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Perfect storm for peak season shipping

Aug 26, 2019
The digital freight forwarder iContainers has advised that IMO 2020, and early Chinese New Year and the ongoing uncertainties over Brexit and the US-China trade war, will combine this year to “throw a wrench” in the day-to-day management of the shipping peak season.

The ocean freight industry has recently been operating under a cloud of uncertainty from Brexit and the unpredictable US-China trade war. According to iContainers, these usual culprits aside, this year’s peak season is expected to be hit by two more contributing factors that could eventually affect global throughput growth. “The fluctuating situation surrounding Brexit and the US-China trade war still lingers and will continue to cause uncertainty and affect volumes,” said Klaus Lysdal, Vice President of Operations at iContainers. “But we also have IMO 2020 and an earlier than usual 2020 Chinese New Year to consider. We can expect these to further disrupt and unsettle supply chains.”

Just last month, shipping consultancy group Drewry lowered its 2019 container growth estimates from 3.9% to 3%. The move was prompted by concerns for a slowing economy, brought on by “escalating geo-political tension” in many parts of the world and the “challenging new emission regulations” facing the industry.

IMO 2020 and 2020 Chinese New Year

iContainers warns that the full impact of the disruption will be felt towards the end of the year as carriers begin taking vessels out of rotation in preparation for IMO 2020. “Crunch time will really begin around the end of the third quarter and the start of the fourth as carriers start fitting their vessels with scrubbers to abide by the new emissions regulations. This will come at a time when companies scramble to get their cargo in before the holiday season,” said Mr Lysdal. “If that’s not problematic enough, the early Chinese New Year will also prompt an additional rush before both vessels and Chinese suppliers become fully booked. So expect this to cause more problems than usual in the day-to-day process of the industry managing the peak season.”

Trucking scarcity abates

Despite the bleak forecast, the online freight forwarder says there is a silver lining for supply chains this peak season. Due to falling demand and an increase in truck orders, the US trucking shortage situation appears to be on the mend and capacity is not expected to be as tight as previous years. “Operationally, the overall situation has improved with truckers and we shouldn’t be seeing the trucking scarcity we saw last year,” said Mr Lysdal. “We still have some issues here and there and there are still areas where availability is generally at least a week out. But it’s much more manageable now and people are also more used to it by now, which means expectations of booking today and getting a pick-up tomorrow are also lower.”

 

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