Shipping companies continue to face challenges as 2020 draws to a close

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The container shortage in Asia, which we reported in detail last month, continues, as does continued port congestion in the UK and Northern Europe.

Together, these issues have a profound impact on ocean freight services.

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Shipping companies navigate rough waters

A number of shipping lines are suspending all cargo bookings from Asia to Europe until the end of the month.

Strong and sustained demand has overwhelmed the container supply chain, creating chronic equipment shortages and driving up rates. Further increases are likely in January.

So far this year, ocean freight rates have doubled on Asia-Europe routes, an unprecedented increase that has caught importers off guard as they have suffered substantial losses as businesses struggle to recover or to meet the continued demands of the COVID-19 pandemic.

Temporary suspension of reservations

The strong demand for containers from Asia and the order book accumulated over the past few weeks have prompted shipping lines to announce a temporary halt to bookings on Asia-Northern Europe traffic for at least weeks 49, 50 and 51.

The severe shortage of empty containers in ports of Asian origin has accumulated since September. China’s spike in volume to the US led to a 37% drop in container availability in Asia, to nearly 50% lower year-over-year, according to The Lodestar reports.

Port issues

The specific port problems, rather than being gradually resolved as hoped, seem to have worsened.

The situation in Felixstowe, London Gateway and Southampton has worsened over the past 10 weeks. High import volumes, approaching Brexit deadline and preparations for peak season, as well as lack of storage space and congested construction sites, have all contributed to the worsening situation .

Volumes increased following the easing of restrictions related to COVID-19 and the approach of Christmas. Weekly import volumes have been more than 30% above average levels at Felixstowe since early September. Importers are looking to replenish inventory levels that plummeted during the initial lockdown phase, a leading UK freight forwarder reports.

Around 2021

With the likely Brexit chaos fast approaching and a container shortage in Asia set to persist through 2021, the situation is unlikely to improve in January.

Rates are expected to remain high and may even rise. Asia-Pacific routes to North America are experiencing similar disruptions due to lack of containers. Importers are facing rising ocean freight costs, which are also expected to persist into next year.

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