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Supply Chain Strain

Have you noticed that it is harder to get bookings from freight forwarders and shipping lines lately? Have you also noticed that ocean freight rates are continuing to rise?

What are the reasons behind this and who is to blame?

The answer is everything, everyone and no one. You must consider how we got to this point – A pandemic erupted, and countries went into varying degrees of lockdown. Shipper’s cancelled large amounts of orders and the demand plummeted. Ocean carriers then responded by cancelling sailings as the demand was not there.

Shortly after all the cancellations the demand increased significantly and quickly. However, the container equipment was not available. Essentially shipping lines were not able to retrieve the empty containers and use them for exports. Shipping lines are continuing to try and solve container shortage by reducing the free-time and detention-at-destination. In theory this would provide a quicker turnaround time and more equipment should be available.

This container shortage is a major contributor to the increased ocean freight rates.  The result has turned shipping from Asia into the Wild West where companies are paying a “premium” to the shipping lines to get space and a booking. The pandemic and uneven global economic recovery has led to this problem popping up in Asia and other parts of the world.

By the end of March, 22 container ships were anchored at LA-Long Beach. 29 were anchored a week earlier. Experts predict this situation to continue at least until late spring if not longer. There is no quick short-term solution or fix for this.

FMi Logistics’ advice to shippers is to give your logistics partner as much lead-time as possible to ensure our ability to secure bookings and equipment. Working with our long-term Asian and European partners we have been able to secure equipment and keep our customers supply chains moving.  Let FMi Logistics take the stress out of international shipping. Contact us today.

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