Are you having problems booking shipments these days? Scarce slots and high shipping rates are causing you headaches? Almost all industries around the globe are currently suffering from the same problem. Everyone is blaming COVID-19, but what is the full story? What is the cause and what can you do to manage this situation?
Early in 2020, lockdown first started in China, then in Europe, the US, and then in almost all countries. Travel and transportation restrictions came into effect. Sales dropped drastically, and so did global trade. In June, global cargo volumes began to sharply increase; firstly between Asia-USA, followed by Asia-South America and Asia-Oceania. In response, carriers quickly reinstated capacity in some trades, supporting the large increase in demand. However, as more trade lanes started to recover, the situation became difficult to handle.
What are the reasons?
The main causes are:
- Cause 1: Reduced number of available containers – The unprecedented reduction of the world trade in the initial two months of the pandemic disrupted containers’ normal flow. The scarcity of containers in the right locations during the recovery phase had a tremendous effect on rates, which caused increases of thousands of dollars within a short timeframe.
- Cause 2: Congested ports – Many ports were affected by reduced workforce both within the terminals and in supportive functions such as truck drivers. This has caused heavy vessel delays, missed sailings and limitations on volumes that could be loaded.
- Cause 3: Reduced number of operational vessels – When the world trade slowed down, some vessels went for refurbishment. With fewer vessels in the market, some vessels even had their voyages interrupted due to on-board COVID-19 cases.
- Cause 4: A changed flow of goods – Changes in people’s buying behaviour and the unpredictable development of COVID-19 are causing many irregularities in global trades. This significantly increases the cost burdens of carriers.
From Home Kuehne-Nagel