Challenging scenarios at SA & global ports drive preplanning
by Denys Hobson. Retailers and importers are being encouraged to book well in advance of their required shipment dates, and to factor in longer lead times.
by Denys Hobson. Port congestion around the globe continues to tie up capacity and impede lead time predictability, prompting local stakeholders across the retail sector to do everything in their power to proactively navigate and address the logistical challenges and bottlenecks. Locally, berthing delays are not as severe when compared to other major ports in Europe and the USA. Cape Town port is still experiencing a high number of vessels bypassing which is forcing importers to adjust their lead times or consider alternative ports for discharging, in an effort to ensure orders are not received late.
Abroad, capacity availability from Europe is severely constrained. Imports from Europe have more recently been plunged into new difficulties in the form of labour shortages and strike action at several European ports. Shipping lines continue to battle balancing their vessel and port rotations which has caused blank sailings; excessive backlogs for new shipment bookings; as well as trans-shipment delays of up to six weeks, particularly affecting carriers of automotive and chemical products. Most carriers are fully booked weeks in advance with exceptionally limited spot capacity available.
On a brighter note, capacity availability from China and South-East Asia is now relatively stable at this stage. Demand is expected to increase through August and September as the Chinese Golden Week approaches at the beginning of October. We should expect carriers to implement blank sailings over the coming weeks should their vessel utilisation decrease to levels that they are not comfortable with. This will create demand for future sailings following the blank sailings to increase.
US East Coast trade has also been affected by port congestion due to a shift in outbound and inbound cargo movements from the West Coast. Inland trucking and rail bottlenecks have delayed cargo movements to the ports, resulting in bookings not being utilised and therefore creating a roll-over pool for future sailings. Long berthing windows are also impacting the carriers’ ability to maintain any schedule reliability. The booking lead time has extended, with some carriers being fully booked for four weeks in advance.
This challenging scenario – capacity constraints and schedule reliability issues globally; as well as disruptions due to geopolitical and civil instability; and elevated ocean freight rates – will continue for the remainder of 2022, with the next few months expected to be volatile. A further threat is that half the global shipping fleet does not comply with the International Maritime Organization’s carbon emission objectives, which take effect in January 2023. This could result in many vessels dry-docking to undergo technical changes, and a reduction in speed for those that cannot comply.
Consequently, as many start planning for the second half of the year, retailers and importers are being encouraged to book well in advance of their required shipment dates, and to factor in longer lead times. Planning ahead now, while certainly the theme for the last two years, is critical now more than ever for operational resilience.
Main image credit: Unsplash.com
Denys Hobson is Head of Logistics, Investec for Business
– Receive the Retailing Africa newsletter every week • Subscribe here.