The Forecast Isn’t Promising At Its Busiest Season Of The Year

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  • The shipping industry is worth trillions of dollars, carrying 90% of all globally traded goods, according to OECD data.
  • Enda Breslin is general manager for EMEA at global fulfilment provider ShipBob.
  • The cost of shipping a shoebox-sized parcel from the UK to America has risen by nearly a third in just 12 months, the study found, from £15.73 to £20.56.

The sector is planning a course through supply chain difficulties, including increased costs and climate disruption, before the peak shipping season begins.

Forecast doesn’t look good

The shipping industry is worth trillions of dollars, carrying 90% of all globally traded goods, according to OECD data.

But as it nears its busiest time of the year, the forecast doesn’t look good.

Having weathered the storms of Covid-19 and the Ever Given blockage in the Suez Canal, shipping has now been impacted by an unprecedented heatwave in China, which has caused disruption to vital logistical routes.

At the UK port of Felixstowe – which handles almost half of container freight entering the UK – ships have been unable to dock due to worker strikes.

Enda Breslin is general manager for EMEA at global fulfilment provider ShipBob.

Runaway costs 

Danilo Promotions is already badly impacted.

Founder Laurence Prince believes this could cost the business hundreds of thousands of pounds.

“It’s not only our Christmas products; you have food and grain and everything else,” he says, acknowledging the impact on “vital necessities coming into the country”.

That inability to find other options is why many fear shipping’s current pressures will continue for the long term.

Heath Zarin is the founder of EV Cargo, which carries for Sainsbury’s and Asda.

Boosting resilience within shipping is seen as tough due to the lack of alternatives and because its operations rely on many independent factors going right.

However, this is not affordable for most.

This is due to a combination of currency fluctuations, international fuel surcharges and inflation.

Other manufacturers are choosing to ‘reshore’ where they can.

ShipBob found nearly four in 10 (38%) of businesses it spoke to planned to manufacture domestically in the next 12 months.

Turning to technology

Technology can have a positive role to play in building greater shipping resilience.

Bart Coppelmans, head of global supply chain & logistics industry solutions at HERE Technologies, points to several options: for example, a mix of 5G networks and sensors relaying information faster and RFID tags providing location-based data for remote tracking and monitoring.

“With an industry process as complex and time-reliant as the supply chain, it is important to have clarity on each component to address potential problems as they come,” he says. 

“Real-time location data can improve the efficiency, aiding visibility of arrival times and enabling them to recalculate loading and unloading points on time.”

At Solent Gateway port in Southampton, head of business development Chris Anderson says pressure has built as the volume of goods increases in the run-up to Christmas.

Part of its resilience plans includes an off-dock storage solution to unlock additional capacity.

“As we saw during the last supply chain crisis, one stone dropping into the ocean can have huge ripple effects.”

However, for Anderson, the HGV driver shortage is still impacting shipping resilience.

“The whole system is reliant on each of its constituent parts to keep an uninterrupted flow of goods moving, particularly during peak seasons,” Anderson adds.

The biggest challenge here is getting containers to off-dock sites when there aren’t enough drivers. If a port is congested with cargo, which can happen “surprisingly quickly”, then the ship cannot wait. “It will have to sail for the next port with the cargo destined for the UK still on board – this is how shortages on the shelves happen,” Anderson says.

Government support 

The government could support industry resilience by expediting permit approvals for the storage of bonded goods, Anderson believes, fast-tracking planning for new storage sites and providing targeted support to encourage more people to train as HGV drivers.

Larger retailers are expected to feel the greatest impact.

Industry-wide, there is a small piece of good news.

The latest data from Sea-Intelligence shows that schedule reliability has increased to 40.5% in July 2022, up from 40% in June.

But in the meantime, Danilo must play a waiting game.

Prince accepts that Covid-19 and Brexit have had an impact but says the company now faces continual changes and updates to its logistical planning and financial forecasting.

“Everybody blames everybody else, but nobody actually takes the blame.”

 

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Source: Raconteur

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