With political tension escalating with China and the advent of COVID-19 the market for many Australian exporters has been affected. There are minimal flights, and shipping operations are seeing congested ports, limited service, record high freight rates, and an increase in detention charges. The intra-Asia tradeline is the largest worldwide and comprises around 100 port pairs. There is a shortage in containers being returned to Asia
A major shipping line called this the “Black Swan” container shortage.
Security inspections and assessment are at record levels.
Increased Shipping Costs
Traditionally costs for this route have been kept in check but there are now large carrier surcharges and freight rate increases. The carrier Hapag-Lloyd noted the strongest increase in 40ft demands following on from the strongest decreases in demand to date within a six month period. Cargo from Asia is being prioritised Eastbound but also on exports to Australia, Latin American and Africa.
Almost every vessel out of China is full and so other countries worldwide, including Australia, are badly affected by the shortage of containers and space to meet the shipper’s demand.
There has been a surplus of import over export containers coming into Port Botany in Sydney over the past 15 months. This is not uncommon, and when shipping ports are operating normally thousands of empty containers are stored in unladen vessels. This evacuates the empty containers, allows local congestion to be cleared, and the equipment can be used again soon afterwards in Asia.
Pricing of Containers
The costs of shipping goods has increased by up to 300% with the Corona Virus pandemic and Brexit. Shipping firms have increased the rate of freighting goods.
Shipping containers were around $1,500 to $1,800 at the start of 2020 and as of November, the price can be anywhere between $6,000 to $8,000.
Retailers are Building Up Stocks
It appears that retailers are building up their inventories in case of the need to brace for a resurgence in COVID-19 cases. This surge in shipments can mean days of unloading at the shipping docks, and a delay in returns of containers due to time and staff constraints.
Biosecurity Processing Delays
The Australian Department of Agriculture, Water and the Environment struggles to manage the increased volume in imports which have resulted in unacceptable delays in processing of entries through the Cargo Online Lodgment System (COLS). This affects container release times. Inspection times when containers are released and inspected are being delayed.
The extent of the current container balance is estimated to be that approximately 75,000 TEU are sitting in container yards around Sydney. This current load would take around five months to clear if a sweeper vessel was employed on a weekly basis. This does take into consideration containers that continue to come in with additional trade.
There is diminished capacity in the Sydney Empty Container Park market which means that shipping companies have been unable to store empty shipping containers. Transport operators are forced to redirect many of the containers. Shipping lines have always charged late fees for returns of containers and this continues to occur.
Freight & Trade Alliance (FTA) are addressing long term reform in the management of empty container returns. While this is a step forward, The ECWG however, has no influence over current operational matters.
There is not likely to be an immediate relief in container shortages until sweeper vessels are scheduled to clear the stored containers in mass volumes.
The Freight and Trade Alliance (FTA) understand that the container problem in Sydney has improved. DP World have advised that they no longer have delays with scheduled shipment arrivals. Some vessel calls can sustain a delay of between 1-2 days. The Patrick terminals strike situation has improved also, with the majority of their vessels now including Sydney again.
ACCC Australian Competition and Consumer Commission are monitoring this situation.
There are processing delays in the shipping industry worldwide.
For information and quotations on affordable and efficient shipping locally and worldwide, contact us at C2C Logistics. Our experienced team can help you with the best option for your business.