Global trade industry triggers on the rise

by Denys Hobson. Early this month the global trade industry was hit by yet another threat that could have destabilised one of the world’s busiest shipping zones, with the Chinese military exercises around Taiwan. This followed US House Speaker Nancy Pelosi’s visit to Taiwan. In addition to this, the recent heat wave that hit China forced factories to shut down to ration electricity use – allowing people to have enough supply to power air conditioning. As a consequence, the knock-on effects are starting to be felt.

In fact, retailers and importers will need to keep a very close eye on these developing triggers. The political tensions between China and Taiwan; and the impact of electricity constraints to Chinese factories have the potential to be very disruptive with far reaching global implications.

Hope on the horizon

Despite these tensions, from a broader industry perspective, we are slowly starting to see some gradual improvement in the market which gives us renewed hope that we are heading closer to some form of stability. Bottlenecks and congestion still remain a headache, but there are positive signs that the worst supply chain challenges may be behind us: global schedule reliability is slowly improving; fuel prices have started to decline; less capacity is being tied up in port congestion; investments are being made in logistics infrastructure; and rate levels across the major trades continue to decline.

Capacity and planning ahead

Demand for space on the Far East to South Africa route has not been as strong as anticipated at this time of the year; but we can expect a surge in demand as we approach the pre-Chinese Golden Week shipping window, coming up October 1. Some carriers will implement blank sailings in the coming weeks, which will negatively impact capacity availability.

Therefore, as an importer, it is crucial to take note of the following timings if you wish to book your shipment prior to Golden Week, especially for those that are already looking at end of year stock:

• For ocean shipments: Book 3-4 weeks prior to Golden Week.
• For air shipments: Book 1-2 weeks prior to Golden Week.

From an air freight perspective, volumes across the trades remain strong, but in general there is sufficient capacity to cater for the demand. We are, however, seeing capacity pressures on the USA trade. Trucking capacity remains a challenge in the USA and parts of Europe. Larger shipments may need to be split over more than one flight, especially where capacity or carrier options into South Africa is limited.

Having an import partner that not only has sight of industry movements, but also has a finger on the pulse, can help better mitigate these risks and while we are on the path to recovery, we cannot rest on our laurels – if the last two years have  taught us anything, it is to always expect change – good or bad – as things develop quickly.

Main image credit: Unsplash.com.

Denys Hobson is Head of Logistics, Investec for Business

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