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Update October 2021Published on 21 October 2021
We would like to give you an overview of what we have seen happening over the last few weeks, especially on the freight side. We expect to be living in a “new normal” for at least the next six to seven months. Initially, we thought the impact to our industry would only be a few months, but as it looks now, we will have to deal with the new reality for several more months to come. We still see a massive impact on transit times and the cost of shipping. Therefore, we want to keep you informed on what is going on in the international relocation industry and the impacts due to the COVID-19 pandemic, as this will have an influence on almost all relocations we perform globally.
Transit delays have not improved since our last update. The situation has even worsened in some parts of the world due to fully congested ports, especially in the West Coast of the USA as well as in Europe. To give you an example of the situation in the USA: there is a delay of shipments from New York to the West Coast of six to eight weeks. We also see a lack of capacity of containers in various parts of the world. As a result, shipments to New Zealand will only depart as of the beginning of 2022. This has been the situation for the last six to seven months already and it is expected to continue for at least six more months. There are even more challenges on the horizon. As mentioned in previous updates, we are seeing all kinds of challenges in APAC, EMEA as well as in the Americas. The following links share articles detailing that this situation is still far from over.
- qCaptain: Containership Traffic Jam in Southeast Asia Worst Since April
- CNN Business: The global supply chain nightmare is about to get worse
- The Maritime Executive: Congestion, Delays and Supply Chain Challenges Will Continue into 2022
Sea freight pricing is at an all-time high, with on average 10x higher spot rates than in an average year. Especially all exports from APAC and freight to and from North America are severely affected. The positive news is that we have seen the rates from APAC cooling down a little over the last two weeks and hopefully we are moving away from the highest points there.
There is a lack of containers in several markets and this is causing a continuous impact. In certain markets, there are too many containers and in others too few. The biggest problem at present is that in addition to the high prices on containers, the industry is contending with 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, and for some locations the wait increases by weeks and even months. This effectively means that most shipments go via SIT (Storage in Transit) to await available containers and a departing vessel. In Europe, we are also witnessing a lack of intra-Europe capacity due to shortages of drivers. This is not only the case in the United Kingdom, but also in continental Europe. This has impacted the total capacity in the supply chain, and we see these issues reported in the daily news.
From a labor perspective, there are multiple challenges in the world. With the global race for talent, we see labor demand everywhere. In general, this is good news for the relocation industry as we foresee growing international mobility and immigration to support the demand for labor in all markets. Due to pressure on the market, costs go up as salaries increase. We see this trend in all major global markets.
Materials are another area to look at. The costs for packing materials have been going up by over 60% in recent months. Carton is getting very expensive, as well as wood. On average, materials have a 20% impact on the costs for origin services. Also fuel and gas prices are high as well. The effect is that the overall costs of services are going up or staying at a high level.
What Do We Do?
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 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.
What Can You Do?
For new initiations, please reach out to us as soon as possible so we can properly understand the needs of the transferee and the transit time requirements. We can also examine the COVID impact, transit times and/or costs. This will allow us to set realistic expectations at the start of the relocation journey.
Global Network & Connection – To Keep You Informed
We are already looking at the end of the year and see more activity as our clients go back to offices. The global relocation industry is changing rapidly and we expect a dynamic marketplace for the next few months. We will keep you updated regularly and please reach out to us for any questions. We are here to serve you!
Wiebe van Bockel – CCO Voerman Group