 10 Months

The global air cargo market has virtually recovered from the losses that the COVID-19 pandemic caused according to performance data for February 2021 from industry analysts CLIVE Data services and TAC index.

Chargeable weight for the last 4 weeks of the month, stood at 1% compared to February 2019 and 2% ahead of last year’s number. Niall van de Wouw, Managing Director of CLIVE data services commented the following that passenger airlines will be, “dreaming of such a recovery in passenger demand.”

CLIVE data will continue to compare first to market data to pre-pandemic numbers of 2019, to give a meaningful perspective of the industry’s performance. This is planned to occur until at least Q3 of this year. This will be produced alongside the 2020 comparison.

Capacity levels in February 2021 were -8% and -5% of 2019 and 2020 respectively. CLIVE’s load factor calculated both the volume and weight perspectives of cargo flown and capacity available was up 5% pts on February 2019 and 9% pts on February 2020. The overall dynamic load factor was the same as last months while the monthly volumes climbed 7% despite the short month of February as capacity rose 5% over January.

Van de Wouw added: “These are tricky months to compare due to the Chinese New Year and Leap Year variances, so we have to be careful in how we read the market. To give a meaningful view, it makes sense to keep an eye out to 2019 before the pandemic took hold and, on that basis, air cargo demand is now nearly at par with pre-COVID volumes despite much less capacity in the market. If we normalise for last year’s Leap Year, we can see a 2% growth in global volumes compared to February 2020 but that does not tell the tale by any measure – the apparently modest global growth number is masking what lies underneath. Volumes from China to Europe, for example, were nearly 5 times higher in the four weeks of February 2021 than in the similar weeks of 2020. This was caused by the dramatic drop in volumes because of the of the factory closures a year ago in response to the COVID outbreak. Volumes from Europe were down by -11% for the same period.”

“Demand is increasing and there are a lot of passenger planes sitting around that could start flying cargo, but I don’t think that will happen proactively. Given the high financial risks, when it comes to adding capacity, airlines are more likely to follow the market as opposed to trying to stimulate it. But if it makes sense, they will surely fly those aircraft. Air cargo has been resilient and, bit-by-bit, has clawed back the losses we saw only a few months ago. In April 2020, volumes were down -39% but are now back to the pre-COVID level. Who would have that possible inside 10 months? It’s a recovery airline passenger departments will be dreaming of.”

According to TAC index, volume, capacity and load factors continue to reflect the high price of transporting shipments via air cargo at the moment.

Robert Frei, Business Development Director at the company commented: “Volatility remains high (also intra month) and, given the much higher pricing levels than a year ago, is having a major impact. Looking at PVG-EUR, for example, if you are 10% off with your procurement today (which would be RMB 3.20) compared to 2020 levels, it would have meant a deviation of 18%. This presents a very risky environment for freight forwarders and potentially an immediate loss of their gross margins of 8-10%. So up-to-date pricing information on a weekly basis is an absolute necessity to manage these volatile periods. We also assume the spread of spot rates is likely to remain high.”

The latest data from TAC Index shows that despite the ‘mundane’ monthly pricing average there is still quite a lot of volatility in the weekly rate levels.

Data shows that the Baltic Exchange Index was +2% over January which also took Chinese New Year into account which is normally considered peak season but looking more closely at the impact on the PVG – EUR compared to previous years, TAX index observed the following:

• 2019 – overall period +8%
• 2020 – overall period -4%
• 2021 – overall period -13%

February 2021 saw the highest drop in yield compared to that of the previous years during the period around Chinese New Year. In absolute terms this compares as shown below:

• 2019 – average RMB 20 /kg
• 2020 – average RMB 17.5 /kg = – 11% to previous year
• 2021 – average RMB 31 /kg = +79% to previous year or +63% higher than 2019

TAC Index added that interesting observations have made when comparing other international routes such as HKG – EUR which stayed relatively flat in terms of pricing levels whereas the PVG counterpart increased by +7%. Meanwhile, HKG – USA went up 2%, whilst PVG – EUR went down by -1%.

Hauliers wanted

Hauliers Warned of Tougher French Customs Controls

Since the UK’s departure from the Single Market and Custom’s Union, the predicted delays on Kent motorways have thankfully been avoided.

Unfortunately, this is set to change with haulage companies being advised to brace for tighter controls at French border control which could potentially see the first significant post-Brexit border disruption. The warnings were shared during two conference calls between British Industry bodies and UK government agencies on the 7th January.

Shane Brennan, CEO of logistics body The Cold Chain Foundation told the BBC that it could take months for the new trade agreements to settle in: “Trade levels are very low. It’s growing from 10% on the 1st January to not yet 50% of the traffic flows that we would normally expect and even at those levels we are experiencing high levels of confusion, delays, businesses….. not being turned back, but being told if they come back with the same level of preparedness next time they will be turned away. So the feeling is that we are building to quite a significant potential disruption.”

Reports suggest that cross-Channel HGV traffic through the Port of Dover and Eurotunnel have been significantly low over the past week and is most likely a result of supply chains stock piling items. Despite low traffic passing through, the Department of Transport advised that only 1% of lorries arrived with the correct paperwork with a further 3% being sent to Manston for testing as drivers arrived without having the necessary negative COVID test result. The Road Haulage Association advised that one in five lorries were being turned away citing both reasons with only 2000 lorries currently crossing the border compared with normal numbers of 5000-6000. Based on these reports, it is clear that the border has not been used at its normal capacity and will be scrutinised in the preceding months as to how it copes.

Failing to Prepare

Chief Economist for the Chartered Institute of Personnel and Supply, John Glen, told BBC news that he was hearing from customs clearance agents in Dover that there was a distinct lack of preparation from businesses and their custom brokers. Whilst he expects this to change over time, he is aware that the people involved are “worried that demand will increase faster than capacity does.”

Elsewhere, the BBC have been reporting disruption at the Irish border with Andrew Kinsella, managing director of Gwynned Shipping, advising them of a backlog of 60 lorries waiting to be shipped to Dublin. He explained that many hauliers are discovering that their customers are not able to generate the special declarations that are required for their goods to cross the border.

“Whilst you don’t see queues at ports and terminals the reality is that these queues are developing elsewhere in our depot at Holyhead, in our depot at Deeside and in our depot at Newport in South Wales and lots of hauliers have depots in the proximity of ports.”

“There are a lot of issues about demarcation about who is going to arrange the export declaration with the UK revenue authorities, who’s going to arrange the import declaration, the hauliers then trying to arrange the import safety and security declaration to create an ENS number which helps you generate a PBN number so there has been a lot of everyone finding their feet.”

Trade Barriers

UK retailers expressed concerns that the new UK-EU trade deal has created trade barriers that are believed to have had a direct impact on cross-Channel and FMCG logistics. Traders now believe that they will be required to pay tax on imports and exports of specific goods including food and clothing that are not completely made in Britain. With so much confusion over paperwork regarding this, some parcel companies have made the decision to suspend their road deliveries to Europe.

The UK-EU trade deal was billed as preserving its zero tariff and zero quota access to the bloc’s single market; however, some major retailers using the UK as a distribution hub for European businesses could face possible tariffs if they re-export to the EU. This could see businesses concentrating on time-consuming workarounds or relocating hubs to the EU.

The British Retail Consortium is seeking short term resolutions for the challenge’s businesses face and is seeking dialogue from the government and the EU to mitigate the long-term challenges new tariffs will pose.

A Perfect Storm of Brexit Disruption

Scottish seafood exporters have described their situation as a, “perfect storm” of Brexit disruption with their industry on the brink of sinking. Donna Fordyce, chief executive of Seafood Scotland speaks on the subject:

“These businesses are not transporting toilet rolls or widgets. They are exporting the highest quality, perishable seafood which has a finite window to get to markets in peak condition. If the window closes these consignments go to landfill.”

According to Fordyce, the sector had already experienced difficulties as a result of COVID-19 and the French border closing at Christmas as well as “layer upon layer” of problems associated with Brexit. Without exports it is feared that fishing fleets will have little reason to go out.

“In a very short time we could see the destruction of a centuries-old market which contributes significantly to the Scottish economy,” adds Ms Fordyce.

Parcel Traffic Affected

Elsewhere DPD, the parcel delivery service has told the BBC that it has suspended its European Road Service due to the “increased burden” of customs paperwork required to be completed on shipments for the EU including the Republic of Ireland. Increased paperwork has seen 20% of parcels identified as “incorrect or incomplete data attached” causing them to be returned.

In a communication with their customers, the business has spoken of a “challenging few days” for the international operation and is planning on restarting the service pending a review on 13th January.

low tariffs after brexit

Brexit and the Logistics Industry: Infiniti Research Outlines Key Challenges

Well known market intelligence company, Infiniti Research have announced completion of an article on their website outlining what they expect the key challenges of Brexit will be on the logistics industry.

The deadline for the UK and the EU to negotiate a trade agreement is set to end on the 31st December.  With the deadline a matter of weeks away, no deal has been struck and it is looking likely that the UK will no longer have access to the single market and customs union. Due to the high amount of cross-border movement within the sector, this will undoubtedly impact the logistics industry in a significant way.  According to Infiniti, Brexit is likely to have severe consequences to even the big logistics companies. One significant example of how troublesome Brexit is set to be is through the importation of Britain’s petroleum. At present, over 25% of this commodity passes through the EU before arriving in Britain. With no access to the single market and customs union, a tariff will be applied on this product as it leaves the EU and enters the UK. The extra expense will have consequences on Britain and the EU as those extra costs trickle through the markets.

 

Brexit and the Top Challenges

Infiniti’s article outlines the following as the logistics sector’s top challenges as the UK leave the single market:

Reduced Trade

In 2019, 43% of the UK’s exports went to the EU which equated to £294 billion whilst 53% of the UK’s imports were from the EU. With the UK set to not have access to the single market, a rise in tariffs will discourage trade between the EU and these numbers will inevitably decrease. With EU trade, making up such a large percentage of the UK’s total imports and exports, this will undoubtedly make a huge dent in the country’s GDP.

Border Control

As free movement between the UK and the EU ends, tighter border controls are set to be put into place creating barriers for trade on either side. The UK government has warned of a 6-month disruption period with the worst of it being during the first 3 months. This will mostly be down to additional checks being introduced and the expectation that at the beginning drivers will not have the correct licences and shipments will not be accompanied with the correct paperwork. In an attempt to mitigate these delays as best they can, HMRC have announced there will be a period of leniency for the first 6 months where the new procedures will be simplified. The disruption to the border is already having a knock-on effect on the logistics industry. With businesses predicting delays in supply chains, they have taken to stock piling essential goods. For UK logistic companies, delays in the border will mean a decline in efficiency and potential problems with administration if the correct paperwork and customs fees are not paid.

Migration Control

Another potential problem that Infiniti has outlined will be stricter controls on migration with particular emphasis on EU workers. With freedom of movement coming to an end, citizens of EU states will no longer have the right to work in the UK and will need to apply for the necessary work visas.  This will translate to less EU workers working for UK companies. Road haulage is set to be majorly impacted by this, as the sector relies on drivers belonging to other EU countries. Additionally, drivers with UK licences will be required to apply for an international driving permit to transport goods within EU states. These permits will need to be issued for every journey that is made and they are capped in amount. This alone will significantly import the number of times UK drivers will be able to transport goods. Drivers with EU licences will be able to continue to use their licences in the UK but only for a temporary period.

Increase in Operating Costs

With no trade agreement in place with the EU, the cost to import fuel into the UK will rise which will impact on the price consumers pay at petrol stations. This along with added tariffs and duty payments that will need to be handled, managing shipments is going to become considerably more expensive than it was whilst the UK was in the single market.

 

Prepare for the Worst

Due to lack of direction from the government and the ongoing issue of the COVID-19 pandemic, logistics companies have been slow to prepare for the looming deadline of 31st December.  Businesses are being urged by experts to not, “sit on their hands and hope for the best,” and to instead do the research themselves to ensure that they know what is expected of them. Holding out for a trade deal at this late stage is wishful thinking and will be detrimental to businesses going forward. The UK government are urging companies and their affiliates to start preparing for the new legislation, understand what is required of them and to ensure that their associates are updated.

Heathrow Cargo

Why is Air Cargo seeing an increase since COVID-19?

According to CLIVE data services, air cargo volume saw a 12% increase in the last week of June compared to the last week of May. Niall van de Wouw, managing director of CLIVE, explains this increase was initially due to the urgent requirement of personal protective equipment (PPE) needed by governments in an attempt to contain COVID-19. Despite the international demand for PPE now beginning to diminish, Van de Wouw is confident that air cargo volume will continue to rise month on month.

“Our June analyses seems to suggest the first steps towards a structural market recovery. Despite the decreasing demand for PPE in June, we still see that the volumes increased over May. We are starting to see a more recognisable airfreight market following more logical economic principles and more logical rates.”

There is no denying that aviation has been one of the industries hit hardest by the COVID-19 pandemic. Government restrictions have prohibited entry for travellers causing ticket sales to plummet, reduced schedules and redundancies for airline staff. An increase in air cargo volume is a glimmer of hope in what has been a dark time.

How has COVID-19 impacted Air Cargo Volumes?

A number of sources have submitted their findings on how the global pandemic has affected air freight including; Veritas Global, Seabury and The International Air Cargo Association (TIACA). Alongside this, the International Civil Aviation Organisation (ICAO) have also done their own studies, which are updated and shared on a weekly basis. Despite the sheer number of agencies looking into this there continues to be a lack of reliable data but what does stand out is the following:

• Global air cargo capacity is down 35% from 2019
• 20% of belly cargo continues to fly
• Freighters capacity is showing signs of stabilising

Due to the current restrictions of passenger travel, airports are seeing a sharp decrease in their revenue forcing many to close. Despite full closures to passenger traffic, a share of airport and airside infrastructure must remain open to support air cargo which comes at a cost to a weakening cash supply.

How is TIACA Supporting the Industry?

TIACA believes that it is their permanent role to promote the air cargo industry. During the outbreak of the coronavirus, they have focused their efforts in reminding governments how important the role of the air cargo industry is to the global economy, international trade and in battling the devastating effects of COVID-19. The value of air cargo has been highlighted during the pandemic as without it the transportation of valuable medical, PPE and food supplies would not have been possible. As COVID-19 looks set to continue its impact on the world, so will the demand for medical supplies. It is vital that delivery services are able to keep up with this demand.

How have Cargo Operations Changed Due to Coronavirus?

Changes to cargo operations to mitigate the impact of coronavirus include:

• The use of passenger aircraft
• Expanded use of charter flights
• Changes in flexibility to certain regulations
• Introduction of new standard operating procedures
• Increased protection for staff

The implementation of these new operations and assessment of how effective they are is a time-consuming process and is changing everyday as we learn more about the novel virus. TIACA and other aviation organisations are pushing an initiative where a working document is created for a post COVID-19 recovery path. The main focus of this document is to suggest short, mid and long-term solutions to the issues caused by the pandemic so that the industry as a whole can recover.

What can the Industry do to Prevent this Impact from another Pandemic?

When industries such as aviation rely on governments from all over the world to collaborate and work cohesively, there needs to be a concerted effort to make things consistent. A standard that extends from one end of the world to the other.

It is clear that the implementation of new procedures to prepare ourselves for a future crisis are required; particularly, relating to health and safety in the workplace. Emergency plans will need to be drawn up and implemented to ensure that if another pandemic were to occur that industries would have systems in place to mitigate the effects that were able to destroy everything so quickly and in such a short space of time. This will involve analysis, risk assessments, training sessions and re-writing standard operating procedure. For aviation in particular, more consideration needs to be given to air cargo and how we can keep operations going in the face of a crisis. The air cargo industry has proved invaluable during the COVID-19 pandemic; however, more support needs to be given to be able to provide that invaluable service in the future.