May Update

containers in port cropped

We continue to experience the issues surrounding equipment availability and placement in EU regions impact on lead-times, collections and deliveries. This, unfortunately, is a situation that is likely to be with us for the remainder of the year. The key causes remain:

  • Import volumes are up, export volumes are still down
  • Demand is out stripping supply
  • A high % of import services operating as “unaccompanied” – ie driver in Europe trailers the container unit to port of exit to travel on the ferry “unaccompanied”. Once arrived in UK loaded unit collected by a driver on UK trailer traction for onward journey to final delivery point.
  • European hauliers remain reluctant to travel to the UK
  • UK hauliers remain reluctant to travel to Europe
  • This reluctance and nervousness caused by the end of the Brexit transition period, delays to new customs clearance procedures and equipment availability
  • Subsequent adverse increase in time and cost impact to EU and UK haulage companies with Central Europe and France particularly affected. 

Sea Freight

The logistics world is still adjusting to the effects of the global pandemic. The recent delays caused by the Ever Given container ship blocking the Suez Canal have added to planning concerns. According to reports, many vessels stuck outside the Suez Canal experienced delays ranging from 7 to 14 days. The knock-on effect for many shipping lines resulted in yet further changes to export and import schedules.

Shipping containers have become the important element in the current situation with stockpiling on the quaysides in European and Chinese ports the main cause of delays. The lack of containers on certain routes and the increasing demand has resulted in price increases of up to five times normal rates compared to 2020 as highlighted below.

Currently, vessels are booked three weeks in advance of the sailing, but, on average, only six out of every 10 containers get loaded. It is possible this number will increase as further “blank sailings” have just been announced.

USA congestion – Journal of Commerce reported on 4 May: Longshore labor disputes are flaring up in North America, with real and potential conflict building on multiple fronts that is disrupting cargo movements today and could lead to much greater supply chain disruption in the year ahead. Bloomberg reported on 3 May, congestion at the U.S. West Coast’s busiest ports is disrupting cargo coming from all of the world — not just shipments coming directly from Asia. Shipments face delays of 10 to 13 days at the Los Angeles and Long Beach ports. The number of anchored container ships waiting to offload at L.A.-Long Beach totalled 16 as of Sunday, down from 18 a week earlier and less than half the length of the queue in February.

Australia and New Zealand experiencing delays in departure and changes to schedules.

Indicative Sea Freight rates for spot bookings:

Trans-Atlantic – Europe to East Coast rates are up 132% according to Freightos* and up 37% according to Drewry’s* year/year.

Asia-Europe – according to Freightos* rates are up 493% year/year and 5.9% times the rates in mid-May 2020. Drewry’s* are saying 539% year/year Shanghai-Rotterdam

Kukla is continuing to manage the changes and challenges.

European Freight

Despite these challenges for the logistics industry, Kukla has been working with our carrier partners across Europe to mitigate the effects of the disruptions to supply chains as much as possible. European road hauliers are facing increased costs caused by time-delays. This is resulting in increased amounts of paperwork for both export and import routes. As a result, a significant number of European and UK owner-drivers and haulage companies are still refusing to take export orders.

Kukla’s operations are being supplemented with a solution of local loadings for groupage in more depots across the EU regions. This will help to alleviate the threats of cancellations and late deliveries. Although lead-times are increased, our delivery performance from mainland Europe remain fluid. We are working with all our customers and their suppliers to manage this volatile and difficult period.

Planning ahead – Summer Closures and Christmas 2021

In any ‘normal’ year, it is always crucial to plan ahead to schedule your seasonal orders well in advance.  This year, as we approach the season of summer cellar closures in Europe, it’s more important than ever to allow for additional lead time as the current disruptions to supply chains are unlikely to recede in the next few months. Make allowances in your stock replenishment schedules for this.

HMRC – we are also told to expect greater scrutiny from both UK and European customs towards the end of this year and into 2022. Although this element of the freight cycle is not the primary cause of the current delays, it is contributing to an ongoing scenario exacerbated by the wider global issues.

Summer and Q4 planning advice to customers

  • work backwards in planning dates for when orders are required in the UK – as a guide as per current conditions (see above), this will be kept under review – 50 days for Australia, New Zealand and USA. South America 40 days and South Africa 25 days.
  • tell us when it’s needed here – irrespective of country of origin, the earlier we can make collection, loading and shipping bookings the better the chances of meeting due dates.
  • create a short-term stockpile to carry your business through this period.

In order to prepare to help our clients Kukla is investing 

  • actively engaging and developing new partnerships with additional local European container operators and continental hauliers.
  • In the coming months we will be releasing more information about our developing operations in the UK.
  • Moving to new premises in June
  • More staff recruitment – 3 new starters this month 
  • This investment is all linked to our commitment to service our clients as the leading UK beverage logistics company.

* Freightos Baltic Index (FBX): Global Container Freight Index the only daily and IOSCO-compliant container freight index, ready for index-linked contracts and derivatives.  

For more than five decades Drewry’s has been continuously monitoring and analysing the world’s shipping markets. Over that time, they have established a reputation for objective, robust and balanced opinion senior stakeholders within shipping, finance and logistics need to make informed business decisions.