With rail workers striking tomorrow and Saturday nationally and the Felixstowe Port strike starting on Sunday, for potentially eight days, UK supply chain operations and infrastructure are facing the biggest industrial action challenge in decades.

Two of the UK’s most important container ports will be shut by industrial action during the busiest time of year for global shipping - the annual peak season - when manufacturers gear up after the holiday period, and retailers replenish inventories to start their build up for the critical Christmas trading period.

The Unite Union’s 1,900 members at the Port of Felixstowe will start their eight day walkout on Sunday 21st August. Unite’s chosen industrial action is a ‘discontinuous’ strike, when action takes place on a series of days, with normal working in between, which can either support operations, or cause maximum disruption.

The container shipping lines will be preparing for more congestion around Europe and we await their contingency plans and schedule updates at time of writing, because they are likely to offload UK-bound cargo at hubs such as Antwerp and Rotterdam, which are already busy and dealing with their own industrial disputes and congestion delays. Omitting the UK entirely to avoid the closed ports is also a likely tool to be used to try and keep schedules as intact as possible.

With Southampton and London Gateway working at capacity, if the Felixstowe or Northern European ports situation deteriorates, it is very possible that some carriers may drop UK-bound cargo further downstream – for example in Tangier or alternative Mediterranean ports - and use feeder services to get cargo closer to destination.

To coordinate our response to the Felixstowe escalating situation and linked industrial actions we have created an eight-strong ‘Strike Action team’ who, working with the port, carriers and our contracted long-term haulage and rail partners, have been delivering and moving containers to off-dock holding areas ahead of Sunday. This is something that we, Metro, anticipated when the original potential strike action was announced and have been preparing for ‘behind the scenes’.

As we learn what omissions and discharge points the shipping lines are planning, we are reviewing modal/service options and will work with our contracted partners to plan the haulage offerings we have available in the UK and on the continent. Another contingency that the shipping line partners using Felixstowe have is to delay vessels which will have a further impact on schedule reliability and result in delayed arrival into the UK.

The Strike Action team will discuss options with affected customers individually and swiftly. As any options that are possible in those ports, will likely be subject to availability, due to the congestion that will quickly build during the strike action, or as part of the following impact.

Unofficially, we understand that some carriers that call at Felixstowe have changed port rotations, so that vessels that were initially due to arrive during the strike period will now arrive after.  Alternatively, as highlighted earlier, carriers may plan to remove Felixstowe bound containers at earlier port calls, to be collected by the following week’s vessel which is due to call Felixstowe after the strike period.

Felixstowe has advised the suspension of the option to book vehicle booking slots (VBS) more than 24 hours in advance, which is available to us and other large users of the port normally. Instead they will release any available VBS slots each day, subject to the level of workforce present, which means there will be limited collections and deliveries from the port next week. Therefore, disruption, rent and demurrage, and elevated costs are likely to feature prominently. Neither the shipping lines nor the Port of Felixstowe have offered any immediate advice on the extension of free time during the strike action. It is likely that additional costs will be inevitable at the current time, as no party within the dispute, or carriers will accept any liability.

Shortages of drivers and the continuing pandemic-linked supply chain disruption caused significant snarl-ups at Felixstowe ahead of last year's Christmas period, with some container ships diverted to other ports, or omitting the UK altogether. This week’s industrial action could have a more profound impact than Christmas, or the Suez blockage last year, as it is specifically UK focused. However it will have an impact on other ports, as Felixstowe vessels call or are redirected to discharge and load both in the UK and Europe, as a consequence further disrupting the supply chain and logistics for container movements. From experience and market intelligence a seven day delay will take more than seven days to rectify and there will be consequences to the port's closure that will reverberate for weeks after the event, and that is without further industrial strike action being confirmed.

Dockworkers at the Port of Liverpool have also voted to strike over wage negotiations and while no dates have yet been announced, it will not be before the 3rd week in September.

The inland movement of containers will be further disrupted today and Saturday as the RMT and TSSA rail unions withdraw labour, including drivers and critical operations staff, which means many freight services will not be running. The reality of this situation is that the rail network for container movements will be interrupted for the next three days and road transport will be the only reliable way to move containers to and from all of the UK ports, as this is a national strike.

The Strike Action team have been consulting closely with rail service operators and do expect some freight services to keep running. The current planning shared with them suggests that 30% of services will run today, 70% on Friday and 50% on Saturday 20th August.

The timing of these disputes could not be worse for the economy, where the cost of living is soaring, with inflation already at a 40 year high and recession warnings ever more pessimistic, as inflation escalates and consumer demand is dampened.

We will continue to monitor and manage the situation as it unfolds but the disruption now looks unavoidable. We continue to hope that there will be an eleventh hour resolution(s) and will keep you updated on a daily basis.

Please contact your Metro team member to discuss any specific movements and we will also continue to communicate with you proactively on developments, options and alternatives available during this event, and any future action and reoccurrence.

Please call Grant Liddell or Andy Smith for further specific information on how we are able to deliver continuity of operation. We are well positioned, with considered teamwork, to ensure that your supply chains and logistics platform are protected during this emerging situation.

Europe’s heatwave forced the closure of the Rhine to barge traffic from last Friday as water levels fell 4cm below the depth necessary for operations, raising fears for container shipping and industrial disruption.

The Rhine, the second-largest river in central and western Europe, runs 760 miles from the Swiss Alps to the North Sea, with significant container volumes moving between Rotterdam, Antwerp, Germany and Poland.

The depth of the Rhine was down to 49cm on 7th August at the gauge tower at Kaub, a bottleneck widely considered to be the most important point for navigators assessing depth. At 41cm the river becomes all but impassable and the river dropped to 37cm on 13th August. 

Levels at the Kaub chokepoint are lower than they were at the same point in 2018 ahead of that October’s historic low of 25cm. The water was so low the river was closed to ship traffic for weeks, forcing companies to switch freight to railways and roads.

Millions of tonnes of containers and conventional cargoes are shipped on the Rhine and any drop in capacity will hit industrial production. Similar drought conditions in 2018 saw production drop by 1.5%.

Operators have been running services at 20% capacity (which has already generated a containerbacklog) to reduce the depth they require, but with water levels dropping a further 5cm over the weekend, they have had to discontinue navigation on the Upper and Middle Rhine.

The river’s closure has come at an already challenging time for European supply chains, which are dealing with continuing port congestion, the repercussions of the war in Ukraine and increasing industrial unrest.

The most unfortunate shippers will be wondering how they can retrieve containers already out on barges when the closure was announced and get them to the nearest terminals for unloading.

Barge operators say they will position vessels to safely unload containers at terminals and move overland between the terminals on the Upper, Middle and Lower Rhine, although this is not assured, as there are fears that water levels could fall well below 27cm record and switching from barge to rail brings a premium, which can be substantially more to move goods by road.

Please read the attached link to Loadstar with an informative article from last week in the prominent trade press that provides further details - https://theloadstar.com/rhine-closure-imminent-as-low-water-hobbles-freight-movement-by-barge/

The UK and Europe's supply chains are being hit with many unimaginable challenges over recent months that will continue in 2022 and 2023. Metro will always be at the front of the industry and leading innovation and initiatives to ensure that we work around issues and deliver the best available and competitive solutions within any environment regardless of the reason for the disruption.

The impact of the Rhine’s closure to barges will not directly impact many of our customers, but the knock-on impact to continental container ports could be profound and may impact traffic diverted from Felixstowe, in light of next week’s strike.

We are closely monitoring the situation in Germany and other affected countries and how it extends to European ports, because delays and congestion there may impact the repatriation of cargo and UK vessel calls, with extended overall transit time.

For further advice and updates, please call your Metro team. We will provide the latest information and options, to ensure your product is delivered to the right place at the right time, competitively. It’s what we do.

As we enter the traditional peak season for sea freight, demand for space from China is falling and the lines are taking action to counter over-capacity in the North Europe and Mediterranean trades, while transPacific demand in stasis.

As Hapag-Lloyd published its Q2 2022 results, the impact of increasing contract rates in 2022 is clear, with more record breaking profits and average freight rates up 70% year-on-year, even with the supply/demand equation shifting in favour of the shipper. 

The overall picture is mixed, with rates on some routes experiencing downward pressure, while continuing port congestion has reduced the amount of effective capacity, which stops rate erosion on others. Most notably on the Asia-North Europe trade lane, where major hub ports are suffering a combination of increased import dwell times, labour shortages and industrial action.

Ocean carriers will be looking to blank as much capacity as possible in the short term, to move the supply/demand equation back in their favour.

While no blanking details have emerged, research by Sea-Intelligence has found that certain sailings crop up repeatedly, when it came to blank sailings from Asia to North Europe.

The Danish analysts measured the average number of weeks between a blank sailing on each respective service, to identify those most at risk of blanking.

2M’s AE5/Albatross and AE10/Silk were blanked once every 9-13 weeks in the last 12 months, while AE55/Griffin and AE6/Lion were blanked every 5-6 weeks in the last 12 months.

Ocean Alliance’s AEU2 and AEU6 were hardly blanked in the last 12 months, while AEU7, AEU9, and AEU1 were blanked every 5-7 weeks, while THE Alliance services, were all blanked quite frequently.

Carriers favour certain services, either by virtue of value, routes, or the ports that they call at and knowing which services are more likely to be blanked help us limit disruption to our clients’ supply chains.

To move cargo on specified vessels and routes, in the most efficient and cost-effective method, we apply the most beneficial pricing model for our customer, which may be based on contracts, FAK or spot rates.

We negotiate annual volume and rate contracts across the three alliances, primarily for the largest shippers, who need pricing stability and the best space guarantees.

Freight All Kinds (FAK) pricing allows us to leverage our buying power, to get competitive rates from individual shipping lines on a variety of routes, locked-in for a specified period.

The spot-rate market can offer the lowest rates, but it applies to individual sailings and needs to employed with caution, to minimise instability. It is by far the most unpredictable pricing model, with significant risks, such-as cargo rolling, which may result in financial and transit penalties.

We negotiate long-term and FAK contracts with shipping lines across all three alliances to secure space and rates, to provide the best alternatives and options, whatever the situation.

By leveraging agreements across the alliances - and spot rates, when appropriate - we can often adapt port pairs and routings, to work around blanked sailings, to maintain resilient and reliable supply chains.