Vaccines add to international supply chain challenges - CILT(UK)
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Vaccines add to international supply chain challenges

12 January 2021/Categories: CILT, Industry News, Freight Forwarding, Logistics & Supply Chain, Ports, Maritime & Waterways, Coronavirus


Written by Chris Evans, International Supply Chain Specialist, Colliers International

The news that the UK was the first country to approve the Pfizer/BioNTech coronavirus vaccine marked the welcome start of the end of the pandemic for us all. However, the Covid-19 economic rebound and state-imposed precautions have added to existing global container shipping challenges for importers and exporters, exacerbating existing port congestion issues and resulting in a worldwide shortage of empty shipping containers to support the global supply chain. In addition, the average dwell time from arrival in a destination country is increasing by approximately 50%, mostly due to changes of procedure in receiving warehouses as a response to the Covid-19 restrictions.

The impact of increased volume at the main container ports has created a rolling congestion problem. Felixstowe is particularly badly hit and this has spilled over to the other main container ports, such as Southampton and London Gateway, and inland railheads. If we throw into the mix the ongoing HGV driver shortage and the reduced efficiency at warehouses, all of this is leading to a delay and loss of efficiency for hauliers and those firms slow to adapt to the challenges of collecting boxes from the ports.

This congestion has caused ships to omit UK ports, mainly calling at Rotterdam, Antwerp and Zeebrugge, and then bringing containers across to the UK using smaller feeder vessels. This strategy is not the least bit unusual, and as a result we are seeing much bigger volumes moving into ports of the east and west coast. 

A shortage of containers is further exacerbated by congestion at ports such as Colombo, Sri Lanka, where more than 50,000 containers are stuck. Initially, it started due to a Covid-19 outbreak and then mushroomed very quickly due to existing congestion in the Bay of Bengal ports in countries such as Bangladesh and the Indian ports along the coast.

Set against this background, sea freight rates have risen rapidly, because shipping lines are tightly managing their ship capacity, particularly on the east-west trade routes, so that the trade is now dominated by three alliances and the use of ultra-large containerships with 18,000 to 24,000TEU capacity. This brings a separate set of challenges for ports around the world, when they are used to discharging 4,000 to 5,000 containers at a time and then pick up a similar amount, with a significant number of these normally being empties.

Meanwhile, we are seeing the impact of the vaccine rollout at international airports, too, as they prepare to begin distributing the vaccine around the world at ultra-low temperatures, and airlines are adapting cargo strategies to accommodate the vaccine. There is also an increased number of rapid testing kits being air freighted from Korea to Europe by Korean Air. This activity is bumping Hyundai and Kia parts off the flights. All of this will have an impact further back in the supply chain. The result of this is much higher air freight prices and reduced capacity once again, because the bulk of airfreight normally moves as belly hold cargo in passenger aircraft. 

What does this mean for Brexit? We should expect more short-sea freight to be moved via the east coast ports, rather than through the traditional Channel ports,
such as Dover. There will be more unaccompanied trailers, plus the absence of passengers that will increase costs as these vessels become roll-on/roll-off rather than roll-on/passenger. Overall, ports will need to ensure that their Border Inspection Post is capable of handling the foodstuffs that we typically get from the EU countries.

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