The Impact Of The Suez Canal Blockage

The Suez Canal was effectively blocked for a week before reopening last Tuesday, but the set back to the Asia market is likely to be nearer to two or three months.

Just as we were seeing signs that rate levels were ready to fall, importers have been dealt another blow - as the market heads back towards disruption, driven largely by container equipment issues.

As almost 400 vessels queued to pass through Suez, and many others diverted around Africa for an extra 10-12 days at sea, it became obvious that we would be in for some schedule disruption. With so many vessels in the wrong place there are going to be capacity issues over the coming weeks.

Perhaps less obvious at the time, was the impact this would have on equipment availability, as literally hundreds of thousands of containers were delayed on ships during the blockage. With so many vessels due to arrive over a short period, and the threat of heightened congestion at European ports, these containers will undoubtedly be delayed getting back to Asia even further. 

The impact on pricing is already apparent - spot rates are being driven up and longer term or contract rates are effectively worthless.

There is already limited equipment and booking availability, which is varying from line to line and from origin to origin. Finding a line with a booking slot has become a struggle once more and when slots are found they will go quickly if the booking is not confirmed immediately.  

This means that when we spot quote a rate, we may only have a very limited time, sometimes only ten-fifteen minutes, before that quote becomes unavailable to book.

This position is similar to where we were two to three months ago, when we suggested that customers try to provide us with a 'no-ship' spend limit on orders. This worked successfully for many, especially when decisions needed to be made outside of UK office hours.

As far as the upcoming market conditions are concerned, it could take two to three months to get equipment and vessels back in the right places, which suggests these current conditions could be around for a while.

Westbound are working hard to manage the situation and as always we will keep you updated. If you would like to find out more, or discuss setting up spend limits, then please do not hesitate to contact your Westbound representative.

  

At Westbound Logistics we pride ourselves in offering personalised and tailored logistics solutions. To find out more please call 01375 800800‚Äč oemail info@westboundglobal.com.