It will not be possible to work as previously: it is important to plan the container cargo shipment in advance
2021 April, 28
Spring has not brought a respite in the logistics sector — containers and ships are still lacking, they are unevenly distributed in the ports of the world, and the Suez Canal crisis last month delayed the normalization of the situation.
Our experts advise you to plan logistics needs as much in advance as possible. Only by doing this it is possible to be sure that the cargo will be delivered on time, and it is possible to look for more favorable transportation prices.
Deficiency forms new habits
“It is important for freight shippers to change their habits — logistics needs to be planned, places on ships should be pre-booked, containers should be ordered up front, because it would be impossible to work as we have done before. We were accustomed to the situation where I could call, issue an order and tomorrow there would already be a container for loading goods located in the yard, and after a few days it would be already shipped”, — says Justas Kairys, head of “Tarptautinės logistikos centras” (TLC) UAB.
Currently, it is advisable to order a container before a good month prior to the planned date of shipping, but this still does not guarantee that the cargo will be dispatched at that time.
Logistics specialists still hoped in March that cargo flows would settle in May or June, when the increased demand for goods would be met primarily in the United States (USA) market. However, this did not happen — just at this current moment several dozens of ships are waiting for docking and unloading cargo at the port of Los Angeles, a little less of them at the port of San Francisco.
“We can already admit that stabilisation of the situation will have to wait until the second half of summer or autumn, or maybe even later, because the pre-holiday peak will start again in autumn”, — notes J. Kairys.
Suez crisis will make containers be late
Container transportation is the most popular method of sea transportation, currently accounting for about 60% of global trade. Containers also form the bulk of cargo in the port of Klaipėda.
The blocking of the Suez Canal, which lasted more than a week and caused a chain reaction in ports, will also have a negative impact on shipping due to the delay in arriving and the formation of traffic jams.
“Delays and ships abandoning their planned docking windows in ports will have a huge impact on the already limping supply chain. For Lithuanian exporters, this means that containers will arrive in Klaipeda even later, because the container delivery plans, which were planned for shipping lines before the crisis, have collapsed.” – says the Head of TLC.
However, we can rejoice that the container ship Ever Given that the has blocked the Suez Canal did not contain the cargo of TLC customers, because the containers on board will not reach the recipients for about half a year or even longer, as the ship owners announced a general ship breakdown.
Under sea law, in the event of a general breakdown, losses are distributed between the ship, the freight and the cargo in proportion to their value, so according to J. Kairys, in this case cargo owners can be protected from enormous losses only by insurance.
“We always recommend that you insure the cargo, because in recent years the loss of containers due to various reasons is growing, and the delays, at least at the moment, are already becoming a new norm”, — says J. Kairys.
Prices gradually declined
“In March, transport prices dropped slightly and stabilized,” says J. Kairys. — The decrease in tariffs was influenced by the coming spring, melting ice in the gulfs of Bothnia and Finland and general trends in spring logistics”.
However, it is currently difficult to predict the prices of container transport in the future. Now the 40-foot container arriving from the main ports of China to Klaipeda costs from 8.300 USD.
“This is only the lowest possible price, and it does not guarantee that the right place for the cargo will be obtained. A couple of weeks ago, such a service cost starting from 7.200 USD,” says the Head of TLC. “It seemed that the prices were already down in the first quarter, but after the Suez incident they went up again.”
“However, we can always offer even better prices for cargo transportation to Asia, USA, Norway, because we are agents of several shipping lines in the port of Klaipeda, we have a great relationship, and many years of work with our partners, which gives us an easy priority over other market players”, — notes the Head of TLC.
According to the TLC experts, cargo transportation, the weight of which reaches 1500-3500 tons, has particularly intensified. The items carried most often are fertilizers, wood, wheat, corn and barley.
“There is currently a shortage of vessels in the Baltic Sea region, as many of them are located in the Bay of Biscay off the French and Spanish coast or in the Mediterranean. Also, quite a large number of ships are staying in the ports of the United Kingdom and the Netherlands, waiting for return cargo to the Baltic States”, — summarizes J. Kairys.
According to him, some foreign timber importers even pay bonuses to vessels for their voyage without a cargo so that the owners return their timber vessels to the Baltic States as soon as possible.