Over the last year, the freight shipping industry has seen various of unfavorable circumstances like rising spot rates and port delays. Other Events, such as a global pandemic and the Ever Given being stuck in the Suez Canal caused difficulties in the shipping industry as well. The Yantian Port, which is part of one of the busiest ports in the world (Shenzhen) has also seen a fair amount of issues.
From delays, congestion, not enough equipment, and port delays, each problem corresponds with another. This is not only limited to the Yantian port but seaports around the world as well. The peak shipping season is said to be between the middle of August the mid-October. As these months quickly approach, there is a concern as to the effect these months will have on the current backlog. Companies that normally rely on shipping have even started using air transport as a method to get their freight across.
What is Causing the Yantian Port Delays?
There are many different factors contributing to the Yantian port situation such as container shortages and a reduced amount of vessels. However, the issues link to a sudden outbreak of coronavirus cases. The number of positive coronavirus cases has recently been growing in Shenzhen China where the Yantian port is located. In late May, the rising coronavirus cases resulted in a 5-day pause for incoming shipments. This added to the already prominent congestion and supply chain disruptions.
The Effects on the Spot Rates
In shipping, a spot rate is a price that is paid to transfer freight to a certain destination. There are many different factors that determine the rate but the higher the rate, the more it will cost to move freight. Over the last few months, spot rates worldwide including the trans-Pacific region have risen to record heights. A potential cause of this may be a large number of delays in the current market.
When a container ship is delayed it means that the vessel is unavailable for usage to ship freight. When the current number of ships goes down, the demand for a ship goes up, and with it, the spot rate. Also, the decrease in available ships leads to a decrease in available containers, hiking the price of a single container.
How Long will this Persist?
The current situation has had an impact on not only the freight forwarding industry but on supply chains globally. The Yantian port connects importers and exporters from China to the rest of the world. Some shippers have even resorted to offering extra on their contracts for containers space to get their goods out on time. With the holiday season quickly approaching, the delays may persist until next year. At the end of the day, only time will tell how long this continues.
If you want to know more about the shipping industry or plan on moving freight and want to be prepared, contact us at 305-821-8995. We at A1 Worldwide logistics are dedicated to helping you navigate the shipping world.