China’s October Golden Week, Christmas, and Chinese New Year will bolster strong demand for container shipping for the last quarter of 2021.
But port congestion, especially in the US and Europe, and service delays are expected to create headwinds for service schedules.
- The global economy remains robust although the pace of recovery has softened according to the global PMI manufacturing trends indicator.
The global purchasing managers’ index hit 52.6 in August.
- Inventory levels in Europe and the US remain at their lowest levels on record, leading to stockouts on some products.
This means even once retail demand declines, we will see cargo volumes continue to remain strong as inventory levels need to be rebuilt.
- Global container demand growth is projected at 6%-8% in 2021. The high 2021 forecast reflects the strong H1 as well as ongoing demand strength in the US and partly in Europe.
How is Maersk addressing capacity and equipment shortages in the global supply chain?
The COVID-19 pandemic has had an unprecedented impact on container shipping and global supply chains.
Congestion at ports in the US, Europe, and Asia as well, disrupted sailing schedules, and equipment shortage, particularly in exporting countries such as in China and Vietnam, have created significant disruption for customers’ supply chains.
Maersk has taken measures to alleviate this by rationalizing our schedules and repositioning the empty containers and we have tripled the number of dry freight containers.
However, In-fleeting of new containers alone is no longer sufficient to meet overall demand, so it remains critically important that import containers are turned around as quickly as possible.
The latest COVID situation in Vietnam.
Hundreds of factories closed under lockdown rules are expected to reopen from early October, after Ho Chi Minh City authorities extended social distancing guidelines under Directive 30 until Sept. 30.
Maersk’s air freight services are operating normally although with longer transit times on some trade lanes. Northern CFS warehouses are operating normally.
Drivers need to show a negative test result within 3-7 days (depending on fast test or RT-PCR test) of moving cargo in/out of warehouses, depots, and ports.
- We expect strong export demand from Asia to continue for the rest of the year particularly into the US and Europe.
- To improve schedule reliability, Maersk has decided to adjust vessel voyage numbers on Asia-North Europe services to match the corresponding actual weeks of departure.
Continued strong demand, coupled with network disruptions has hammered our schedule reliability.
Maersk will rationalize some of our service coverages to reduce the number of port calls to improve reliability.
- We expect Q4 to be stronger for Asia imports with network utilization remaining above 95%.
We are striving to meet the needs of our import-focused customers and reposition empty equipment back to Asia.
- We expect equipment availability to continue to be tight in 2021 Q4.
We have increased our flow of empty containers into Asia ports and invested in fleeting of new containers to provide sufficient stocks for Q4.
Air Freight Update
Greater China: Demand from large retail and lifestyle customers is fuelling a likely 10% increase in trucking demand in Q4.
Customers should be prepared for long transit times and plan as early as possible.
- Japan and Korea: Demand for ICR services in northeast Asia in Q4 will be stronger but there is a shortfall in capacity and equipment.
We are working on potential capacity increases and products to cope with customers’ strong demand.
- Australia and New Zealand: Two services – Maersk Connect and Maersk Inland Storage – are helping customers overcome port delays and service omissions.
- Vietnam, Cambodia, Myanmar: Demand for North Vietnam, Cambodia, and Myanmar is expected to be strong for the rest of the year.
With the container shortage escalating in North Vietnam, Maersk customers can choose one of three modes (trucking, barge, and rail).
Major Port Update
- Ports in the Asia Pacific continue to be severely congested.
With continued high yard density issues and weather disruption since July, operational challenges remain in port operations and the situation is not expected to improve in the immediate future.
- Labour restrictions coupled with high throughput volumes remain the primary constraint.
- Port of Savannah has become increasingly challenging recently as congestion across the East Coast picks up.
- UK Ports are operating smoothly but with very severe trucking shortages across the country, leading to high yard density in ports.
- Ports in Latin America: Port of San Antonio continues to be congested causing further delays.
This article was originally published by IssueWire. Read the original article here.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Glean News journalist was involved in the writing and production of this article.