by Rob Simmons | Apr 6, 2021 | Delivery, Freight Forwarding, Shipping Logistics, Supply Chain, Transportation
How does the Suez Canal Congestion affect the ships carrying freight and supply chains? During a journey through the canal, the Ever-Given container ship was moving through a sandstorm. The rough winds turned the ship sideways and lodged it in the canal. This created a domino effect that has lasted a few days and may continue on for much longer. Although the ship has been successfully released, there may still be an aftereffect.
The Importance of the Suez Canal.
Created over a century ago, the Suez Canal is known as one of the most important passageways for shipping freight globally. After many attempts to connect the Red Sea to the Mediterranean Sea spanning thousands of years, the first successful completion happened in 1869. Freight vessels have been using the canal as a shortcut from Asia to Europe and vice-versa ever since. Today, the canal is used as a convenient shortcut sailing by South Africa. Around 50 ships pass through the Suez Canal on a daily basis.
The Chain Effect of the Trapped Vessel on Supply Chains.
When freight is moved internationally, there can be many components that contribute to the distribution of the freight. When one component is disrupted, it may trickle down to other parts of the supply chain. In the case of the Suez Canal, the Ever Given vessel blockage resulted in over 300 ships being restrained by Sunday. This means that the ships may not make it to their ports in time which means that the freight may not reach the endpoint in time. Which can look unfavorable to the companies distributing the goods.
The Ships that were impacted contained thousands of containers each. Companies like Ikea and Walmart also depend on the Suez Canal when moving their freight. The total monetary cost of this incident is yet to be determined. This may be extensive nonetheless, depending on how much the supply chains are strained.
Now that the Ship is Freed, what is next?
On Monday, the Ever Given ship was released and allowed for the resuming of Vessel activity. But with the delay already creating a large backup, it can take a while to clear. The vessel itself will first be sent to Great Bitter Lake for damage examination. With the canal still backed up, freight forwarders and shippers are looking for other passageways to move their freight. Some carriers are taking a lengthier route and going through the Cape of Good Hope in South Africa Instead.
As of today, the ports that the ships were on their way to have not been affected greatly. This is because the vessels that were blocked by the canal were planned to arrive on a later date. The ports may see an increase in volume in the coming weeks, however, it may be too soon.
A1 Worldwide Logistics
Are you planning on moving freight and need a forwarder to aid you? Feel free to contact us at 305-821-8995 . We also provide customs clearance services to clear your freight when it enters the country.
by Rob Simmons | Mar 30, 2021 | Customs Broker, Customs Broker Miami, Customs Clearance, Delivery, Freight Forwarding, Shipping Logistics, Supply Chain
After over a year of stagnant to moderate business, we may be seeing a return to regularity for air freight similar to pre-Covid-19 levels. Associations such as the International Air Transport Association (IATA) and the Association of Asia Pacific Airlines (AAPA) both had positive outlooks for 2021. The IATA has noted that in January of 2021 the demand for air freight was still 3.2% lower compared to January 2019. This is before the coronavirus was announced as a global health emergency.
Despite this, the 3.2% was still higher than the 4.0% decrease in air cargo demand in December 2020, showing a small increase. It was also reported that the Asia-Pacific region’s internal load factor in January 2021 was 74%. This is a positive sign meaning that air freight is returning to high levels of demand for that region.
How does the ocean freight market affect this?
In late 2020, port congestion occurred in numerous ports across the U.S. Particularly on the west coast. Freight shipments were backed up for days and even weeks. The cause of this is the sudden surge in e-commerce due to the pandemic. With stores being temporarily closed and restrictions being put in place, online purchases became the easier alternative. The issue arises from the overwhelming amount of e-commerce purchases.
When goods are purchased online, they may be brought in internationally. The freight that was imported into the U.S. exceeded expectations and caused congestion in ports across the nation. Companies started to move their freight by air to combat the delays. Different aircraft manufacturers adapted and released planes solely for air cargo. In turn, the market for air cargo has managed to stay afloat and still growing today. Despite the pandemic inhibiting business for aircraft manufactures, a new lane arose where profit could be made.
Will Transportation fees move up?
As previously mentioned, the demand for air freight has seen a steady increase compared to Mid-2020. Comparatively, the freight capacity has not yet grown to meet the demand due to the regulations still in place in the industry. Airfreight companies have taken advantage of this and hiked up their rates in response. With how volatile the market is at the moment; it may be too early to tell what the future holds in terms of pricing.
Boeing to produce more planes.
The positive forecast for the air freight industry extends far past 2021 for many companies. In response to the demand, Boeing stated that during the next 2 decades, over 4000 airplanes will be made for the Southeast Asia region. This is part of the 40000 new airplanes that Boeing projects on needing over the next 2 decades. This includes the 2000+ airplanes that Boeing projects will be needed for the cargo industry.
A1WWL
If you are looking for a freight forwarding company to assist with your supply chain needs, do not hesitate to call us at 305-821-8995. We assist with air and ocean freight for both imports and exports.
by Rob Simmons | Mar 26, 2021 | Customs Broker, Customs Broker Miami, Customs Clearance, Freight Forwarding, Supply Chain
Since the middle of last year, vessels sales have seen a steady increase. In correlation, shipping stocks from container and dry bulk sectors have also seen growth with tankers following the trend in early February of this year. While some believed that the stocks would slow down due to the coronavirus, more people bought goods that were shipped overseas internationally, which raised the demand for ships to move the freight and rose the prices of shipping stocks. That growth has accelerated even more in early February with several stocks from the dry bulk and tanker sectors reaching an over 30% increase.
How Does the NAV Correlate to the Shipping Stocks?
The net asset value can be described as the value of a company determined by subtracting the total asset value by the liabilities. Shipping stocks have tended to trade at a discount relative to the NAV over the past decade. Likewise, the asset value of the ships also tended to be greater than the rate to charter a ship. This meant that the value of the actual ships was higher than the value they were trading for on the market. Recently, the opposite effect happened where the rate for chartering a ship was higher than the asset value of the ship, which may explain why the shipping stocks rose in early February.
Potential Reasons for the Increase
A theory proposed for the sudden rise in shipping stocks in early February is that retail investors may have run up the price of the stocks similarly to how the price of the GameStop stock rose in January but not to that extent. Another theory is that stockholders are predicting that a global economic recovery may happen later this year. With various vaccines being rolled out at a remarkable rate and restrictions slowly being lifted, investors are preparing to take advantage of the profit opportunity.
A Sign of Things to Come
The coronavirus pandemic causes an economic shutdown and a halt to businesses globally. Over a year after the pandemic was announced, we are still feeling the effects around the world. Many could believe that we are at the beginning of an upturn. It is interesting to note that compared to other shipping stocks, tankers tend to do poorly but have been performing well recently. The purchasing of stocks in the tanker sector has increased alongside dry bulk and container sectors for the first time in over a decade. The growth of Shipping stocks may be a leading economic indicator showing a return back to normalcy.
A1WWL
The world of international shipping may sometimes be tricky without the right guidance or information. If you need assistance with your shipment or want to know more about shipping freight by means of the vessel, contact us at 305-821-8995.
by Rob Simmons | Mar 5, 2021 | Customs Broker, Customs Broker Miami, Customs Clearance, Freight Forwarding, Shipping Logistics, Supply Chain
A recent trend that has popped up in the last few decades is the invention of 3D printing. Instead of printing a 2D picture into a piece of paper, 3D printing is when the picture is printed as a solid object. With all of the potential growth that it may have for the logistics industry, it may also have a negative effect.
Positive Impact on the Logistics Industry
Since logistics are the obtaining, manufacturing, and distributing of goods to the public, 3D printing can potentially simplify this process. This is because the products could be produced directly, near a company’s office instead of being brought in from a different country. Time and capital are saved, and the company has greater control over the manufacturing of the goods. This also means that the supply chain itself may become faster.
Greater customization is also possible since the goods are produced digitally and can be individualized for the customer. Another positive result of 3D printing is that the waste created from the production of a product will be reduced. Regular manufacturing tends to leave out excess waste but since 3D printing uses the necessary amounts of materials such as synthetic resin and plastic, no material is left unused. And on a large scale, this can be greatly beneficial to the environment. The need for warehouse storage can also be reduced since the production of goods can be on-demand or when needed.
Negative Impact on the Logistics Industry
A section of the logistics industry that may be negatively impacted is the freight forwarding industry. The job of a freight forwarder is to coordinate the shipment of goods internationally and this can change with 3D printing. Many of the goods that are produced today out outsourced from different countries. Since 3D printing allows for direct insourcing of a good, the number of freight forwarders can decrease. Similarly, the number of customs brokerages may be lowered because goods produced inside their own country do not necessarily have to go through customs.
Having to go through customs is also important for security reasons because one task of a customs official is to look for potential threats to a product. Since 3D printing allows for insourcing, certain safety requirements may be overlooked. Although 3D printing is growing, it is not sizable enough for the mass production of goods and products. The method of having goods produced overseas and being brought over with the assistance of a freight forwarder may still be favorable if your company produces a large number of goods.
by Rob Simmons | Feb 26, 2021 | Customs Broker, Customs Broker Miami, Customs Clearance, Delivery, Freight Forwarding, Shipping Logistics, Supply Chain, Transportation
Sometimes referred to as hazmat, a shipping hazardous material can be described as any material that may pose a potential threat to safety, health, and the environment. Because of this, there are specific regulations that have to follow when shipping these types of goods. The rules may differ relative to the method of conveyance, but we will focus on air and ocean freight.
Shipping by Ocean
The International Maritime Organization sets the safety and security measures for international freight moving across the ocean. The IMO categorizes hazardous goods into various classes and some of the classes are grouped further into divisions with the class. For example, class 2 contains dangerous gasses and division 2.2 contains non-flammable gasses. Along with the typical documents that are required when shipping freight internationally, additional information such as the declaration of hazard goods, classification, and emergency phone numbers are needed for shipping HAZMAT.
When the hazardous freight is transported on the ocean, it may be in a large bulk which requires that the handling of the freight is very distinct. This can mean that that the HAZMAT cargo is separated from the rest of the cargo. The workers on the ship may have to report the details of the goods to the maritime authorities before entering the destined port.
Shipping by Air
The International Air Transport Association is responsible for setting the regulations for safety for transporting goods by air and similar to the IMO, has classifications that the hazardous goods being transported fall into. To verify if your freight is hazardous acquire a Safety Data Sheet (SDS) which can usually be obtained by the manufacturer of the goods being shipped.
When transporting, the packing is set into various groups from 1-3 depending on how much packaging is required with 1 being the highest amount. Supplementary info is also needed for hazardous airfreight and the goods may not be allowed on the aircraft if the authorities do not have proper documentation.
A1 Worldwide Logistics
Navigating the world of international freight may sometimes be challenging, even more so if you plan on transporting hazardous goods. If you want to understand the necessary requirements or are planning on shipping materials that would be considered hazardous, contact us at 305-821-8995 to help you out.
by Rob Simmons | Feb 24, 2021 | Customs Broker, Customs Broker Miami, Customs Clearance, Delivery, Freight Forwarding, Shipping Logistics, Supply Chain, Transportation
CMA CGM is known as one of the leading shipping companies which ship to 420 different ports around the world. Recently with the purchase of four A300-200F freighter aircraft, CMA CGM will begin the launch of its air cargo division. This acquisition will add to CMA CGM’s already wide reach by providing transferring of goods by air. In a time where businesses are looking for suitable and more accommodating approaches for moving goods around, this branch will offer an answer to many challenges in freight forwarding.
CMA CGM
Since its beginnings, CMA CGM has always been known as a company that moved freight by ocean and land. It soon became world-renowned for its shipping services and is currently the fourth largest shipping company in the world. In 2020 it was announced that CMA CGM bought a 30% stake in DUBREUIL Aero which is an airline company located in France. The reason being was to create a working relationship between the two companies and to give CMA CGM entry into the air freight sector.
When the buying of the four Airbus A330-200F aircraft was revealed, it was simultaneously made public that CMA CGM would create an air cargo division. The addition of its air division and its partnerships with several airlines will lead to the cultivation of a new area of logistics for the company.
Why Air Cargo?
Air Cargo can be considered a convenient method of conveyance for moving freight because of the quickness of time that it takes to transfer the good to the allocated location. Also, when cargo is transported by air there is a wide range of locations that it can be delivered to. With the increasing need for quick and easy logistics solutions by clients, CMA CGM understood that it needed to grow to meet the needs of its customers.
What does this mean?
Importantly, it paves the way the way for potential growth of not only the company but the industry as a whole. In January of 2021, Amazon bought its first aircrafts after leasing them since 2016. Currently, Amazon plans on having a fleet of over 70 by the end of 2021. Although CMA CGM never leased an aircraft, this purchase can be the beginning of a larger expansion and may possibly resemble Amazon’s fleet one day. With the world becoming more interconnected, many other shipping companies may follow along and open the door to a possibility of new alternatives to moving freight around the globe.
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