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Update June 2021 (2)Published on 24 June 2021
In previous updates, we have informed you of the effects in the global supply chain due to the COVID-19 pandemic. In this new update, we would like to give you an overview of what we have seen happening over the last few weeks, especially on the freight side. The dynamics are changing fast so we would like to keep you informed of what’s happening as this will have an impact throughout the remainder of the year.
Supply Chain Crisis Explained in Six Minutes
To get a good understanding of what is going on in the world of global supply chain, please watch this video that explains in six minutes what the causes and the effects are of the supply chain situation at the moment. The video is hosted by Ray da Silva – an expert in the mobility services industry – for IAM learning – the International Association of Movers. Additionally, in an article by ING Bank, the five reasons why global shipping costs will continue to rise are clearly explained, please click here to read this article.
As mentioned in previous updates, we are currently seeing all kinds of challenges in both APAC, EMEA as well as in the Americas. Currently, there is a global disbalance of available containers. This disbalance has led to significantly skyrocketing shipping rates and a diminished global capacity. At present, we are seeing the huge impact of getting containers from APAC to Europe and to and from the Americas. Prices have gone up by 300%+ in some instances and the end is not in sight. Expectations are that the market will stay very volatile till the end of the year and we foresee prices going up even further on some transport lanes. We would like to provide you with some examples of lanes to show how serious the situation is and the impacts on the availability and prices in our market:
- From Asia to the U.S.: Ocean carriers from Asia to the U.S. have increased by $3,000 per 40ft. This means that some carriers are now asking $17,000 per 40ft container for some U.S. east coast ports.
- From Asia to Northern Europe: Ocean carriers from Asia to Northern Europe are increasing their tariffs to $20,000 per 40ft container. This represents an incredible 1,000% increase compared to a year ago (source: theloadstar.com).
- Northern Europe to the U.S.: According to Freightos Baltic Index, rates of ocean carriers from Northern Europe to the U.S. have jumped by 17% which means an increase of $5,069 per 40ft container. (source: theloadstar.com).
- Northern Europe: The situation of port congestion at the container hubs of Northern Europe is impacting the alliance networks and further disrupting the already stretched supply chain. Maersk and MSC have announced that the vessel waiting times at Bremerhaven, Hamburg, are exceptional and even recommend not going to Bremerhaven to unload containers over the next four weeks (source: theloadstar.com)
In addition to high prices on containers, we have also seen non-availability of containers and vessels. On average, we need to wait four to five weeks to get a departing vessel to take a container. This effectively means that most shipments go via SIT (Storage In Transit) to await available containers and a departing vessel. We have also seen that some ports have been shut down in China as well as in the U.S.
Another capacity issue is the global shortage of trucks & professional labor. Many global movers including partners within our network have already indicated that they are unable to facilitate any more moves until the end of the summer. These notifications have come from APAC, North America as well as Europe. In all markets, domestic moves are booming and there is a shortage of labor, trucks and materials. We are also seeing a peak in pricing as a result of the current market pressure. These issues will affect cost pricing as well as transit times and will likely cause further disruptions. People may not be able to move at the desired time as there is just no capacity. For instance, it is almost impossible in the present market to book a domestic move in the U.S. this summer. For international moves, there are currently massive price increases in ocean freight and other cost price impacts.
What Do We Do: Expectation Management by Customer Service
Our customer service staff will work closely with the families moving as well as our corporate contacts to proactively keep everyone updated. We are also actively looking at different transportation modes (e.g. rail from China to Europe) and proactively booking capacity in high volume markets on available capacity. Over the next few months, we will look to secure dates for packing or delivery as soon as orders are in and book the transportation promptly. Please bear in mind, however, that it may be difficult in the coming months to pre-confirm dates for transferees due to the ongoing and changing immigration or travel restrictions. We will count on flexibility from both sides to meet the preferred packing and delivery schedules, and we are committed to serve.
Global Network & Connection – To Keep You Informed
Although it is partly a crystal ball that we are trying to look into, we are actively involved in industry associations in all continents to ensure we are prepared to serve our clients in the current market conditions. Our supply chain team has increased the service capabilities for us as a Group and The Harmony Relocation Network is helping us a lot to create operating capabilities. Our account managers will keep you updated as we progress in these next few months.
We wish you a great start of the summer and will be sure to keep you informed!
Wiebe van Bockel – CCO Voerman Group