I am often asked: ”Have you ever seen anything like the current situation?“ The short answer is ”no”. There have been many challenging periods over the years, but the situation over the last 12 months is unique, in as much as it has had a global impact. All continents are seeing high volumes and operational challenges, restricting land-side capacity at the same time.
Like all carriers, Maersk has been heavily affected by COVID-19 outbreaks slowing down port operations. Lately, all markets were significantly impacted as the Yantian terminal had to shut down large parts of its operations. When one port is impacted, it quickly results in a downward spiral, as delayed vessels accumulate at subsequent ports, leading to further delays, etc.
It’s like when there is road construction on the way to work: One construction site is normally not a problem, but if there are 4 or 5 big construction sites on the route, traffic slows down, and you are bound to reach the office late unless you leave home earlier than usual.
In dealing with these challenges, we have deployed more vessels and containers than prior to the pandemic, yet we still see unfortunate delays leading to missed sailings and missed capacity to carry the strong volumes. This is not because the vessels are not sailing, but because even a delay of 1-3 days in most ports on a 12-port rotation often means a roundtrip of 10 weeks can take 11 or 12 weeks.
We are at the same time looking to optimise all corridors in the rotation and call alternative ports, all with the objective of leaving as little unused capacity as possible on all legs. Like the ships, container availability is negatively impacted, as it takes longer to return import containers empty because of restrictions on either trucking or warehouse capacity. In some locations, terminal congestion also impacts the ability to return all empty containers to origin.
How long will it last? This a very difficult question to answer. We see pockets of improvements, only to get setbacks when terminals or vessels encounter a COVID-19 outbreak and renewed lockdowns. This is likely to happen locally around the world. Currently, South Africa seems on its way into renewed lockdowns. This changes every week. In the coming months, we will, therefore, likely see improvements ‘come and go’. A consistent return to a normal environment will only be possible when market volumes reach a more stable level, and the local operations do not witness capacity restrictions. Until then, all vessels will continue to be in use to make up for the limitations as much as possible.
In this ever-changing environment, communication around developments, both on the carrier and shipper sides, is more important than it has ever been. At Maersk, we have made a focused effort to communicate as early, and in as detailed a manner as possible, irrespective of whether it has a positive or negative impact on the supply chain. From a customer’s perspective, our advice remains: early planning and engagement and prioritising modes of transportation via air and rail. For the latter, we have seen a visible increase in interest during the COVID-19 crisis.
The Christmas season is starting, and I think the trend we’re seeing with customers is that several of them plan to start their shipments earlier. Normally, that would be August-September, but now they are aware of the various bottlenecks and delays throughout the supply chain. Seen in this light, we do expect every week in the coming week to be tight, like the weeks before Chinese New Year. Early planning is therefore essential.
So, getting early advises from customers about changes in supply patterns, priority shipments, etc, will assist in providing the best possible service. Engaging as far upstream in the supply chain as possible will allow alternative solutions to be developed. Over the course of the last 12 months, we have already seen a visible increase in digital engagement, again, to better pre-plan. Stronger digital engagement enables early detection and solutions when any incident occurs.
The last 15 months have been a roller coaster for all involved in the international movement of goods, and it is fair to assume the challenges will continue for a while. But having said this, I do believe that we have been able to prove to our customers that even at the most difficult of times, we have been able to keep goods moving, adding value to our customers’ supply chains. Our customers are at the heart of what we do, and we will keep working to minimise impacts on their supply chains. Always.