SHIPPING | Ocean freight rates are dropping but scheduling headaches for importers are far from over. As services resume, they are still nowhere near the pre-pandemic levels, particularly in Asia.
Shipping lines have announced more than 80 blank sailings across the major trade routes over the next month, representing an 11% cancellation rate.
China, South Africa’s largest import market, is still being affected by Covid with several cities imposing fresh lockdowns following the Golden Week holidays at the beginning of October.
China’s strict zero-Covid policy has resulted in disruptions to supply chains in Ningbo, Shanghai, and Tianjin, creating uncertainty for shippers and BCOs, with a shortage of truck drivers preventing timely container delivery.
“This situation makes it difficult to plan anything long-term,” says KZN regional manager for Turners Shipping, Neren Dayanand.
“Importers want to get consumer products here for the festive season, and manufacturers need their raw materials and components here before the month-long Chinese New Year shutdown in February next year.”
Despite the uncertainty in the industry, shipping rates are coming down after peaking at unprecedented levels in mid-September 2021.
The global lockdowns had a number of consequences that took industry experts by surprise and resulted in record highs in the cost of shipping containers around the world.
As the manufacturing sector began to shut down in March 2020, so did the logistics supply chain, but as consumers were stuck at home, unable to travel or spend their money on nights out and entertainment, they began shopping online.
Soon the demand outstripped supply and as Covid restrictions were eased and freight began moving the shipping capacity was a fraction of the pre-pandemic levels. Prices began to soar reaching their peak with the cost of shipping a container from Asia increasing fifteen-fold over the prices in January 2020.
“Rates are almost back to pre-pandemic levels and consumers will eventually see prices dropping at the tills, but this won’t happen for some time,” says Dayanand.
“Much of the inventory on the shelves now was bought when shipping rates were high and retail margins don’t allow for the price of those goods to be adjusted to reflect current shipping costs.”
In the medium-term South African importers will have to work around and make allowances for disruptions and uncertainty currently being experienced by the shipping industry.
