Supply Chain Archives | Page 66 of 91

China exports surge even as consumer demand weakens

May 30, 2022 | China, Supply Chain

Container volumes at eight of China’s top ports surged 25% to 16.8 million TEU in April, largely driven by consumers in Europe and the US, but manufacturers are anticipating weakening demand.

According to figures released by China’s Transport Ministry, only Shanghai recorded a decline in sea freight throughput in April, the first full month of the city-wide lockdown that has closed factories and slashed trucking capability and capacity, due to government restrictions in the movement of its Citizens.

Transport Ministry figures show month-on-month volumes at Shanghai fell 19% in April to 3.1 million TEU from 3.8 million TEU in March, while other ports, including Tianjin (+48%) Shenzhen (+43%), Guangzhou (+35%), Ningbo (+32%) and Qingdao (+31%) experienced double-digit increases.

Ningbo’s 32% increase in volumes, to more than 3 million TEU in April, was massively boosted as shippers diverted cargo, to avoid the disrupted trucking and port operations in Shanghai.

With Shanghai starting to ease lockdown restrictions carriers are reporting improving logistics and supply chain performance, with Maersk resuming operations at 25% of warehouses, including facilities in Pudong, the area closest to the main port areas at Yangshan and Waigaoqiao.

Despite the massive volumes moving through China’s ports, manufacturers are bracing for more pain as rising interest rates and inflation combine to increase prices and dampen US and European shoppers’ enthusiasm for goods, with many already shifting towards buying services than goods.

Some manufacturers are reporting that while overall demand remains robust, orders for delivery in the final quarter look weaker, with buyers becoming very tentative in restocking and ordering.

While some of the spending shift reflects a return to normal buying habits, some of it also reflects rising inflation and interest rates, fading government stimuli and volatile financial markets.

The slowdown isn’t a trade recession because underlying demand remains solid and consumers do have money to spend, but the downshift is notable and the WTO lowered its projection for growth in merchandise trade this year to 3%, down from its previous projection of 4.7%, while Asia’s manufacturing sector contracted in April for the first time since June 2020.

Evidence from South Korea, often seen as a bellwether for international trade, is showing an enduring slowdown in exports, with shipments from Taiwan also down and China’s lingering zero-COVID policy creating further hurdles.

While many financial indicators may point to risks in the global economy, amid recession warnings, we’re not there yet and any slowdown will enable global supply chains to shake off any lingering ‘performance’ issues, which in turn will ensure that the recovery, when it comes, will be super-charged by cost-effective and efficient global freight infrastructure.

Whatever challenges your supply chain may face, the long term fixed price and capacity agreements we have in place with our partner carriers mean that we are well positioned to continue to deliver resilient, consistent and reliable supply chain movements.

Metro’s cloud-based supply chain management platform, MVT, simplifies the most demanding global trading regimes, by making every milestone and participant in the supply chain transparent and controllable, down to individual SKU level.

To discuss how our technology could support your supply chain, please contact Simon George our Technical Solutions Director or Elliot Carlile.

Demand for Shanghai sea exports may divert to air freight

May 30, 2022 | Air, China, Sea, Supply Chain

As COVID lockdown measures are gradually relaxed in Shanghai it is uncertain how quickly export sea freight volumes will rebound, but many experts are anticipating a strong and sustained spike in demand creating a backlog of shipping containers, which could once again result in ocean shipments diverting and putting pressure on air freight, which is already experiencing reduced availability due to the lack of passenger aircraft, restricted movement through Russian airspace and carriers not finding the long haul route economically viable.

Shanghai port - the world’s largest container port - has remained open while the city’s lockdowns have disrupted manufacturing, trucking and freight operations for the past two months and the strength of the city’s manufacturing output recovery will determine if freight rates, which have stagnated, will increase sharply as peak season approaches.

While some believe that factories will recommence manufacturing steadily over coming months and ocean container shipping will resume the seasonal ups and downs we’ve been accustomed to before COVID-19, others point to the tremendous amount of cargo that is already awaiting shipment, estimated at 260k TEU, which combined with pent-up demand, can only result in a surge of pressure on container movements from the region.

The port is basically bursting with containers, and if not cleared or substantially reduced, there may be little room for export loading movements to occur as smoothly as they normally do, which in turn could pile on the pressure at Shanghai Pudong (PVG) airport.

Vessel traffic around the port is increasing with currently more than 3% of the global container fleet capacity stuck there and wider congestion is still having a profound impact, with serious congestion in both American and European ports causing sailings to return to Asia late, resulting in additional delays and blank sailings.

Meanwhile the huge backlog of containers at Shanghai grows, with no capacity to shift it and when you have all this capacity constraint and demand on the ocean freight side, cargo will simply begin diverting to air freight, to recover failures and delays in the supply chain.

Importers who need their products to meet market demand, or to use in production, will use air to get those products as quickly as possible and that will also have an influence on capacity, which is more scarce today than it was two years ago. We know this as distressed sea freight and add this to the planned air freight for higher value products, with peak season due at the end of Q3, then there is likely to be a spike once production flows are recovered in the factories.

This could contribute to already elevated air freight rates, which have remained elevated due to the lack of capacity that followed airspace restrictions and the Shanghai lockdown.

Shanghai is loosening lockdown restrictions now, with the normal manufacturing and logistics environment likely to return in June and when it happens, we expect to see a surge in air freight volumes as shippers expedite products, that are needed on shelves the UK, Europe and the US.

We will continue to closely monitor the situation and update you as changes occur, but we do recommend checking with your vendors, to clarify the status of your orders.

We hope to see supply chains start to flow freely again quickly, as the pent-up demand for delayed goods could quickly create congestion, if operations are not running optimally.

We expect demand for space and spot/ FAK rates to increase very quickly and would suggest you start talking to us now about your potential requirements, so we can put appropriate plans in place.

To discuss how we support and protect your supply chain, please contact Elliot Carlile.

Avoiding container demurrage and storage charges over the Platinum Jubilee

May 19, 2022 | Sea, Supply Chain

As the country prepares to celebrate the Queen’s record-breaking reign, with an extended bank holiday, we consider the potential penalty traps waiting to catch out the unwary shipper during the break and how you can avoid demurrage, detention and port charges.

Shipping lines and ports levy time-based charges, to encourage swift return of containers and to penalise for extended use, or port space used.

Avoiding demurrage, detention and port rent charges, are always a race against time, because the clock is ticking from the minute a ship docks, with inbound containers, or an exporter collects an empty container for loading.

And that clock keeps ticking through bank holidays, which could be critical over the 4 day, Platinum Jubilee. Freight movements and related costs do not stop for weekends, holidays or the arrival and departure of vessels or aircraft, regardless of the circumstances, unfortunately.

As always, we want you to avoid these unwelcome fees, which is why we recommend best use of any free period, by planning ahead, to ensure your documentation is complete and delivery bookings are confirmed and completed before the 2nd June.

The run-up to the extended bank holiday will be particularly challenging for hauliers and we would urge you to coordinate your warehouse slots and labour availability, with booked deliveries, to avoid mishaps and penalties.

For more information on how we can help you avoid demurrage and detention fees, please get in touch with our sea freight team. Led by Andy Smith, Metro's sea freight director, they can advise and recommend the best solutions to avoid unnecessary costs. Sharing your forecasts, will aid scoping and planning, to agree best progression.

Logistics companies struggle with continued rising costs

May 19, 2022 | Logistics, Supply Chain

A members survey by freight trade association, Logistics UK, found that 40% of respondents had experienced transport costs rising by 25% or more and with margins typically very low, particularly for road freight, many will not be able to absorb these increased costs.

In the survey 71% reported an escalation in the cost of transporting goods during Q1 2022, with sharp increases in the cost of fuel and other global supply chain pressures with 40% reporting increased costs of 25% or more.

Surging costs are feeding through to freight rates, with more than six in ten respondents saying both air and international road freight rates had increased substantially and 50% confirming freight rates for transporting goods by sea, domestic roads and rail had increased substantially. As if you didn’t know…….

Bulk diesel prices, which constitute about 30% of the cost to operate a vehicle, have risen by 35.7% compared with Q1 2021, with the cost to transport goods and the broader cost of living squeeze beginning to impact demand for goods.

The cost to transport goods is surging at an unprecedented rate amid significant increases in the cost of fuel and the sheer number of companies reporting increases in freight rates and the costs to move goods suggests rising prices are deeply embedded and unlikely to subside in the short-term. The sector is particularly reliant on diesel, the cost of which is likely to remain elevated even as the cost of other fuels subside.

Activity in the logistics sector is a reliable indicator for the broader economy and the survey reveals worrying signs, with more than a third of respondents saying orders are declining, likely as a result of rising costs and consumers cutting back amid a broader cost of living squeeze.

With COVID-19, Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important.

Logistics UK represents the freight and logistics industry, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers whose businesses depend on the efficient movement of goods.

YOU CAN USE THIS LINK TO VIEW THE ORIGINAL SURVEY REPORT ON THE LOGISTICS UK WEB SITE

We work tirelessly to keep our operating costs low and to protect our customers from price rises, as much as possible.

From accessing alternative solutions, like our group shipping line (Ellerman City Lines), to leveraging our considerable group buying power in negotiating volume and price contracts with leading air and ocean carriers, our focus is always on deals that deliver the best service at optimum pricing.

Our long-standing investment in technology and innovation is driven in large-part by developing applications and processes that simplify and automate activity, that frees up resources and drives down cost.

Many of these initiatives are supported by our Business Process Outsource operations in Malaysia and India, where our experienced personnel are highly skilled at executing complex data input projects and completing global compliance and regulatory declarations.

If you would like to review your processes and explore your cost-cutting opportunities, talk with Elliot Carlile, who will take you through the options.