Get the latest from our Oceania team on how trade routes into the region are being impacted by unprecedented disruption.
“May you live in interesting times” – a saying we’ve perhaps all heard at one time or another. But are those “interesting times” a blessing or a curse? I’m sure we can all argue that’s debateable. As supply chain professionals, we’re certainly experiencing interesting times right now. Each week we face new challenges that seem to be ongoing for the foreseeable future.
The challenges we face
Covid is still impacting supply chains out of China, with Tianjin now being the latest port to suffer issues. The trucking strike in South Korea is having an impact on raw materials, which will throw more kinks into the supply chain.
Meanwhile, space and equipment availability remain tight – especially for key South East Asia exporting. We expect to see increases in Bunker Adjustment Factor (BAF) charges as carriers start announcing emergency fuel surcharges or reviewing bunker charging mechanisms more frequently. We already know BAF is increasing by circa US$118.00 per TEU for Q3 and more increases are likely.
The equipment shortage continues in China’s main ports, Shanghai and Ningbo. This is likely to be an issue for some time as volumes increase out of China, with most of the equipment still sitting in destination ports. We are also seeing an increase in blank sailings due to the congestion.
What’s more, there seems to be a high likelihood of a GRI / PSS >USD 400/TEU in July 2022.
There are ongoing issues with transhipment in Asia too, with significant delays being encountered. With this in mind, our suggestion is to book on direct services wherever possible.
As well as placing advanced bookings, forecasting is critical. Here at Ligentia, high level PO management from our origin teams means that you have visibility of what’s happening. We’re working with all our customers to limit the unexpected. You can only fix challenges when you know you have them, so the sooner these are identified, the quicker we can develop a solution.
We’re seeing some improvement in inbound shipping reliability from historically low levels. Whilst there are improvements, these levels of reliability are still placing significant stress on the supply chain.
| Trade | On time reliability | Transit time reliability | ||||
|---|---|---|---|---|---|---|
| Mar | Apr | May | Mar | Apr | May | |
| Asia-Oceania | 22.50% | 14.60% | 22.40% | 22.80% | 15.90% | 20.80% |
| Intra-Oceania | 26.80% | 34.00% | 34.50% | 26.80% | 33.80% | 34.30% |
In Australia, we’re seeing numerous landside issues on top of the international challenges.
Ongoing port congestion is a challenge at all ports. Current delays are:
Weather conditions on the east coast have also caused issues with delays, both at ports and in returning empties to container yards.
Delays in Auckland due to congestion are easing somewhat but are still problematic. Container detention has been a developing issue for some time, and there are now rumours of shipping lines being aggressive in levying these charges. There have been ongoing issues with container yards being full and drivers sent to alternative yards. This adds both costs and frustration in the supply chain.
Across Australia, empty container parks are either at capacity or over capacity. This is triggering extraordinary cost risks, which ultimately pass through to the cargo owners with nil reprieve from the shipping lines (in terms of D&D). Detention, extra waiting time, layover yard storage and LoLo fees are all additional risk and cost to cargo owners, as wharf cartage providers are caught in the unfortunate position of having to both incur and pass these extra costs on to cargo owners due to the inability of empty container parks to receive empties in time due to the present congested environment.
How Ligentia can help
There is certainly a level of fatigue in the industry at the moment. No shipment is routine. Delays are a reality. What we are doing to build resilience into the supply chain involves:
At Ligentia, we’re ready to help our customers thrive during “interesting times”. If you have a need for support, please reach out to Dean Neville (dean.neville@ligentia.global).
