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Transport capacity shortage in China

04 December 2020

Ordered shipments are arriving late in Europe because ports are overcrowded and container ships on their way to the West are brimming with cargo, according to supply chain firm Setlog.

In addition, in Asian ports there has been a shortage of empty containers because the delivery volumes from the Far East to the West are currently much higher than in the other direction. Charter ships can hardly be booked because the capacities are no longer available. While some industries need lower shipping capacities others have had higher sales volumes and need larger capacities. Some ship owners have now stopped bookings for 2020 because the ships are full until the end of the year. And they have been deliberately cancelling planned departures to drive up freight rates. Insiders report that within 13 weeks, 26 departures to Europe have been cancelled.

Key Points

  • Ships from China to Europe are fully booked.
  • Lack of air freight capacity.
  • Rates are sharply rising - for sea, rail and air freight transports.

Companies report permanently rising costs and expensive seasonal surcharges of shipping companies to the software provider Setlog. More than 100 fashion brands, which have a lot of goods manufactured in Asia, use Setlog's SCM software OSCA to control their international supply chains. One of the large shipping companies offers a kind of "priority service" with a surcharge of around 1,000 US dollars, which companies can use to "buy" a place on a desired ship. However, even the surcharges are no guarantee that transports to Europe will run smoothly. 

“For 20 percent of bookings, even the surcharges do not help,” says Setlog’s CEO Ralf Duester. He estimates that overall only ten percent of all old contracts are still being adhered to.

Short-term transport bookings are almost impossible. As a result, companies now place transport orders from China to Europe up to six weeks before shipment.

Prices rises

Sea freight: In calendar week 48, the Shanghai Containerized Freight Index climbed to almost 3,000 US dollars for a 20-foot sea freight container. This is about four times the value six weeks ago.

Airfreight: The backlog of shipments to Europe is sometimes six days. Some airlines charge up to 9.50 US dollars per kilogram of cargo weight, depending on the relation. By way of comparison, just a few years ago a kilogram was flown for 1.75 US dollars. The coronavirus is the cause of the capacity bottlenecks. Because large parts of the passenger aircraft fleets remain on the ground, the so-called belly capacities are no longer available as cargo space. Some airlines have passenger planes converted to freighters without further ado. Iron Maiden singer Bruce Dickinson recently entered this business with Caerdav. The rock musician and entrepreneur is the chairman of the company's supervisory board.

Rail freight: To transport a container by rail from Wuhan in China to Germany, in some cases more than 8,000 US dollars must be put on the table. The reason: As in sea freight, the flow of goods from East to West is much greater than vice versa.

For more information, visit www.setlog.com