The current UK market is undoubtedly one of the most challenging we have ever seen. It is expected that the coming months will continue to be difficult, with shippers navigating a wide range of issues at the present time.
Some of the headline issues, which most are now acutely aware of, are identified below.
Rising rates, equipment shortages and limited capacity
Increased consumer demand and the shortage of shipping containers, brought on by the pandemic, have led to soaring rates and ongoing delays. Exacerbating matters further have been the blockage of the Suez Canal and more recently the outbreak of COVID-19 in South China. These situations have both further impacted equipment availability, space and rates.
With space limited across the board, carriers are accepting higher priced cargo, resulting in a backlog of cargo waiting to be shipped. Even paying premium prices, it remains difficult to secure space.
Every container is fought over, increasing demand continues to push rates upwards, schedule reliability is poor and port congestion in Asia, the US, the UK and Europe remains an issue.
There are also a number of other emerging and current challenges that must be considered:
The driver shortage is worsening, and it is likely to continue to do so in the near term. With an estimated deficit of 60,000-100,000 commercial drivers, the present issues have created a “perfect storm” that will get worse before it gets better.
As COVID-19 restrictions are lifted, UK drivers will inevitably start to take holidays and others will potentially make the decision to return to their origin countries. Adding to this pressure is last year’s suspension of driver training and tests, and an overall feeling amongst drivers that they no longer want to work 60+ hours per week. Local delivery companies such as Amazon and DPD are offering similar remuneration to HGV rates and drivers are able to return home each night, which is drawing talent away from the rest of the transport community.
The ongoing salary battle between suppliers, carriers and agencies – who are all trying to retain drivers – is resulting in rate increases across the board. Some of the larger supermarket chains are actively recruiting drivers, offering big pay incentives, shorter hours and bonuses. While this is filling their vacancies, it is exacerbating the problem elsewhere.
Any steps implemented by the UK government, such as the temporary lifting of visa restrictions and the extension of drivers’ working hours, are expected to bring very little benefit.
Despite suppliers doing what they can to retain drivers, in some instances this has not been enough. As an example, one supplier had 173 vehicles at the start of April, which has now been reduced to just 130. On a daily basis, there are more than 30 trucks standing in the yard due to no drivers being available.
Some suppliers are starting to introduce daily capacity allowances due to the shortage, in order to assist every customer equally. This will add further pressures when large vessels arrive, particularly if every party tries to book all deliveries as close to vessel arrival as possible.
Furthermore, fuel prices continue to rise rapidly, which is likely increase total haulage / rail costs.
This problem is not unique to the UK – the EU and USA are also having similar issues, so this is becoming something of a global problem.
Port / rail terminals
Rail terminals are continuing as normal with no drop-off in performance. However, issues with VBS and turnaround times are ongoing. The driver shortage is likely to drive these issues to deteriorate further should there be an increase in vehicles going into port.
The Goods Vehicle Movement Service (GVMS) system is being upgraded. From 1st January 2022, it will act like an inventory system, linking the Movement Reference Number (MRN) and GVMS to allow clearances.
This will mean customs declarations are no longer issued as arrived at non-inventory linked ports and will virtually eradicate the present issues of import cargo being delivered without the proper clearance process.
Changes to the DEFRA operation and requirements will come into effect on 1st October 2021. We are currently awaiting further details from BIFA and will provide an update once further information is available.
There is still no schedule in place for the end of CHIEF. Although it was supposed to be agreed upon in June, ongoing issues with CDS have delayed it yet again.
CDS is currently being used for supplementary declarations but it is not fully functional for primary declarations.
BIFA is working on an e-learning module, which will be a practical course on using CDS. This is expected to be available in September this year.
Dangerous goods by ocean
A new requirement this year is that all dangerous goods (DG) exports by ocean must include a 24/7 emergency telephone number.
Providing the security guards’ number for the office reception is not sufficient as the line must be manned 24/7 by someone who is able to provide information about the hazardous product. In many cases, this will mean exporters need to contract a bureau organisation to support their exports.
In China, some port officials are placing additional requirements on DG shippers, in particular those involved with lithium batteries using limited quantity provisions. For lithium batteries that fulfil the requirements of this provision, the container should not be placarded with lithium labels. Officials in some Chinese ports are refusing lithium without this, which then causes problems at destination when the labels have to be removed.
Several lines have approached the Chinese government and have been informed that there has been no change in official policy, which is to apply the IMO UN requirements. This therefore seems to be a local interpretation, however it is proving difficult to overcome.
Shipping to Australia
Implemented on 12th July, shipping containers from 40 countries across Europe, the Middle East and Africa are now required to be fumigated in order to prevent the migration of Khapra beetles into Australia.
Please see our most recent update on this for further information.
There are a number of ways to help minimise disruption, whether that be through prioritizing inventory, improved forecasting that considers long-term planning, considering options for consolidation at origin or conducting a thorough supplier network review. In what is a very tough market to navigate, our global experts are monitoring the situation and continue to search for the right solutions for our customers.
We will keep you updated on further developments and changes. For a discussion about your current and future planning, get in touch with us today email@example.com