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Supply chains brace for more disruption as storm season intensifies

Sep 17, 2024 | , , , , , , , , , , , , , , , , , , , , ,

From wildfires and floods to scorching heatwaves, the consequences of climate change are becoming more pronounced, and as we enter the peak shipping season, businesses are scrambling to prepare for what is predicted to be one of the most disruptive storm seasons in recent memory.

So far in 2024 supply chain disruptions caused by extreme weather are estimated to have cost companies billions of pounds, and the storm season is far from over. Hurricanes, wildfires, and floods have already stretched global supply lines thin, and the arrival of storms like Typhoon Bebinca, which threatened Shanghai this week, adds a fresh layer of concern.

Increased visibility allows managers to pinpoint disruptions and adjust supply chains accordingly, and the key to weathering these events lies in preparation. Shippers are diversifying their carrier bases and building inventory buffers to keep goods moving in the face of challenges. Strategic planning, such as maintaining safety stock for high-demand items, has become essential in managing supply chain risks.

The heightened storm season comes as companies are already reeling from the effects of wildfires in California and Australia, as well as floods that have caused widespread damage to transportation networks in Asia.

While technology and data-driven insights have made supply chains more resilient, this year’s relentless barrage of natural disasters is proving particularly difficult to navigate. While technology can help predict and respond to the impact of storms, it is only effective when paired with clear communication and regular updates on shipments.

The threat posed by Typhoon Bebinca is yet another reminder of the supply chain vulnerabilities that remain, with Shanghai closing ports, cancelling, and halting transportation links to ensure safety. With more storms likely in the coming months, companies must remain agile and vigilant, ready to adapt to further disruptions.

The need for resilience and adaptability is more pressing than ever, as companies navigate the challenges ahead. This season may prove to be one of the toughest in recent memory, but for those prepared, there are still opportunities to maintain operational continuity in the face of adversity.

Extreme weather events consistently highlight the vulnerability of supply chains and the importance of robust contingency plans and marine insurance to protect against risk.

We have been maintaining supply chain resilience in the face of unforeseen challenges for decades. To learn how we can develop and support your supply chain resilience EMAIL our Chief Commercial Officer, Andy Smith.

ULD on tarmac

Air freight peak season surge amid tightening capacity

Sep 17, 2024 | , , , , ,

As the air cargo market enters the final quarter of 2024, capacity is already under pressure, with spot rates from Asia climbing and setting the stage for a challenging few months.

In early September, global spot rates saw a significant rise, driven primarily by tightening capacity from key regions, with average spot rates from Asia-Pacific to Europe climbing week-on-week, and rates from Thailand to Europe increasing significantly, pushing prices to nearly double what they were the previous year.

On the transpacific front, rates from Asia to North America crept up gradually week-on-week, representing a 64% increase year-on-year. These sharp increases reflect the pressure that demand is placing on available space, particularly as eCommerce volumes continue to surge.

With capacity shortages expected to escalate, particularly for shipments from India and China to the US and Europe, the cost implications will be significant as demand outstrips supply, with surges in volumes already causing congestion at air hubs across Asia, including Korea, Taiwan, and Japan. This surge is affecting not only China but also other major production centres in Asia, with increasing reliance on charter services, which further exacerbates capacity issues.

Carriers are responding to these challenges by adding more connections to their networks, expanding winter schedules, introducing additional transpacific services and increasing flights to China and India.

Looking ahead, the air cargo market is expected to remain under strain into 2025. While spot rates are forecasted to continue rising into Q4, the market outlook remains unpredictable, with factors such as economic conditions and capacity constraints shaping how the peak season will unfold.

Despite the challenges, carriers remain cautiously optimistic and while they are working to expand capacity, the pressure on available space is likely to persist. Managing the balance between capacity and demand will be key to navigating the peak season ahead.

Our block space agreements (BSA) and capacity purchase agreements (CPA)  protect space and capacity on the busiest routes.

Regardless of your cargo type, size and requirements, we have extremely competitive rate and service combinations, to meet every deadline and budget.

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice on our airfreight, charter and sea/air solutions. 

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Air cargo under pressure as peak season looms

Sep 4, 2024 | , , , , , , , , ,

With capacity already strained and further challenges expected from potential labour strikes and reduced belly capacity in the final quarter, shippers are under increasing pressure to secure cargo space ahead of the peak season.

Strong demand
According to IATA’s latest figures global air cargo demand surged by 14% year-on-year in July, marking the eighth consecutive month of double-digit growth. This increase is largely driven by ongoing eCommerce expansion and disruptions such as the Red Sea crisis.

Despite the high demand, capacity only grew by 8%, pushing load factors up significantly and intensifying the pressure on available space.

The Asia Pacific region has seen particularly strong growth, with demand up 18% year-on-year in August, while North American carriers recorded an 9% increase, even amid disruptions like Hurricane Beryl. The Asia-North America trade lane experienced an 11% rise, and transatlantic routes also saw rates climb  in August compared to July, with expectations of further increases as the year progresses.

Preparing for peak season
With the peak shipping season starting in September, air cargo demand is expected to remain robust, particularly in high-demand regions like Asia Pacific. However, capacity constraints are already evident, with flights on many lanes fully booked. The market faces potential additional pressure from reduced belly capacity in Q4 and the possibility of strikes at US East Coast ports, which could exacerbate the existing challenges.

Shifting capacity
The ongoing Red Sea crisis has disrupted traditional shipping routes, leading to a shift towards air freight as shippers seek more reliable alternatives. This shift, combined with the seasonal reduction of capacity on other lanes, has left the market vulnerable to further disruptions, potentially causing backlogs and price spikes.

As carriers redirect freighter capacity to the high-demand Asia market and reduce capacity on other routes, the market’s fragility increases. The anticipation of a strong peak season, coupled with the current tight capacity, means that shippers must act quickly to secure space and avoid significant disruptions.

Outlook and recommendations
Given the current market conditions, shippers are strongly advised to plan ahead and secure air freight space as soon as possible. The combination of high demand, potential capacity shortages, and the risk of labour disruptions could lead to an overheated market towards the end of the year, with rates likely to continue rising.

Early booking and careful planning are essential to navigate the challenging air freight landscape in the coming months, so please share your forecasts with us as early as possible so that we can ensure there are no disruptions to your supply chain.

For urgent, valuable and sensitive shipments we have a range of airfreight, charter and sea/air solutions, with block space agreements (BSA) and capacity purchase agreements (CPA) to protect space and capacity on the busiest routes.

Regardless of your cargo type, size and requirements, we have extremely competitive rate and service combinations, to meet every deadline and budget.

EMAIL Elliot Carlile, Operations Director, for insights, prices and advice. 

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Sustainability focus

Sep 4, 2024 | , , , ,

When managed effectively, supply chains not only reduce costs and boost profitability but also play a crucial role in sustainability. The impact of climate change has underscored the need to improve supply chains to protect our ecosystem and conserve natural resources for future generations.

As the global push for decarbonisation intensifies, both the maritime and aviation sectors are under pressure to adopt sustainable practices. Metro has been at the forefront of these efforts, investing in new fuel technologies that will support the green transition.

Ocean
In July, the International Maritime Organisation (IMO) set a new climate strategy aiming for net-zero greenhouse gas emissions by around 2050. Interim targets include reducing emissions by 20%-30% by 2030 and 70%-80% by 2040, compared to 2008 levels. To achieve the 2030 target with green fuels alone, over one-third of international shipping would need to transition to low or zero-emission fuels within 5-6 years, which is highly challenging.

However, the IMO could meet its 2030 goal with only 10% of ships using green fuels if it also significantly improves energy efficiency. This would require increasing the energy efficiency target from 22% to 38% by 2030, which could involve widespread adoption of wind technologies and reduced operating speeds.

Shipping CEOs have united to push for faster decarbonisation in global maritime transport, advocating for an end date for fossil fuel-only ships and urging the International Maritime Organization (IMO) to establish regulations that will speed up the shift to green fuels.

Their joint declaration outlines four key regulations:
1. Set an end date for new fossil fuel-only ships and establish a timeline for greenhouse gas (GHG) intensity standards to encourage investment in green technologies
2. Implement GHG pricing to make green fuels competitive with traditional fuels during the transition
3. Allow vessel pooling for GHG compliance, where a group’s overall performance counts, accelerating decarbonisation
4. Adopt a Well-to-Wake (lifecycle) GHG approach to guide investments and avoid stranded assets

LNG is seen as the most practical current solution for decarbonisation, with the ability to transition to net-zero carbon fuels like bio-LNG and e-LNG. LNG-fuelled ships are growing in numbers, with over 1,000 expected by 2027, compared to just 36 a decade ago.

Air
The aviation industry is relying on SAF to achieve 65% of its net-zero emissions target by 2050, but current production is a fraction of the 500 million tonnes needed annually by 2050 and the challenge now lies in financing, not engineering.

Investors are being urged to fund large-scale SAF ventures, as this could lead to a new industry that transforms aviation, creates jobs, and offers substantial financial returns.

Redirecting some of the $7 trillion in fossil fuel government subsidies could significantly accelerate the shift to sustainable fuels, with countries like Japan, Singapore, and the US already incentivising SAF production.

Metro has been investing in Sustainable Aviation Fuel for years, and was the first forwarder to join the Air France KLM Martinair Cargo (AFKLMP Cargo) SAF programme.

Grant Liddell, Metro’s managing director said. “We are proud to take this collaborative approach directly with the airlines. Air France and KLM have been pioneering SAF since 2009 and Metro’s participation will help fund the research and development, which can increase production and make SAF available in greater quantities and in more locations.”

Metro has been certified carbon neutral for three years and is committed to extending this zero-emission strategy as far down customers’ supply chains as possible. 

The same toolkit we use to measure, reporting and offset our emissions, to achieve carbon neutrality, is available ‘free of charge’ to our customers.

Part of our MVT supply chain platform, the ECO module monitors the energy emissions, emission costs and CO2 equivalent emissions, of customers’ consignments, by every mode. 

Reports and key eco statistics related to their movements, allow them to see which areas will benefit most from emissions offsetting and where efforts can have the most impact.

To request a demo or discuss your requirements, please EMAIL Ian Powell.

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