Although the blockade on the Suez Canal has been resolved, the consequences of this event will continue to impact global supply chains in the coming months.
Therefore, we highlight some critical issues that require greater care and contingency planning:
Backlog
Approximately 400 ships are still standing in line, on both sides of the Suez Canal, and the situation is expected to last until the weekend (a time considered quite ambitious by some experts). Therefore, interruptions and delays in the maritime schedule are expected, particularly on the Asia-Europe route.
Port congestion
As soon as the ships are released from the Suez Canal, the backlog of cargo ships begins to obstruct the ports in Europe and Asia, since the vessels will arrive at the same time at the destinations.
Imbalances and equipment shortages
The week-long shutdown of the Suez Canal “held” tens of thousands of containers, unbalancing the availability of equipment. Empty containers in Asia, limited even before this incident, will become even scarcer, significantly delaying the export shipment process.
When the flow of goods returns to normal, spring will be over and many of the goods (seasonal or special) may no longer be needed. European exports are obviously affected in a similar way due to the lack of equipment, also impacting other trade routes, such as that of the Americas.
Free time reductions (detention, demurrage, storage)
The challenges mentioned above require operators and terminals to trigger all available management contingencies, including reducing the free time of containers, anticipating the imposition of fees.
Schedule alignments, route adjustments, blank sailings
In addition to the blockade of the Suez Canal, the redirection of other vessels through the Cape of Good Hope caused an even greater disorder in the navigation schedule. For this reason, shipowners will announce blank sailings, that is, the cancellation of berthing in certain ports, reducing the ability to start the recovery process of the schedules. This will affect all service cycles until at least the month of May.
Rate increase, booking interruption
This whole scenario is increasing operating costs in the maritime transport sector. In addition, with around 7% of world oil passing through the Suez Canal, we may experience temporary fuel shortages and possible price increases. Fees and surcharges will increase further. Many shipowners have already started to cut allocations, especially Named Accounts (NAC), and are applying premium rates. They also imposed selective blocking of reserves.
Air and rail freight from Asia to Europe may change, as demand for alternative modes of transport has increased and capacity is also limited.
Bearing in mind that this is an unprecedented situation, together with the challenging market dynamics in the midst of the Covid-19 crisis, it is clear that it remains to be seen how all this will evolve.
There is a high probability that the situation will last at least until the month of May, and normality will not return until the second half of the year.
DHL Global Forwarding monitors the situation very carefully and will continue to provide relevant updates as they become available. Contact your local representative to review and discuss your potentially affected shipments in progress.
DHL Global Forwarding
*Picture by Getty Images
*Original in portuguese, translated to english by Google Translator
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