Why it’s Important to Know Exactly What’s Happening Within the Shipping Industry

Why it’s Important to Know Exactly What’s Happening Within the Shipping Industry

We’re a third of the way through the year, and it’s fair to say there’s still a lot going on within the shipping industry in 2022.

Perhaps the most obvious issue is ongoing delays and congestion, with continuing instances of shipping schedules not being adhered to.

However, while our clients might be able to understand this, there are a number of back-of-house issues that are also having an impact, yet aren’t as visible to those outside the industry.

One of the major problems currently facing freight forwarders like ourselves, is an increase in detention costs, costs which are largely worn by the business.

Simply put, detention is charged by shipping lines when containers aren’t returned within a specific timeframe – generally around 7-10 days.

However, when cargo volumes increase at the port as a result of several vessels arriving within a short space of time (known as ‘bunching’) it’s unrealistic to be able to unload containers from a ship, transport it to a client, have it unpacked and returned within such a timeframe.

The tight labour market is exacerbating the issue, with transport among the many industries desperately trying to hire staff.

As a company, we have absorbed tens of thousands of dollars in detention costs in the past few months alone, which is simply unsustainable in the long-term.

We know we’re not alone in dealing with this issue. In fact, the Freight and Trade Alliance and Australian Peak Shippers Association have written to major shipping lines to request a blanket extension of detention free days.

However, aside from detention, there are also other issues currently having an impact on the industry;

  • COVID-19: The pandemic remains a lingering problem for the industry, not only here in Australia with increasing case numbers and isolation requirements, but also China’s COVID lockdown policy, which results in added congestion and delays at global ports. Employees working from home due to isolation and/or quarantine rules can also present challenges, adding extra time to various procedures.
  • Burnout: While COVID cases have resulted in large numbers of workers being forced to stay home while they are unwell or due to being deemed a close contact, employees who remain in the workplace are often facing increased workloads. After dealing with the pandemic for more than two years, many workers are simply exhausted, and are burning out.
  • Rates: Despite the Ningbo Container Freight Index falling about eight percent in March, container rates remain high, while blank sailings by some shipping lines is again restricting capacity.
  • Unpredictability: The supply chain has been unreliable for two years now, as a result of problems arising without notice. This unpredictability makes planning and scheduling increasingly difficult, which has knock-on effects throughout the economy, as recently seen with food shortages across Australian supermarkets.

The recent significant rise in the price of fuel also had an impact, with many companies moving to introduce a fuel surcharge to customers effective immediately, adding to overall costs.

As a business we work hard to communicate with our clients, and in fact just last month discussed the importance of apologising when things aren’t going to plan.

While we will always suggest solutions where possible, we will also continue to highlight relevant issues, if only to ensure our clients and the wider public are informed and understand what the shipping industry is facing.

Read more here.

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