You will have most probably read or seen on TV that it has been a tough time importing into the UK this autumn, as neatly and accurately explained in the following BBC news article – https://www.bbc.co.uk/news/business-58904567
What we are sure you will want to know is if the situation is still bad, worse, or hopefully getting better!
The good news is that things are improving, though rather slower than we would like, and this seems to be down to a slightly reduced demand for container services worldwide, rather than any additional capacity being available, with just about every ship worldwide that can be loaded with containers in use.
We are hearing stories of established shipping lines not being able to charter ships when they send any of their own fleets in for repair, as there are non-available. Instead, they have had to cancel importing and exporting services and let customers down until their ships are returned to service.
Container Shipping Margins
Even with the recent slight dropping off in demand, there does seem to have been a structural change of the container shipping marketplace, with importing and exporting demand matching or exceeding supply for over a year now.
It seems very likely that this is not going to change in the near or medium term. As a consequence, the container ship owners and operators have very quickly re-thought their strategy after many fallow years of operating at very low margins, or even losses in the case of some, as they chase market share.
Owners & operators have now gotten used to much higher margins recently and we suspect they will be very reluctant to let these higher margins dissipate by indulging in market share wars. Recent years have seen mergers between operators so that there are actually only a small amount of container shipping companies and therefore little competition. Yield management is now the name of the game.
Airfreight To The UK
Airfreight space too is in short supply. Pre-COVID the majority of airfreight traveled on passenger flights. With passenger flights nearly all out of service virtually all freight had to travel on the world’s limited supply of freight aircraft.
Passenger flights are just starting to operate again UK / USA / UK, so we are expecting this market to normalise in the coming weeks and months.
There is a similar situation with India to the UK as well as Pakistan, Bangladesh and Sir Lanka to the UK, more passenger flights operating mean much more capacity and therefore cheaper prices.
Unfortunately the same cannot be said of airfreight from China to the UK. There are still very few passenger flights, due to COVID.
There is no sign that this is going to change in the near future and so all freight has to travel on the limited number of cargo flights operating. We are now noticing that airfreight volumes from China have increased considerably in recent weeks due to delays in ships leaving and manufacturers in China holding off, hoping, unsuccessfully, that there would be a large drop in freight rates. The result has been that some customers have been forced to make unplanned use of airfreight to catch last-minute Christmas orders, causing a perfect price storm.
The worldwide container freight and airfreight markets remain complicated to navigate and if you need to know you are getting the best possible price, please contact us on the phone: +44 (0)1606 272 880, or message through the website on our contact KL Freight page.