The Suez Canal blockage, COVID-19 cases shutting down the world’s third busiest container terminal of Yantian, record low carrier schedule reliability, growing congestion across North Europe, and chronic vessel space and equipment shortages. The disruption is also flowing downstream and impacting short-sea shipping and inland logistics providers. The panel will discuss what must change within the Asia-Europe supply chain before any normalisation can occur.
European supply chains haven’t had any time to reset this summer, and as the Asia-Europe trade heads into the peak shipping period, the strain is showing. Months of strong consumer demand have kept European imports surging, while COVID-19 measures have created labour shortages and bottlenecks at terminals at origin and destination ports, and vessel schedule reliability at European hubs is at record lows. Late arrivals are driving up congestion across Europe’s ports, absorbing available vessel capacity, and disrupting the onward carriage of cargo via the feeder and short-sea services, inland waterway, rail, and road.
Despite carriers’ poor on-time performance, rates are extremely elevated, soaring 800 percent in July above those in pre-pandemic 2019. On top of the high rates, carriers are charging thousands of dollars extra per container to guarantee space on vessels leaving Asia, with shippers reporting the cutting of agreed weekly allocations in a highest-bidder-wins-the-space environment.
This combination of record-high rates and record low service has created a toxic relationship between shippers and carriers and is leading to unprecedented levels of animosity. With the peak Asia-Europe shipping season kicking off, industry stakeholders face the prospect of continued disruption right through year-end as Europe’s economies reopen and pent-up demand sustains import volume.
This two-part webcast series will take a close look at the drivers behind the healthy imports and analyse the economic consequences of the pandemic on containerised trade into and out of Europe. Importantly, it will look at how deteriorating shipper-carrier relationships will play out. How much trust has been lost over the past year, and how will that change the way cargo contracts are structured? Container terminals and the inland logistics chain have been maxed out for months, but how long can the system continue to run at full speed? Finally, what can Europe’s importers and exporters expect in the year ahead?