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%.

air freight

The Impact of COVID-19 on the Air Freight Industry

Due to the COVID-19 pandemic, air freight has been one of the hardest hit industries in logistics.

Lockdown restrictions and travel bans have caused chaos internationally with many flights being grounded. On a normal day, air freight is responsible for the transit of trillions of dollars’ worth of shipments every year. Flying is one of the fastest methods of transport and is considered ideal for low volume, high-value items. With the industry currently at its knees, it has heavily disrupted global supply chains and production cycles for multiple countries. Other sectors of aviation including commercial and private air travel have also taken major setbacks with many airlines having to resort to mass redundancies of their employees.

 

The Pre-Pandemic Air Freight Industry

Before COVID-19, much of the worlds air cargo was carried via passenger aircraft. This was transported in the aircraft hold and made up 40% of annual global cargo. New generation, wide bodied aircraft are equipped with a generous belly hold capacity and are ideal to carry large quantities of cargo. A Boeing 777 passenger aircraft is able to carry as much as 20 tonnes and was frequently used to transport many shipments. Unfortunately, with only 20% of the world’s air traffic in operation at the moment, this has been significantly impacted.

Although freighter aircraft continue to operate by cargo operators and freight forwarders, many of these aircraft are hub focused and are not able to access the same extensive route network as commercial aircraft which is proving restrictive and taking away much of the convenience air freight has always promised.

 

Making Up the Shortfall

To ensure essential cargo continues to be transported, airlines have been utilising their main passenger cabins. The load sheet must be worked out precisely to ensure the weight and balance of the aircraft is not affected and is secured into passenger chairs with netting. It was widely publicised that emergency PPE for frontline healthcare workers was transported from China in this way.

At least 20 airlines have offered their aircraft for global cargo missions including British Airways, Delta and Cathay Pacific. The aircraft are chartered by freight forwarders and operated by the airline’s crew.

 

Low Fuel Prices Making up for Low Occupancy

Low fuel prices have eased the expense of low occupancy flights. This has been a saving grace to many airlines which has enabled them to continue flying to destinations they would otherwise have had to cancel. Aircraft manufacturers, Boeing and Airbus have also offered their freighter aircraft to transport critical supplies including 1.5 million facemasks.

Despite these creative solutions and work arounds, the industry is experiencing a major shortfall in the capacity it is able to transport and is majorly disrupting the transportation of essential goods such as medical supplies to virus epicentres.

Coordinating cargo supplies to demand is a time-consuming business that requires intense labour and negotiation from a lot of people. During the pandemic, this has been covered by governmental departments and national carriers and have usually been organised on an ad-hoc basis

 

Operational Obstacles

Before a shipment reaches its final destination, operators have to address certain challenges including airport curfews, border restrictions and flight time limitations. If the aircraft is permitted to land in a certain country, the crew can be subject to gruelling quarantine and testing regulations. This could see them spending up to two weeks in a hotel room upon arrival causing severe disruption to the operator. Without their crew they are without an aircraft prohibiting them from making other vital cargo journeys.

These issues are likely to cause pandemonium for the future of passenger air travel when lockdown restrictions lift. It is likely that these issues will still be in affect and will continue to prohibit many people getting to where they need to go.

 

Preventative Measures for the Industry

Aviation is an industry that relies on governments to work collectively and cohesively. When it comes to air freight, there needs to be more of a concerted effort made to remain consistent from one country to the other. The COVID-19 pandemic has taught us that new procedures are required to prepare ourselves for future crises. A framework must be developed for all countries to work from and ensure that the transportation of vital supplies is not severely disrupted regardless of the critical threat level of the world.

The development of this framework will involve analysis, risk assessments, training sessions and the re-writing of 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.

Brexit-uk-ireland

Trade with the UK and Ireland takes a tumble as Brexit Bites Back

In a statement from the Irish government, it was reported that goods shipments in Ireland have halved in number with the UK and doubled with France in the first month of Brexit.

This shift in numbers highlights just one of the new issues that have arose from the new trade deal particularly with Britain’s so-called ‘land bridge.’ Hauliers now carrying EU shipments on British motorways are now facing lengthy delays due to the new bureaucracy imposed at the borders which is making the option of transporting via sea freight much more desirable despite the lengthy wait for the shipment to arrive.

 

Bureaucracy at the Border

According to the Irish Prime Minister, Micheál Martin, just 17,500 trucks (an average of 45 per ferry) arrived into Irish ports in January from Britain which is half of the figure that arrived in the previous year and just a fraction of the capacity of the Irish sea ferries which have the ability to carry at least 200 heavy goods vehicles.

Despite the exceptionally low flow of goods from Britain, hauliers were required to provide 760,000 import declarations, which averaged at around 43 per truck, to successfully gain entry into Ireland. The Prime Minister confirmed that these low volumes were as a result of, “Brexit stockpiling, COVID-19 restrictions, newly introduced checks and controls and the emergence of new direct services with additional capacity on European routes.”

Sea routes that bypass Britain have doubled in the last few weeks, particular the Ireland to France route which has seen triple the number of options available to hauliers. Drivers have been purchasing standby tickets in the hope they may find a last-minute space on these commonly full sailings.

 

COVID Testing Chaos

France is now requiring that drivers arriving on Irish ferries as well as from England should have a negative COVID test taken within the last 72 hours. In response to this, Ireland last week set up test centres enabling drivers to receive free antigen testing before boarding ferries. The two test centres were set up in Dublin and Rosslare and are already able to test up to 1500 drivers weekly.

 

Customs Clearance Catastrophe

As many as one in five lorries arriving into Ireland from Britain do not possess the required paperwork for customs, animal health, food safety or security. This is causing hours and even days of delays to vehicles before they are permitted to proceed into the country.

“The challenge the new checks due to Brexit create for traders is fully acknowledged,” the office said.

The same issue is arising for Irish drivers trying to access Europe via Britain. A protest was held at Dublin Port last week appealing to European Commission President, Ursula Von Leyen to appoint an EU trade trouble shooter at the major trade hub.

At present, Britain’s new customs regulations have been relaxed to ease companies into the processes. With issues already causing hassle, it is set to get worse when the new regulations come into full force in July.

“Exporters are being urged to prepare for these changes now,” said the Prime Minister’s office, noting that some Irish firms faced, “severe difficulty adapting to the new systems of control.”

The office recognised that companies were often let down by their clients or even customs agents but emphasised that, “It is absolutely necessary that everyone in the supply chain knows and understands their roles and responsibilities….. It is the responsibility of the importer or exporter or their agent to ensure the required information and channels of support are available to hauliers when goods are stopped.”

To mitigate delays, firms transporting goods from Ireland to Europe are now being advised to use direct sea links and cut out transportation through UK suppliers and distribution centres where possible. As a result of this, the number of crossings for direct EU routes had more than doubled to 62 weekly sailings including 36 with France.

These routes have gained in popularity for the sheer number of heavy goods vehicles it can carry (up to 10,000) with the added option of drivers being able to drop their shipments off on the ferry and have them picked up by another driver in Europe avoiding the need to complete the sea voyage or source a coronavirus test.

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.

warehouse

Post Pandemic Warehouse Automation Market poised for Long Term Gains

An updated report by international market research provider, Interact Analysis, suggests that the warehouse automation market is set to make long term gains into 2023. 

Despite many industrial sectors suffering major losses as a result of the pandemic, COVID-19 has driven more people to turn to online shopping giving the sector a boost which is set to last well after the end of the pandemic.  This is causing warehouse managers to increasingly resort to automation solutions to provide a more efficient, productive and socially distanced working environment on the shop floor.

 

A Closer Look at the Numbers

Due to COVID-19, revenue for 2020 will continue to depress as completion dates for projects are pushed back to next year; however, the sudden surge in online shopping has caused a significant increase in order intake.  The second quarter order intake for Dematic has doubled compared to the same quarter in 2019, with the company planning to hire 1000 new staff by the end of the year.  In addition to this, the market size of the automation sector is set to be 6% larger in 2023 than pre-pandemic forecasts.  Although a lot of sectors such as manufacturing and apparel are predicted to see a drop in their market share – a combined decrease of $600m – the general merchandise and groceries are expected to make up for this fall, driving a significant overall net increase in the warehouse automation market.  Data from the report puts that increase at a combined market value of $3.5bn higher than pre-pandemic forecasts.  As a result of this, supermarket chains are now investing in their own warehouse automation.  With contracts to manufacture 38 automated warehouses by the end of 2025, Ocado are set to become one of the leading warehouse automation providers.

 

Software Revenues Under Threat

Another important finding from the report is that warehouse automation software revenue seems to be under threat.  An explanation for this is the growing trend among online retailers to bring warehouse execution and management software in-house.  Companies like Amazon, Alibaba and JD.com have been leading the way in this trend and other retailers are starting to follow suit.  As a result of this, we could see the market price of automation software commoditised forcing multiple systems integrators to tender bids for solution designs.  Research is suggesting that more innovation is required to suit specific sectors which off the shelf software is not providing.

Interact Analysis’ lead analyst for warehouse automation, Rueben Scriven says:

“The warehouse automation world is on the move. COVID-19 has devastated high streets and shopping malls, but there are already signs that eCommerce retailers are preparing to step in, with grocery retailers taking advantage of disused sites to augment micro fulfilment centres onto existing stores, bringing the fulfilment process closer to the customer, and attracting customers and jobs back in to the high street.  When it comes to the issue of automation software development moving in-house, we found that only the grocery sector will likely continue to heavily rely on existing integrator software solutions.  The way forward for warehouse automation vendors supplying online retailers is to increase their ability to tailor their software offering to individual customers.”

 

Relaxed Brexit Border Infrastructure Welcome but Not Enough Warns British Ports Association

On 24 September a new development order was applied, in named areas of England, relating to the requirement to check and process vehicles on entry into the United Kingdom as well as facilities for drivers and border staff. The order gives specific government border departments such as HM Revenue and Customs (HMRC) and the Department for Transport (DfT) the ability to apply to the Secretary of State to add infrastructure to its ports which will prove beneficial once the UK break away from the Single Market and Customs Union.

Approval by the British Ports Association

This order has been welcomed by the logistics industry, including the British Ports Association (BPA); however, they warn that there is still more to be done before the transition deadline. Richard Ballantyne, chief executive of the BPA said, “The legislation introduced to bypass the planning processes for border infrastructure in England is certainly a welcome move; however, there is still a lot be done to get ready for 2021. At various stages next year, new customs and border control processes will be introduced on European trade and our ports are working with the government to look at what needs to be done.”
He added that he hopes for a swift roll out of the government’s infrastructure plans, in-order that the UK’s gateway to Europe be ready.

The preparations have begun to create a physical and digital infrastructure to facilitate customs and other border procedures during transit between the UK, Europe and Northern Ireland. This could include new inspections facilities and computer systems to manage border controls that have emerged, following Britain’s exit from the Single Market and Customs Union.

Ballantyne said, “the sensible and measured implementation of the new border requirements could be essential for all parts of the freight and logistics industry.”

This order comes after a concerted effort by the Road Haulage Association and key figures from the logistics industry urged the government for a meeting over Brexit amid concerns over the slow progress that was being made.

The BPA represents 86% of port traffic in the UK, which includes major gateways such as Birkenhead, Dover, New Haven, Pembroke and Tyne. These facilities support the transport of thousands of trucks and trailers on a daily basis between Europe and the UK. This part of the industry could have the biggest impact on the new processes that are included in the new order.

Drawbacks to the New Order Identified

Following on from this, planning law expert of Pinsent Masons commented that the powers granted by the new regulations were limited to smaller developments which would not require environmental impact assessment (EIA). He explained that the development would not be able to approve new motorways or express roads over one hectare nor motorway services over 0.5 hectares unless it is proved that they will not have an untoward impact on the environment. He surmised that, “realistically…. The new order will apply to more modest changes in and around the ports.”

“Proposals must be put forward by a relevant border department – for example, HMRC – with the site owner, such as the harbour authority, only engaged on the application. Presumably, in practice, it is likely that the border department will have discussed things at length with port operators, as it is difficult to see how the border department will be best placed to lead on the necessary infrastructure to process port traffic efficiently through the port and surrounding areas.”