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Displaying items by tag: Global Volatility

The container shipping and supply chain consultancy Drewry believes ocean freight carriers will continue their practice of tactical sailing cancellations for the foreseeable future, due to the “still uncertain and risky outlook for trade and for the global shipping network”, recommending that shippers and forwarders carefully monitor the market and extend lead times to take account of potential operational delays.

The analysis, reports LloydsLoadingList, follows a series of weekly discussions by Drewry Supply Chain Advisors with its shipper customers over the past few months. As well as informing the consultancy about how the COVID-19 health crisis has impacted shipping schedules, cancelled sailings and port operations, it said the sessions have helped encourage the exchange of views on how to best respond to the situation and mitigate risks from a logistics perspective.

It highlighted that one common issue faced by shippers has been the major disruptions to the shipping and transport network, first in China and then in the rest of the world, and the associated operational problems that have resulted from space shortage, delays and roll-overs.

For example, in a survey of shippers in April, Drewry reports that 83% of shippers who responded had cargo rolled, with the proportion of containers rolled varying from region to region, up to 20%. From Europe, the percentage of containers rolled was 10-15%; from North America, the percentage of containers rolled were <5% to 10%; from Asia, the percentage of containers rolled were <5% to 20%.

Meanwhile, Drewry’s survey of carrier schedules in April, May and June found that the three major carrier global alliances cancelled at least four times as many East-West sailings in the second quarter of 2020 (2Q20) as in the same quarter of 2019. Analysis of the cancelled sailings data shows that non-alliance carriers have not cut services as much as alliance carriers, Drewry noted, “and at least one niche carrier is positioning itself as a more reliable carrier even during the COVID-19 crisis”.

Carrier perspective

Drewry said conversations with several major ocean carriers had highlighted several key themes explaining why service reliability had deteriorated and roll-overs had worsened, although two main themes had emerged: unpredictable and volatile demand; and reduced demand, leading to a reduced service network.

Highlighting the unpredictable and volatile demand, feedback to Drewry from Maersk noted that “throughout the second quarter of 2020, the ongoing COVID-19 pandemic presented exceptional challenges to the container logistics industry, with a low, yet highly volatile demand putting strong pressure on our business. This environment made it very difficult to forecast demand volumes; customers have similar poor visibility and thus shipping needs changed with very short notice throughout the quarter.”

For responses from other container-carriers Hapag-Lloyd and Zim click here and for much more.

Published in Ports & Shipping

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