Shipping Industry in Crisis

As you may or may not already be aware, the shipping industry is in a crisis. Due to the continued strong demand on containers out of Asia, Shipping lines have continued to hold the freight rates at all time highs. This has allowed them to prioritise their empty equipment to the highest bidder and to redirect containers to those trade lanes which command the highest freight rates. We have listed below the main issues currently being faced:

1. Shortage of empty containers–  It’s estimated that the US has about 90,000 empty shipping containers that need to be brought back to Asia for re-use. Other end ports also have many empty containers awaiting to be exported back to Asia. Due to Covid, most shipping lines reduced vessels across certain trade lanes, which has now impacted on empty equipment being repositioned back into Asia and Europe.

2. With the Shipping lines reducing vessels during COVID, space is now at a premium. Shipping lines are prioritising shipping containers to those who pay the highest price. Shipping lines are overbooking vessels, and will then choose from these bookings trade lanes that provide the largest profit. Remaining cargo is then rolled, and may be rolled for a number of weeks. 

3. Container Detention –  In most cases, shipping lines have cancelled or reduced the free time on their containers on contract rates. Most lines will no longer assist in reducing / waiving detention, in favour to maximise their profit, leaving the end user to unpack containers and transport companies to dehire the empty containers back to the shipping line, all within 7 days of discharge, which includes weekend and public holidays.

4. Port Congestion – Port congestion has been on the rise since September 2020. Its extremely difficult for us to provide accurate arrival times for your containers as these vessels are being continually delayed across their voyage. Its not just Australia feeling these delays, New Zealand is also having massive delays. Australia’s largest transhipment port Singapore is experiencing severe congestion issues which has the flow on effect of containers being rolled and remaining in Singapore for up to 4 weeks. Shipping lines have also started to levy Port Congestion Surcharges to importers to recoup their operating costs due to these delays.

5. Exports – Shipping lines are now prioritising sending empty containers back to Asia over taking export cargo. They can make more money shipping empty containers as it enables them to be exported back out of Asia much faster to overseas destination at much higher freight rates than could be achieved with export cargo

Other issues currently being faced are:
1. Space and equipment from Italy is taking a minimum of 2 weeks to obtain.
2. Space and equipment out of Spain is taking a minimum of 3 weeks to obtain
3. Airfreight – Space and rates are still being obtained by spot rates, and is subject to delays due to the lack of flights into Australia.
4. Coastal Services within Australia – Space and equipment is taking a minimum of 6 weeks to obtain.

As this is an industry-wide issue, we seek your understanding as we work relentlessly to meet your shipping needs. At Keys Freight & Logistics we have a highly experienced team who think outside the square and will explore all available options to try get your cargo moving. This may mean paying higher freight costs at times or taking a longer transit time option, but we will always endeavour to put our clients interests first. If you are forecasting stock levels or raising new orders, please consider the above when planning your shipments. We suggest you order and ship as much cargo now rather than waiting as peak season is already upon us. The earlier we have your orders, the better chance we have to find solutions and get bookings.

We thank you for your business and continued support and can assure you that we are always looking for the best solution for your freight needs.

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