Supply chain challenges; 2020 into 2021
The supply chain impact of the COVID pandemic continues to be felt globally, with profound impacts on UK freight operations and infrastructure, that are likely to be exacerbated further when the Brexit transition period ends.
The UK’s primary container ports, and in particular Felixstowe, have been struggling to cope with massive import volumes, triggered by unforeseen consumer demand, the economy reopening after lockdown, Brexit stockpiling and the Christmas rush.
Container ships have been diverting to other UK ports for several months and, as congestion continued to increase, approaching 50% are going to alternative ports in Europe as ports are cancelling berthing slots due to no container storage capacity.
Inevitably congestion has now built at ports in Northern Europe leading to extreme delays, with container yard utilisation rising above capacity, increasing dwell time, restricting the movement of containers and lengthening turnaround times of vessels.
In response some shipping lines are taking the excessive step of off-loading UK destined containers in North Africa, to maintain schedules, adding significantly to total transit time.
Supply chain problems have been exacerbated by the backlog of orders in Chinese factories, which have been running flat out since March, pumping out export order after export order that has led to a capacity issue for the shipping lines.
The increasing challenges in finding empty containers and getting them on boats, has resulted in increasing shipping costs, as demand has kept rising.
And now shipping lines have stopped taking bookings until the end of December as the heavy and sustained demand has overwhelmed the container supply chain, creating yet another challenge for shippers trying to get cargo out of China ahead of the New Year holiday in February.
It is likely that congestion, vessel bunching, and equipment shortages will last until the Chinese New Year factory shut-downs relieve pressure on the global supply chain.
Chinese New Year 2021
In a typical year the air freight peak season would be coming to an end, but this year the peak season carries on, probably up to Chinese New Year in February and instead of cancelling sailings, the shipping lines have stopped taking bookings and are scrambling to find more ships to meet continuing demand.
The Lunar New Year runs from the 11th to 17th February in 2021, though manufacturers are hinting that they could lengthen the holiday up to two to four weeks, which may relieve some of the pressure on carriers. But longer factory closures could make the post-holiday period even busier, as we expect elevated Asia exports to last through February.
The UK government has published a handbook advising commercial drivers of the measures they need to take to enter the UK. But with more than 90% of trucking companies having fewer than 10 lorries, there is a strong likelihood that smaller firms will arrive at the border with incomplete paperwork, leading to lengthy delays, as evidenced by hauliers ignoring requests to stay away from Dover, during the current French border closure.
With the UK government’s worst-case scenario, suggesting as many as 7,000 trucks could be backed up after the transition period ends, there are fears that today’s long queues could persuade EU hauliers – which currently perform most UK-EU haulage transport – to avoid UK work for the next three to six months.