Road Archives | Page 13 of 13

Liner haulage is effectively broken

Sep 29, 2021 | Road, Sea, Supply Chain

Multiple issues are negatively impacting container haulage operations from ports across the UK, with inevitable financial and service impacts, which are likely to impact every importer of full containers. In the worst cases, if no action is taken, importers may face very significant additional charges, with no guarantee of delivery.

Full load importers are facing unprecedented challenges, and while these are great, we believe they can be overcome and mitigated to some extent by taking the proactive actions we describe below.

The loss of HGV drivers to roles outside the freight sector has removed swathes of capacity from the container haulage sector, which is already struggling to deal with inefficient port operations and the lowest vessel schedule reliability in history.

Carrier (liner) haulage is usually a cost-effective option, as it does not not attract a load-on load-off (LoLo) charge. However, the current market situation, haulier cancellations, delays with deliveries and collections and the challenge of matching resource with unpredictable vessel schedules, means that 30% to 40% of haulage moves are failing and shipping lines have very few – if any – bookings until the middle of October or later in November.

Despite the lines extending their haulage booking time from one week to over a month, they are not waiving port storage and demurrage charges, which will be charged in full at each carrier’s tariff and means shippers will be liable to these charges at £75-£95 per day for a 40’ container, which can escalate to £150-£175 a day.

For the 30-40% of failed delivery bookings, some lines are providing additional free time, of between four and seven days, but OOCL and Cosco will offer no additional free time, while Maersk will offer free time up to the point of re-booking.

Merchant haulage may attract additional costs of £150-£300 per container, to ensure we can attract haulage at short notice and absorb the LoLo costs, but it does offer the opportunity to avoid storage and demurrage charges and it is a more flexible alternative, which is particularly critical given the increasing incidences of carrier and merchant transport bookings being cancelled, often without notice, for more lucrative jobs.

We are leveraging every haulier relationship and partnership, to help our shippers and would recommend flexibility on delivery windows, with bookings for afternoon collections and deliveries more likely to succeed.

Regular delivery forecasts mean that we can book delivery slots in advance of vessel arrivals, which increases the possibility of achieving container deliveries in line with your expectations.. However if vessels arrive off schedule, late or bypass the UK altogether, then this will create further impact and issues regardless of slots - containers have to be landed to be delivered.

With post-COVID demand and associated supply chain disruption continuing, we anticipate this issue will continue for the rest of the year and are consequently implementing alternative solutions to traditional container haulage:

- Unloading containers at ports/ railheads for delivery in standard commercial vehicle

- Dedicated delivery/collection slots with contract vehicles and regular drivers

- Swap and containers

Switching your transport requirements away from the carrier option to alternatives, with immediate effect, is the only way to mitigate rent and demurrage charges

We receive no benefit or reduction from carrier support on additional port charges that will be applied as a result of the failure of their arranged transport. Swift action and agreement on costs is required.

Please contact your account manager, operations handler or any of the Metro team to discus your situation, the solutions we have outlined and the cost implications, so we can agree immediate actions and timelines going forward.

Thanks for reading this advisory – it is not what we want to be reporting, but it is the best guidance we can offer in the circumstances.

We will continue to update you regularly, as the situation changes, and hopefully improves.

HGV crisis hidden for years

Sep 22, 2021 | Coronavirus, Road, Sea, Supply Chain

The HGV driver crisis, which has been gathering pace over the last two decades, has been largely hidden due, in no small part, to effective transport management by the freight forwarding community. But the situation has been exacerbated by Brexit and tax changes which encouraged 20 thousand European drivers to return to the continent and the loss of 30 thousand driving tests, during lockdowns, which has critically elevated the shortage of HGV drivers to 100 thousand.

The impact of the HGV driver shortage is being felt increasingly by the general public and in every business vertical and is particularly pronounced for the freight sector.

With driver shortages hitting local collections and deliveries, it is impacting air freight and there are significant capacity issues for pan-European transport. But it is the sea freight sector and in particular the movement of containers that has been hardest hit.

Hauliers have been increasing driver pay rates, offering retention and loyalty bonuses and improving working conditions in a bid to halt the outflow of experienced personnel, which is being reflected in the costs incurred and may reflect a longer term trend to make the industry more attractive to a new generation of drivers.

Changes to the HGV driver testing process, recently announced by the government, will speed up the process and could mean an extra 1,600 drivers joining the industry every week. But there are lots of caveats attached to that figure and its benefits will only become evident over the long-term.

The challenge remains, too much demand and insufficient capacity, and managing the potential impact of this equation on supply chain operations. In the short-term the situation is very likely to worsen, before it gets better and, even if young people and women can be attracted to the profession, it may take up to two years to reach equilibrium.

With over three decades of shipping line and forwarding transport experience, Metro’s transport team is led by Simon Balfe, one of the most knowledgable volume movers in the UK.

Despite the breadth of experience, haulage contacts and relationships across the Metro team, they are increasingly challenged in locating sufficient haulage resource, with ‘merchant’ supply often going to the highest bidder and line haulage becoming increasingly unreliable.

Prior to the pandemic Metro’s on-time delivery KPI hovered around the 99% mark. Today, despite the best efforts of Simon’s team, it has slipped to 80%, which is still far higher than the industry average of 50%.

A significant factor in this fall, is the failure of line haulage reliability. Historically (right or wrong) shipping line controlled collections and deliveries (line haulage) has been perceived to be the ‘gold standard’ in container transport and costed accordingly.

But the pandemic is tarnishing even this ‘gold standard’ as lines increasingly stop offering a ‘to-door’ service, or fail to honour confirmed bookings, which is having a profound impact on unlucky shippers, who are often left facing additional and unexpected charges.

We are increasingly called on to assist shippers who have had line haulage cancelled, or have received no prior notice of its withdrawal and have been offered new bookings, several weeks forward, leaving them to wait for their goods and the likelihood of rent and demurrage charges.

Even though the extended time is a direct result of the line’s own actions, they are not sympathetic to writing off these charges, as the shipper always has the option to arrange their own transport.

Although this option does incur lo/lo charges and can be more expensive than line haulage, merchant haulage can potentially offset the rent and demurrage of an extended wait on the quay or terminal.

We work with a number of selected long-term haulage partners across the UK to give us access to the widest pool of equipment and driver resource at the UK’s primary container ports, to offer cost-effective and efficient merchant haulage services.

To learn more or discuss your situation, please contact Elliot Carlile or Grant Liddell (or Simon Balfe, who leads our UK multimodal transport operations) to talk you through the options.

UK Road freight turbulence to continue impacting global trade and freight movements

Sep 9, 2021 | Coronavirus, Road, Supply Chain

The HGV driver shortage is hitting crisis level in the UK (and around the world) as demand for haulage services continues to increase and, while a potential strike within the industry has been averted, the threat of driver strike action continues at Tesco and Hanson, raising the possibility of further disruption this autumn and running up to the traditional Christmas and festive ‘rush’.

The prospect of strike action comes as severe shortages of workers and raw materials trigger widespread disruption across the British economy, in a crisis caused by the fallout from Covid, Brexit and years of underinvestment in HGV drivers. As well as European drivers returning to their home countries and not returning after lockdowns and Brexit earlier this year, removing an estimated 20,000 HGV1 operatives.

This effect is being felt in all areas of logistics, but in particular within the container transport sector, which can often be seen as ‘hard work that is underpaid’.

The growing global crisis

Fast-food giant McDonald’s has joined the growing list of companies forced to cut parts of their services due to shortages of stock caused by the lorry driver crisis, which adds to stock problems caused by a disruption in international supply chains.

Analysts say a global shortage of truck drivers has persisted since the middle of the 2000s. Still, the deteriorating global driver shortage, which has now tipped into a domestic crisis, has only become visible to the general public this year. It has been around for much longer and has been delicately managed within the supply chain industry.

The transport sector’s labour issues have developed over time as multinationals have driven down supply chain costs, and the global driving workforce has aged. The average truck driver in the UK is 55 years of age. It has not been a popular career path to follow.

The number of drivers in general freight in the US has dropped to 430,000, down from 465,000 at the start of 2020, and the situation is getting worse. This situation is not unique to the UK, and globally there is an issue with the first mile and final mile aspect of freight movements.

Chartered Institute of Logistics and Transport members in Australia and central Asia have reported heavy goods vehicle driver shortages of 20%.

Increasingly, global trade is becoming more complex, consumers want quicker deliveries, and simply there are not enough skilled HGV drivers to handle this demand around the world. In the UK, to become an HGV1 driver qualified for the operation of an articulated 40’ lorry is a lengthy process that has also been impacted by lockdowns and reduced testing for aspiring drivers. Different vehicles require different accreditations, with many tests unable to be completed during the situation over the last 18 months resulting in fewer new people entering the industry.

According to the Road Haulage Association (RHA), there is a shortage of more than 100,000 drivers in the UK, out of a pre-pandemic total of about 600,000, exacerbated by changes to rules following Brexit and 30,000 HGV driving tests being missed because of COVID.

Freight's own challenge

The impact of this shortage is being felt in every business vertical and is particularly pronounced across the freight sector. Touching domestic delivery and collections, as well as international transport, and particularly the merchant haulage of empty and laden sea containers. The air freight sector is also experiencing issues with collections and deliveries and being impacted as drivers move to less hectic roles within the domestic sector.

In addition, and not widely reported, the purchase of new vehicles and trailers are impacted with manufacturers taking at least 6 months to deliver equipment due to component shortages, other manufacturing issues and demand for new lorries, despite the increasing cost of the assets – simply put they cannot be manufactured quickly enough to meet their order books.

Metro’s transport team is among the most experienced and biggest volume movers in the UK. They are increasingly challenged in locating sufficient haulage resource, particularly for movements within a 72-hour window. Hauliers and carriers, along with market conditions, are dictating a ‘pay to play’ scenario, where the highest bidder benefits. And this is across all modes and sectors of the industry.

Even the payment of a booking premium of >£300 on a container is no guarantee that the contractor will not cancel the booking without notice. This often means the shipper’s container will exceed its free period of rent and detention on imports or fail to materialise on export collections.

We manage these situations with agility every minute of the day. There are no statistics published that we can advise or refer to, to demonstrate the scale of the issues. But it is frequent and demanding.

We have and continue to increase our transport teams across all modes, dedicated to ensuring that we overcome all the industry challenges, now and in the future, with innovation, creative and imaginative solutions and hard work.

No silver bullet

The average haulage movement now takes 3.7 times as long to administer, communicate, and organise, with the impact of all the component events this year, as it did pre-pandemic and in 2020.

The RHA, freight transport association Logistics UK and the British Retail Consortium (BRC) are among the trade associations that have - without success - urged the government to take measures, including relaxing visa regulations, to alleviate the road haulage problem.

So far, government proposals have been limited to plans to streamline the process for new drivers to gain their HGV license and increase the number of driving tests conducted. In fact, today, BBC News has run an article on how the government is looking to fast track new driver tests – Government to shorten HGV driver testing process. The situation is changing daily……..

The crisis is anticipated to worsen in the coming months as demand for goods increases with the new school year starting, businesses returning to their workplaces and the build-up to Christmas, traditionally the peak time for logistics movements. This, in particular, is due to be felt in the container haulage industry as detailed – an essential ingredient to global freight movements.

Freight sector hauliers have been increasing driver pay rates, offering retention and loyalty bonuses and improving working conditions in a bid to halt the outflow of experienced personnel to retailers. This all reflects in the costs incurred and the reliability to ensure we continue to deliver consistent services to our customers and ultimately to their customers.

Road transport cannot be avoided, as part of the international movement of goods, with drivers critical for container movements, international and domestic haulage.

We work with a number of selected long-term haulage partners across the UK to give us access to the widest pool of equipment and driver resource.

To learn more or discuss your situation, please contact Elliot Carlile or Grant Liddell (or Simon Balfe, who leads our UK multimodal transport operations) to talk you through the options.

COVID-19: The critical worker crisis

Aug 12, 2021 | Coronavirus, Metro, Road, Supply Chain

In an effort to protect supply chains and essential services the government released a list of sectors where fully vaccinated workers may be exempt from isolation if they are told to quarantine after coming into close contact with a positive COVID-19 case. Many of these are within the supply chain and global logistics platforms that are essential to businesses functioning successfully.

Fully vaccinated adults will no longer have to self isolate if they are ‘pinged’ from 7th August in Wales; 9th August in Scotland; and 16th August in England.

Instead, they will be advised to take a PCR ( if you have ever wondered what it stands for - polymerase chain reaction) test and can stop self-isolating if the result is negative. If the result is positive, they will need to self-isolate just like anyone else.

Until the 16th of August in England employers providing the critical services listed below can request a self-isolating exemption for named employees who are fully vaccinated.

Energy
Civil nuclear
Digital infrastructure
Food production and supply
Waste
Water
Veterinary medicines
Essential chemicals
Essential transport
Medicines and medical devices
Clinical consumable supplies
Emergency services
Border control
Essential defence outputs
Local government

Supermarket depot workers and food manufacturers will be exempt whatever their vaccination status and this is being extended to transport and freight workers, plus those working in the selected critical sectors.

Despite the government’s moves supply chains are missing critical personnel at every point, including ports, freight terminals, railheads and shipper warehouses, not to mention the continuing HGV driver crisis.

So far the government has ignored pleas to relax Brexit immigration rules to allow foreign drivers to return on a temporary basis and calls for the MoD to provide drivers is unlikely to have any impact on the situation. The government’s moves to increase working hours and streamline driver testing systems, to aid recruitment, will only have a marginal impact.

With the shortfall of drivers already standing at 100,000, any personnel loss through illness, self-isolation or move to higher-paying retailers is having a profound impact on haulier operations across the country and particularly around key ports and airports.

After years of underpayment and poor working conditions, a job as an HGV driver has become more attractive in recent months as a growing number of firms offer up-front bonuses and wage uplifts in an effort to attract and retain staff, though shippers are increasingly picking up the tab, through driver surcharges.

All the signs are that we are heading for worsening disruption, as drivers taking holidays are added to COVID-19 shortfalls, without any drivers to cover.

Road transport cannot be avoided, as part of the movement of goods, with drivers critical for container movements, international and domestic haulage.

Metro work with a number of reliable, selected long-term haulage and rail partners across the UK, to give us access to the widest pool of equipment and driver resource.

We frequently audit and manage our associated partners' standards and ensure the safety of all individuals within our platforms are always compliant with the current regulations and legislation.

To learn more, or to discuss your road transport requirements, please contact Elliot Carlile or Grant Liddell (or Simon Balfe who leads our UK multimodal transport operations) who can talk you through the options.