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The changing buying habits caused by the pandemic have created unprecedented peaks and newdemand patterns in global trade. This has given rise to significant bottlenecks to the entire shipping industry.
If you have any questions in regards to your Transatlantic Trade and you would like to speak to an expert, reach out here.
The shock wave has generated four main challenges in the Transatlantic Westbound (TAWB) trade lane:
1. Equipment shortages
Following a busy fourth quarter in 2020, the new year has begun with continued strong demand for cargo on TAWB. This volume increase as well as soaring demand from Asia causes issues with equipment availability across Europe, where empty boxes are turned back to Asia to fulfil demand moving on record-high rate levels. By comparison with Transpacific Eastbound (TPEB) and Far East Westbound (FEWB), where rates have skyrocketed by 300-400% (Source: Drewry World Container Index) compared to pre-pandemic levels, TAWB rates have increased by only a few dozen percentage points to date.
The equipment deficit is most severe in Turkey, Germany, Italy, Spain and Portugal for both Dry and Reefer containers. Some carriers have implemented a temporary booking stop due to lack of equipment and in an effort to recover schedule integrity. In particular, Hapag Lloyd in Germany and central Europe and MSC from selected Mediterranean origins to selected destination ports in the US and Canada. Carriers are expected to resume booking acceptance in March.
2. Port congestions
Due to the large surge in volumes, labour shortages and bad weather conditions, several ports around the world are heavily congested. In particular, Felixstowe and Southampton at the origin side, and Savannah, New York and the US West Coast ports at destination are showing increased waiting time and reduced productivity, leading to pressure on shipping capacity.
3. Tight space
Strong demand fills up space on vessels up to 6 weeks before ETD. Despite the high demand outlook, there is no upcoming capacity upgrade in the near term due to a saturated charter vessel market.
4. Blank sailings
Vessels are waiting for a berthing slot at ports significantly longer than normal leading to ships being behind their schedule, in many cases by more than a week. Given the relatively short duration of the Transatlantic service loops, the delay that vessels accumulate on their journey effectively produces blank sailings, soaking up large amounts of capacity.
Best practices to mitigate the challenges
- Share your shipment forecast with your dedicated Flexport team to plan out the sailings in line with your loading schedule.
- Early bookings are the best way to secure capacity. We recommend placing bookings minimum 5 weeks before Cargo Ready Date (CRD).
- Request Premium services for the most urgent cargo.
- Allow flexibility to ship on the spot market.
- Work with smaller batches (1-2 TEU per shipment) to increase the chances to get bookings accepted on earlier vessels.
- When possible, use 20 ft containers that are less limited than 40 ft boxes.
While you’re here, you might also be interested in:
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