by Rob Simmons | Aug 18, 2021 | Freight Forwarding, Shipping Logistics, Transportation
In 2021, the international freight market has seen various disruptions that have led to container prices skyrocketing. It was recently announced that a company would have to pay an ocean carrier a record $32,000 if they wanted to move containers to Los Angeles from Shanghai, China. The prices have gotten to a point where they are too high for some companies to afford. Certain importers that usually depend on cheap shipping are being priced out and are having to make difficult choices.
Larger companies that import more expensive products may be able to keep up with the growing prices, but smaller companies may be soon forced to look for different solutions. This could mean importing freight from different countries that may offer a cheaper price per import. Another resolution that some companies are being forced to do is to put a hold on part of their inventory. This means that fewer imports would come in which could help save capital. The downside is that this may limit the potential profit.
The Effect of Fright Shipping Delays on Companies That Ship
To accompany the rise in shipping prices, the delays in freight shipping seem to be persistent as well. A potential reason behind this is that the rate that the customer is spending has gone up, partially in North America. This is creating the need to borrow equipment such as containers from other places in the world. The result is a scarcity that may create port congestion and keep the delays going.
To combat the delays, Companies are choosing to order their freight much earlier than before, so it arrives on time. With the freight demand increasing, many vessels are quickly filling up in terms of capacity. This puts pressure on the shipping rates and causes them to rise. It has gotten to the point that carriers had to call off shipping journeys to reschedule and keep up with the load.
Global Supply Chain Impacts in the Last Few Weeks
The rise in container prices can be traced back to different disturbances in the supply chains of the international freight market. Situations such as the coronavirus pandemic, the Ever Given ship being stuck in the Suez Canal and container shortages have strained supply chains and rose freight prices over the last year. However, in the last month, more situations have added to the strain.
In the past weeks, a new coronavirus variant named delta has been making its presence felt global. Individuals who have previously been vaccinated have been reporting positive cases. Seaports around the world are reporting that they are understaffed due to the virus. Ports in Vietnam and Malaysia are currently dealing with freight backlogs because of lockdowns, and this may worsen as the holiday season approaches.
In China, an already delayed port area is currently dealing with typhoon In-fa. Asia is not the only area that is dealing with supply chain delays. Other small disruptions are having their own small-scale impacts which have a compounding effect globally. Ports in South Africa are being forced to shut down because of violence due to the incarceration of Jacob Zuma; the former president. In Canada, the Port of Vancouver has been experiencing railroad freight container delays due to nearby wildfires. The current increase in container costs is the aggregate of all of these situations in the past month and year.
Will Prices Ever Return to Before Covid Amounts
With analysts predicting that container rates will rise in the coming weeks and months, it could take a while before container prices start decreasing. Some shippers believe that it may take more than a year for prices to return to pre-covid amounts. This could be because the amount of shippers importing, and exporting is growing fast compared to the number of vessels and containers available. The freight ships that are currently being built may take well into 2023 before they are available for public use. It may also be possible that container prices may never return to pre-covid levels.
A1 Worldwide Logistics
With everything that is happening in the global shipping industry, it is more important than ever to be prepared before shipping. If you plan on moving freight and want to be well informed on what to expect, contact us at 305-821-8995. Our experienced freight forwarders are here to guide you through this particular time for shipping and help you move to move your freight to its final destination.
by Rob Simmons | Aug 12, 2021 | Freight Forwarding, Shipping Logistics, Supply Chain, Transportation
Forwarders like Senator International and DB Schenker have been looking at alternatives for their freight which is steering them towards Rockford. Rockford airport may be seen as a life vest for the supply chains of many.
Why is O’Hare airport becoming so congested?
The main reason why the airport has become over clogged is because of the overwhelming amount of freight volume. In 2020, the coronavirus pandemic created a surge in e-commerce and that surge was felt in airports worldwide. There was also a rise in ocean imports as well, which clogged seaports and led to companies switching to airfreight to move their cargo. This increased the amount of cargo at the airport. In O’Hare’s case, the freight volume rose to over 14%. It grew at such a rate that an already busy airport could not keep up. The amount of freight that is backed up at the airport is so extensive that forwarders started renting nearby warehouses to accommodate it.
Another cause of the congestion related to the coronavirus pandemic is the replacement of airplanes that are used fully for air freight with passenger airplanes. This is because passenger airplanes have less space for freight and combined with everything else may create a bottleneck effect. The shortage of workers that the airport has been facing in the past months has also contributed to the congestion. When there are not enough workers to handle the loading and unloading of the incoming cargo, it can create a backlog over time.
Rockford Airport
Located roughly an hour away from O’Hare airport is the less crowded Rockford Airport. The congestion of O’Hare has made this airport an ideal choice for freight forwarders to store their freight. Forwarders such as Senator International have already signed leases to have a large amount of space in Rockford’s new warehouse that they recently started building. This airport is currently being called one of the quickest growing airports in the world in terms of freight tons.
One of the main benefits that forwarders had in switching to Rockford Airport is the customized service. Since Rockford is not as large and crowded as O’Haire, planes carrying air cargo are able to have valued importance. When the freight plane arrives at Rockford it may only take a few minutes for it to find parking. Compare this to O’Hare where there may not even be parking space because of the traffic. Also, truckers may wait for hours to pick up a freight load at O’Hare. Since Rockford has less traffic the time it takes the freight can be loaded onto the trucks from the aircraft can be streamlined massively.
A1 Worldwide Logistics
Importing and exporting air freight during these distinctive times may seem intimidating and could be challenging. If you have any questions or want to find out more information, call us at 305-821-8995. We provide transparency and assistance throughout the whole process so you can feel confident that your cargo is moved thoroughly.
by Rob Simmons | Jul 30, 2021 | Freight Forwarding, Shipping Logistics, Supply Chain, Technology, Transportation
The John F. Kennedy International Airport plans on upgrading its air freight facility to keep up with the current times. This will be done by tearing down two vacant cargo buildings to make room for the new one. With the current volume of freight shipments rising, renovations to the airport facility are being made to handle the load. Aeroterm, a distributor of different services to airports nationwide such as development and capital will be in charge of this project.
The JFK airport is known for being one of the busiest airports in the U.S in terms of freight operations. Despite this, the airport has seen a steady decline in terms of position in the market and freight volume. In 2017, Gov. Andrew Cuomo made the project to modernize the JFK airport public. After a few years of waiting for approval from the stakeholders, the project is finally coming to fruition. The plan is to have this project finished near the end of 2023 with the demolishing of the two vacant freight facilities starting in September 2021.
How Will the new facility be different?
The new facility will have a greater emphasis on more advanced, autonomous technology. This includes an autonomous racking system that moves and stores pallets vertically instead of just on the floor. More storage space is created since upright space is being used along with the ground. Not only will it be better for storing freight, but pharmaceutical friendly as well. The facility will include a temperature-regulated region with the purpose of handling pharmaceuticals.
This facility will also be larger than the two facilities that are planned to be demolished. This means that larger volumes of freight may be more manageable than in the past. With JFK airport already having access to most of the big international airport hubs, the new freight facility may improve the links between other airports. New jobs will arise from the remodeling of the JFK airport’s freight facility, which will help raise the local economy.
The Focus will be on Freight.
The goal behind the whole project is to modernize the airport facility and make it a “world-class airport.” The Aeroterm project is part of a bigger modernization project that will have more than one part. The next part of the project is to open 16 acres of land to create another freight facility for JFK airport. This facility is planned to manage an extra 200,000 tons of freight. A new area for truck pickups and docking will also be added, which may help ease airport traffic. However, like the first part of the project, it could be a while before the second part can begin because of approval from stakeholders and other circumstances.
A1 Worldwide Logistics
Plan on shipping or moving freight internationally and need help with the logistics? Contact us at 305-821-8995. Not only do we have freight forwarders to assist with finding a carrier to ship and deliver your freight, but we have customs brokers to make your import abides by customs regulations.
by Rob Simmons | May 21, 2021 | Freight Forwarding, Technology, Transportation
On March 3, 2021 freight delivery franchise FedEx revealed its plan to go completely carbon neutral by 2040. This is part of a global trend where companies that produce carbon dioxide and other greenhouse gasses are becoming greener. With FedEx being such an immense company with a far reach globally, reducing its carbon emissions will have a major effect on the environment.
What is carbon neutrality?
Carbon dioxide is a natural gas that is found in the atmosphere. It is not harmful in small quantities itself but when in a large concentration may cause precarious effects such as global warming by trapping the sun’s energy in the earth’s atmosphere. Companies like FedEx that deliver freight tend to have a large fleet of vehicles that release carbon in the air. Carbon neutrality means reducing the amount of carbon that we emit into the atmosphere. This is basically having a net quantity of carbon emitted that is eliminated.
How will this be done?
$2 billion was announced as the initial investment for this project and it will take multiple steps to accomplish. By 2025 FedEx intends to have 50% of its express pickup vehicles to be fully electric and 100% fully electric by 2030. FedEx also announced that it plans on investing $100 million at Yale University to create the Yale Center for Natural Carbon Capture in hopes of finding methods to remove and reserve excess carbon dioxide.
What may be more difficult is reducing the carbon emissions from the air fleet. Compared to land vehicles that can be replaced with electric vehicles and be carbon neutral, it is much more complex to be accomplished with air vehicles. However, FedEx’s Fuel Sense initiative has cut over 1 billion gallons of jet fuel lowering the carbon emissions that FedEx’s jets discharged since 2012.
Why is it important for the future?
FedEx is one of the many freight and logistics companies making the switch to non-carbon emitting vehicles. Companies such as Lyft and Uber have similarly planned on going fully carbon-neutral in a few decades or earlier. In a time period of expanding e-commerce where goods that are ordered online are delivered straight to your home or facility, it may be especially crucial to reduce carbon emissions. The reason being is because delivery companies are becoming increasingly popular, which means more vehicles on the road. This may not be a simple task but the potential reward to our planet is valuable.
by Rob Simmons | May 10, 2021 | Freight Forwarding, Supply Chain, Transportation
Last year there were reports of a global freight container shortage. This shortage has continued on to this year. The demand for containers greatly outnumbers the number of containers available. With the current state, the shortage may continue until the end of 2021 and even into 2022.
When did this Shortage Begin?
The start of this shortage was believed to happen in mid to early 2020 during the coronavirus lockdowns. With the pandemic establishing quarantine worldwide, people resorted online to purchase their goods. Freight that is purchased online tends to be imported internationally. In 2020, Ports in the U.S. saw an overwhelming number of ships carrying freight arrive at their terminals. This large volume led to congestion across the nation, and we may be still seeing the side effects today.
Why is the Shortage Persisting?
There are many reports as to why there may be a lack of freight containers. One explanation previously mentioned is that a large number of ports have not recovered from the blockage. The number of new containers being sold has also remained sluggish. This may be because the cost of a container has risen greatly in a year. In 2020 the cost of a new container was around $1800. In a year, the cost rose to $3500. Combine the increasing price with the lack of inventory and it creates an unfavorable situation.
Another reason could be the Suarez Canal blockage. This added to the situation because of the large number of ships that were blocked. Over 350 ships carrying thousands of containers were delayed. The Ever Given itself can hold over 20,000 containers of freight. The blockage also led to ships taking the longer route through the Cape of Good Hope, resulting in long delays. Also, Chinese ships that were planning to go through the Suarez Canal are turning around at such a rapid rate that they are dropping empty containers behind. Adding to the scarcity.
Is There an End
As everything recovers from the hectic year of 2020, there may be light at the end of the tunnel sooner than later. The manufacture of freight containers has gone up in 2021 compared to last year. Although this production is still not enough to overcome the current shortage, it may be a sign of things to come. As the economy steadily returns to pre-coronavirus, more freight may start to be shipped globally. This could result in the need for more containers and more production, along with the end of the shortage.
A1WWL
If you are looking to import or export freight internationally and need a quote, call us at 305-821-8995 or email us at info@a1wwl.com. We provide hands-on service with your freight all the way to its final destination.
by Rob Simmons | Apr 26, 2021 | Customs Broker, Delivery, Freight Forwarding, Shipping Logistics, Supply Chain, Transportation
During late March, the freight carrying ship Ever Given got lodged in the Suez Canal for almost six days. With the vessel currently freed, Egypt is now requesting more than $1B for damages and losses. As the Suez Canal opens back up and traffic is cleared, the costs from the blockage may start to come in. The Ever given is currently being held at the Suez Canal for investigation and analysis.
The Suez Canal, known for being one of the businesses canals in the world is responsible for over a billion tons of freight a day. When the canal got blocked, it hinders global trade and created fears for potential shortages. Meanwhile, the world is still dealing with the effects of the corona pandemic; so more stress was added.
Where did the payment come from?
The $1 billion requested from Egypt is a payment for the monetary and substantial damages done because of the Ever Given. Lt. Gen. Ossama Rebei, head of the Suez Canal Authority stated that the payment would include the costs of digging out dirt for six days. It will also include the damages in the canal from dredging the boat and costs from transit fees. It will not cover the cost for the 400+ boats that were delayed for almost a week and costs for freight on the boat.
The owner of the ship, Shoei-Kisen stated that what may happen will be that the shippers will split the general average amongst themselves. This could be a complex situation because of the large number of freight shippers that the boat has. When a general average occurs, cargo insurance tends to pay. However, if the shipper does not have cargo insurance, the shipper may have to pay out of pocket.
Who is liable for litigation?
If legal action is required, it could be complicated to find out who is to blame. This is because of the various nationalities associated with the freight vessel. First, the flagging of Ever Given was done in Panama. This means that the boat is registered in Panama. The firm that owns the ship is Japanese and the operator of the ship is Taiwanese. When the vessel got lodged, two of the pilots on the ship were Egyptian.
As a preventive measure, Lt. Gen. Ossama explained plans to increase the number of ships that pass through the Suez Canal a day to 95. The current number of daily ships is around 50. More support boats will also be added. What may be an issue is that the equipment used to tow the large freight boats has not developed compared to the boats themselves. The freight boats grew in size over time while the equipment stayed the same.
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