As we near the end of 2018 there is a
great deal to reflect upon and our minds are drawn to the challenges that the shipping industry continues to pose during Q4 and beyond into 2019. There is no doubt that managing complex inbound supply chain requirements will be business critical in the coming months.
Strong relationships and
strategic planning will be of paramount importance to manage these challenges effectively.
The Asia – Europe trade lanes have been fairly turbulent during 2018 and Q4 continues to be somewhat unpredictable. Both the Ocean and 2M Alliances have announced complete loop withdrawals which has reduced overall market capacity by 8 % and there continues to be additional periodic port omissions to maintain seasonal demand, which helps ensure freight rates remain sustainable. Following the blank sailing adjustments during and following Golden Week (week 40), this has created a pinch point in capacity and we are hearing of roll pools having to be cleared from transhipment ports. As we build towards the end of Q4 there is likely to be some additional pressure on space as demand builds prior to Chinese New Year which falls on the 5th February 2019.
Shipping lines have considered it necessary to realign capacity to ensure rate levels can be maintained at workable levels in response to industry wide headwinds. Most notably rising fuel costs which have increased operational costs significantly during 2018. The wider challenge for vessel owners will be clear - to maintain schedule integrity while managing operational costs to avoid a repeat of the combined losses announced in Q1 2018 ($1 BN USD).
In addition, our UK ports have been under severe and ongoing pressure. Felixstowe has suffered badly following a troublesome implementation of their new terminal operating system in June. This has caused both ship and landside operational restrictions which has caused lines to omit or cut and run to avoid greater schedule disruption. Southampton has faced severe congestion which has caused intermodal resources to struggle. Trains and road resource are both stretched to breaking point, which has resulted in severe port congestion and longer booking windows for last mile deliveries. Haulage capacity shows no
immediate sign of easing, which presents challenges for those managing the integrity of inbound supply chains.
Importers are facing the perfect storm, as peak volumes arrive in the UK. Managing these diverse and
complex factors has been extremely challenging and while there are some
signs of improvement in port infrastructure, the pressure on intermodal resources look set to continue. Importers are having to innovate to manage these challenges or risk being adversely effected.
For more information on any of our
Ocean services please contact:
[email protected]
Paul Gray
Head of Stragetic Accounts - Asia