Uncertainty in International Shipping and Freight Forwarding
The impact of COVID-19 and other factors on international shipping.
The freight forwarding and shipping industry has had a tumultuous few years, with no signs of a let-up any time soon.
Whilst there is always something happening in the shipping industry, the global nature of COVID-19 introduced a new set of issues. Together with the more standard everyday issues such as poor weather and industrial disputes, these have combined at times to create the “perfect storm”.
For anyone wanting to transport goods internationally, whether import or export, this means delays and costs.
Factors causing delays in international shipping
There are numerous factors that can cause delays in the arrival of goods to their intended destinations. These can range from minor to extreme, and common to rare in the likelihood of occurrence.
Whenever there is uncertainty with overseas shipping, especially sea freight, the added costs inevitably fall back onto the customer.
Poor weather is always the enemy of international shipping, especially for ocean freight. With climate change, however, the variability and incidence of extreme weather events are growing.
Bad weather can cause delays to the vessel’s arrival at a given port or force it to redirect to another port. In the worst case, extreme weather can cause damage to containers and contents, or the ship itself.
Industrial disputes, port strikes, and closures
More common in developed nations, industrial disputes can restrict cargo movements at a given port. This can result in delays in offloading, or redirection of the vessel to another port to offload.
Redirection to an alternate offloading port means that goods need to be shipped overland by road transport. This adds both additional time and costs to a shipment.
Trade disputes and restrictions
Trade disputes can cause disruption and uncertainty between different countries which can flow on to changes in shipping schedules. Even if your goods are not under restriction, the reduction of overall shipments can impact the time it takes to get yours.
Wars and civil conflict
Wars and conflicts break out at various times and places all over the world. This can lead to complete border closures or restrictions of cargo entering or leaving a given country. At the least, these tend to cause delay.
Whilst COVID-19 was a global event, there have at times been more localised epidemics. These can cause a high level of restriction and delay in shipping to the involved countries.
Extended quarantines can be required for certain goods, or shipments arriving from those countries. This complicates not only the actual transportation of goods but their handling at either end of the journey.
Additionally, under these circumstances, preference is often given to the personal safety of the crew, handlers, and port staff.
Access to shipping containers
There has been considerable upheaval in the flow of sea cargo around the world. Because of this, some regions can end up with an excess of shipping containers and others with not enough.
If there is a lack of containers in the country you wish to ship from it can take longer to source shipping containers. Additionally, some shippers are willing to pay more for containers in order to get their goods moving. This means shippers are faced with the choice of added cost per shipment or further delay.
A notable recent event, the blocking of the Suez Canal, caused massive delays in shipping worldwide. Ships and shipping companies were faced with the choice of an unknown wait for the canal to be re-opened or a longer and more dangerous trip around the Horn of Africa. Either way, this caused delays and additional costs.
Accidents, unfortunately, cannot usually be predicted (though accidents due to safety issues could potentially be). In these circumstances, it is important to have your freight forwarder keep up to date with the situation, or look at other alternatives.
Further effects of international shipping uncertainty
Delays with international sea cargo shipping can have a variety of secondary effects, most of which further impact time and cost. These can include;
- Backlog of goods and containers waiting to enter the origin port.
- Vessels are more full than usual. This can result in longer unloading times, or more ports to visit.
- A possible end to ship-on-demand or drop-shipping for which turnaround times are growing too long. This may mean a return to more goods warehousing locally in order to balance out uncertainties in shipping times.
- The increasing price of some goods.
- Greater difficulty in sourcing certain raw materials for manufacturing.
The flow on from extended shipping times may touch upon many areas of business, which in turn will affect consumer access to goods.
The important thing is that trade will not stop; we’ll just need to discover new ways of working.
How you can save money or disruption in uncertain times
There will always be the potential for late shipments or additional costs with international freight. There are, however, a few things that may help reduce costs and disruption to your business.
- Use a freight forwarding company that knows the shipping industry well, like SPLS.
- Have your freight forwarders negotiate deals, or look at alternative shipping lines.
- Consider locking in shipments further in advance.
- Don’t rely on ship-on-demand freight; it is no longer reliable. Consider shipping larger volumes but warehousing locally.
- Pair with other shippers, but only ones you trust totally.
- Integrate rises in shipping costs with your pricing models. Don’t worry too much about the competition with this. Almost everyone who import/exports is in the same boat (no pun intended), so they also need to either absorb the cost or pass it along.
- Look at local manufacturing alternatives, even if it is just to continue supply whilst awaiting further shipments.
To discuss your import/export shipping options, come and speak with us.