COVID-19 Shipping Delays Update

Dear Valued Clients,

 
Firstly, the Wattle Team would like to thank you for your ongoing support during the past few months as COVID-19 still wreaks havoc across the world in both our personal and business lives. This period has undoubtably been inexplicably difficult for all of us, but hopefully with increased vaccinations being rolled out across the country and the world, a sense of normality will soon return to our communities.
 
However, as you may have heard, the shipping industry has been particularly impacted by the pandemic, causing shipping lines to take extreme measures in early 2020 to cut their losses and stay afloat. Though their measures may have been a little too extreme, these actions are now heavily impacting us all while shipping companies are openly reporting massive profits in the wake of their decisions.
 
The shipping industry is very much based on circularity and COVID-19 has caused huge disturbances in the global supply chain. One of the biggest challenges for the shipping industry is container & space shortage on vessels.
 
In early 2020, as many countries entered lockdown, economic activities were heavily restricted. This significantly reduced the number of port staff and slowed down cargo handling speed across the globe. At the same time, factories temporarily closed and to maintain freight and avoid economic losses, shipping lines quickly reduced the number of operating ships.
 
By mid-2020, world economic activities started to recover. Countries resumed their production and export volumes increased, especially from China to North America, Australia and Europe. But shipping lines still operated with fewer ships (meaning lack of space) and the ports with less staff. This caused, and is still causing, massive delays and container shortage as demand is heavily exceeding supply and freight rates are increasingly climbing.
 
Some countries were taking selective measures by opening their factories for production one week and closing them again the next. This irregular goods flow created huge problems with port congestion and shipping lines choosing not to enter certain ports due to the long waiting times.
 
As of now, a large number of containers are either stuck in the wrong ports or delayed by several weeks. Containers are piled up in ports in North America and Europe, especially the UK, where they are not needed, while other countries are in desperate need, struggling with container shortage. This means that if you need to ship goods between China and Europe it may take weeks to get hold of them and rates have increased by approximately 650-750%.
 
For example, due to COVID outbreaks at the Yantian Port in the middle of this year, we are only now just seeing the Shenzhen area starting to catch up and ship regularly again as the backlog is slowly cleared out with the reduced sailings. Shipping lines are running but, of course, the backlog the shipping lines are allowing to take place also allows them to keep their price high, as space on vessels is at a premium.
 
Typically, this time of the year is low season were rates are relatively affordable: however, the current market is not reflecting this due to the matters outlined above. Shipping rates are 4-5 times more expensive to what we would be witnessing during peak season and space on vessels is a premium. Usually at this time of the year, space would not even be an issue to be consider, which of course is also making our jobs a lot harder to provide you with our usual quality services.
 
Unfortunately from what we are hearing these high prices and space issues are here to stay for a while, they are predicting further rapid price increases until at least early 2022.
 
With Christmas peak season stock due to ship typically around October to early December, we predict this period to even more expensive than what we are currently seeing. If we use the Europe to America or Asia to Europe trade lane as a benchmark prices, we will be in excess of USD $10-12,000 per 40’ container by the end of 2021 for shipments Ex Asia to Australia.
  
We strongly suggest you take this opportunity to discuss the current predicted price increase & possible delays (due to the limited space onboard) with us, so we can help you understand the problems we are all being faced with. We urge you to plan your stock levels and prices ahead of time. The implications to your goods that are affected by this supply chain issue is out of all our hands, and we cannot guarantee the same lead time as previous years as we move towards the busy end of the year.
 
If you would like further information or would like to discuss this information with our team, please contact us anytime via info@wattle.com.au or our phone (03) 9067 5677.
  
Once again we thank you for your continued support and understanding during this testing & stressful time for us.