Navigating the November Supply Chain Storm
It's that time of the month again.
This morning, I woke up thinking what a mess the world is in and the crazy global supply chain we're dealing with.
Grab your triple shot coffee, and let's get stuck in...
Port volumes in the US are finally settling and have returned to pre-pandemic volumes. I love a good graph that puts the volumes into visual perspective. According to Xeneta, it's worth noting that overall US import volumes have decreased by roughly 15% this year.
Boeing has confirmed they have had a cyber-attack, and global services have been disrupted. It's speculated that this is the work of a Russian-based ransomware group who announced they were responsible for an attack on a multinational aerospace company. This serves as a timely reminder to assess and enhance your cyber systems. OSCL plans to prioritize cyber security investment and improvements in 2024.
The Biden administration has selected 31 US regions that they intend to develop into “tech hubs,” with the aim to transform these hubs into globally competitive innovation centers. These hubs will focus on a wide array of technologies, from AI-driven biotechnology to mass timber design and battery manufacturing.
Drop shipping infrastructure is becoming a significant focus, with Walmart, Amazon, and UPS rolling out new, state-of-the-art warehouse and distribution facilities. Meanwhile, Walgreens is in the process of implementing extensive upgrades to its existing distribution centers.
We have seen an increase in and demand for peak season, however, this is not due to actual volume increases, as the amount of cargo coming into Australia has actually decreased. A few shipping lines decided to pull out of the CN-AU lane entirely, and most carriers have reduced their services. Therefore, it creates this misleading impression of a thriving lane, however, it's purely more competitive as the services have reduced, and we are now competing to get containers on the same overbooked vessels.
We have been advised to expect a GRI in the second half of November. This is due to how tight the spacing is and the number of containers being rolled to the second half of November and December; we are not expecting the rates to taper off in December as anticipated. No sailings are available on the CAT services operated by YML/EMC/TSL, which is a significant space allocation lost to the market.
We are hoping to see trade relations strengthen between Australia and China, as Prime Minister Anthony Albanese and his team have started their visit to China over the weekend. This is the first Prime Minister to visit China in seven years.
One of our agents is running a NOR (Non-operational reefer) specials with HMM, EMC and COSCO, which tend to me $300-$600 dollars cheaper. Please refer to the below capacity and dimensions information. NORs may be a fantastic option to take advantage of and save some $$$.
Australian Domestic Market:
I am at a loss for words at the state of the domestic supply chain industry. We have had roadblock after roadblock. Diesel is through the roof, with some carriers charging as high as 31% fuel surcharges (take me back to the day of 14%).
Qantas Freight rolled out a new IT system at the end of September, which crashed spectacularly. It was horrendous for the airfreight operations sector, from lost cargo, spoilt perishables (sitting on the tarmac), no check-ins, and days of delays trying to get cargo out of the terminals.
DP World is currently experiencing extensive MUA action, dubbed the "black swan event".
We have seen vessels being delayed sitting off the ports, taking longer to journey and dock at the various DP World ports, full containers taking up to 6 days to be offloaded, and LCL cargo being pushed further from offload to unpack to around 8-10 days. To put that into perspective, that's 1/3 of the time it takes to freight a container from the main ports of China to the east coast of Australia. Shipping lines have scrambled to shift their port calls, with most now favoring BNE/MEL/SYD, and we have even heard reports that vessels are omitting DP World Sydney and seeking alternate docking arrangements.
Following these extensive disruptions, DP World chose the perfect timing to announce excessive increases in Stevedore landslide fees. "...DP World will charge $190.80 for every full container imported into Melbourne from January 1, up 21 percent, while fees on exported containers will jump 52 percent to $175.70. Fees will also rise by almost 40 percent on containers moved in and out of container ports in Sydney and Brisbane. In comparison, on the West Coast, fees will rise only 5 percent to $50.40 for imported and exported containers. Fremantle Ports – owned by the state government – signed a 10-year agreement with stevedores in 2021 that limits increases in access charges..." sourced AFR. The excessive profiteering needs to be regulated, as this puts immense pressure on the economy, importers, exporters, and the small businesses (such as ours) supporting the supply chain.
Panama has announced even more stringent restrictions on the Panama Canal Crossing, further limiting crossings to just 25 bookings per day, with plans to decrease this to a mere 18 by February of next year. That is down from the average of 36 daily ships, which will have flow-on effects as the Canal services an estimated 3% of global trade. It's reported that a recent auction of a crossing pass surpassed $2.85 million USD, compared to a normal booking fee of $ 900k USD.
Shippers are scrambling to secure tankers to carry oil cargoes ahead of any regional escalation of the Israel-Hamas war. If we thought fuel was expensive now, analysts predict another price rise in crude oil. This will have a flow on effect to all aspects of the supply chain, globally and domestically.
Sea-Intel released its latest global forecast on what it described as a “most positive scenario” of container volume growth of 3.8% year-on-year from 2024 – matching pre-pandemic levels, supply growth from 2023 – 2026 based on the current order book with a growth of just 1.3% post-2026. The worst overcapacity would be seen in 2024, and the third would have been absorbed by 2026. The takeaway from this, it's going to be a rocky start to 2024.
World Container Index increases, Daily Cargo News (this is a relief to see global volumes stabilizing): https://www.thedcn.com.au/news/containers-and-container-shipping/world-container-index-increases-2/
DP World’s 52pc fee rise at Port of Melbourne labelled ‘exorbitant’, Jenny Wiggins Infrastructure reporter: https://www.afr.com/companies/infrastructure/dp-world-s-52pc-fee-hike-at-port-of-melbourne-labelled-exorbitant-20231102-p5eh5m
2024 to be the year of the Sustainable Supply Chain, Kayla Walsh, Big Rigs: https://bigrigs.com.au/2023/11/03/2024-to-be-the-year-of-the-sustainable-supply-chain/
Fading prosperity and global shipping surplus pose challenges, Bryan Chuang, Taipei; Vyra Wu, DIGITIMES Asia: https://www.digitimes.com/news/a20231101PD208/forecast-inventory-semiconductor-shipping-tier.html
We did it! As a few of you know, I was nominated in the Canberra Woman in Business Awards under two categories, and amazingly, I won the Small Business 2023 Award. I am feeling extremely grateful and humbled, and this award is a reflection of just how amazing our clients are, as without your support of our family-owned small business, we would not be doing the amazing things we do. We were featured in the Canberra Weekly, and you can check out my 5 seconds of fame on the cover of last week's edition: 02 November 2023 | Canberra Daily
We crossed the finish line in getting our QMS finished in time for our audit this month. Thank you to our service providers who stepped up and participated in our audit surveys. Obtaining certification in ISO ensures that we are delivering and continuing to deliver quality services.
We are taking a much-needed break between the 08/11 - 15/11. Emails will be monitored sporadically; however, there will be no drop to the backend service levels. If there is anything urgent, please send me a text, and I'll action ASAP.