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the-perfect-storm-newsletter-shipping-rate-increase

Freight rates on the East -> West trades have drastically increased over the last few weeks and months, to levels that we as an industry have not seen in a very long time, if ever…  Dare we say, we find ourselves in the midst of a ‘perfect storm’… 

Whilst there are many opinions on how we should wage a war against the carriers for capitalising on this (dare we say) opportunistic behaviour, the fact remains that whilst there is a surge of cargo with limited space and equipment supply, they will continue to release space and equipment to the highest bidder…

So why would Carriers be experiencing an equipment shortage?  Is it bad planning on their side to re-supply the exporting countries…?  I’m afraid not – it really is owing to reasons beyond their control…  As an example, a few days ago it was reported that the port of Long Beach had 40 vessels at anchor waiting to berth.  One of the reasons being that most Terminals are understaffed and are still having to deal with Covid-related issues, thereby affecting the turn-around of truckers waiting to get the full container to the importer and to then return the empty to the carrier.  Let’s say that – for arguments sake – the average capacity of these vessels is 12 000 TEU’s (twenty foot equivalent unit) – that’s roughly 480 000 idle containers.  Not forgetting that these vessels then also need to load full and empty containers back to the ports that they sailed from…  And that’s just one port… 

We are seeing the same with Air Freight in that due to continued limited (or restricted) international travel, carriers have reduced the number of flights or have temporarily suspended certain routes, also due to Covid-19 related issues.  This offers the carriers, who are still servicing the routes, an opportunity to increase their cost…  “take it or leave it”…

Hence the perfect storm…  

Let’s hope we see the rainbow, soon…