Shippers that export containers from both Northern Europe and Mediterranean origins heading westward to North America, have faced difficult conditions over the last several months. However, the factors leading to these issues have continued to worsen, and the situation has degraded rapidly. While the Ukrainian Conflict has not helped matters, it is also not completely at fault.
Lack of Schedule Integrity
As vessels continue to be tied up in ports around the world—most notably outside of U.S. ports—European schedules have suffered heavily. Even as the number of vessels either anchored or slow-steaming outside of Los Angeles has declined, congestion on East Coast ports has worsened.
This has resulted in extensive schedule delays from European ports, as vessels are not returning in time to make planned sailings, and when they do, they face similar congestion. As this trend has continued, ocean carriers are forced to blank some sailings as well, in desperate attempts to return schedules to normalcy.
Booking Scarcity
As vessel schedules continue to slide and be cancelled, a backlog of cargo has been created at most ports. As containers being delayed are pushed out to future sailings, this is limiting the amount of bookings that are available for new shipments.
As a result, what would typically be a 2–4-week window from booking to sailing, is being pushed in some instance to a 6–8-week timeline. Forecasting and advanced planning are becoming crucial, as last-minute bookings face significant wait times for available space.
Even when bookings are secured, the schedules provided are likely to be delayed—both at origin, as the schedules slip, and at destination, as the vessels face the U.S. port congestion.
Equipment Availability
Since early in 2021, carriers have prioritized moving empty container equipment to Asia for higher revenue bookings, which has caused Europe issues with their own supply of available equipment. However, the persistent scheduling issues also mean that empty containers cannot return, leading to low supplies at nearly all ports.
Most acutely impacted, though, is specialized equipment. Specifically, Open Tops & reefer containers, which are often used from Europe westbound, but the ratio of that equipment returning to Europe is not high enough to keep up with demand. Stock of such empty equipment has been depleted as shippers wait for more to return in order to service the bookings that they may have placed many weeks before.
Inland Network Disrupted
Intermodal networks are used heavily in Europe, especially for Northern Europe, to move containers into the ports. As there is too much equipment already at the ports waiting for vessels, these services are being metered or suspended. This raises costs of origin trucking, as many containers now must move over the road only.
To make that situation worse, trucking supply has been stretched as it is hit with new volume at the same time gas prices have risen drastically, causing some companies to stop service.
One example, in Italy national trucking federations have announced widespread action this week, where trucks will refuse to haul cargo if the government does not properly address or take seriously the impact of the rising fuel. Such an action would dramatically reduce the ability to keep containers moving.
Mitigating the Impacts
Most of these factors are outside of a shipper’s control, so it makes sense to wonder what can be done to deal with the impacts, as best as possible. Here are some mitigating factors which should be considered:
- Forecasting is critical. Work with service providers to clearly present anticipated demand as far in advance as possible, while maintaining reasonable accuracy. If shippers wait until cargo is ready to make a booking, they will likely face long delays.
- For special equipment material that may move in Open Tops, consider breakbulk options. This may require additional or more substantial packaging, but with equipment issues presently being faced, there may be long delays while cargo waits for the next opportunity.
- Air freight must be considered and utilized if delays are not acceptable. Air rates will continue to be challenging, but low reliability of space and equipment on the ocean side should be kept in mind when considering the higher costs.
Mohawk Global will continue to work on behalf of our clients to help manage the situation and will continue to provide updates. For discussion about impacts to your specific cargo needs, please contact your Mohawk Global representative.