Forecasting freight requirements the best Christmas present.
There is always at this time of year, a sense of frustration and angst, as we head towards the 25th of December where everything must be completed.
Exporters are planning their shipments around Christmas in Europe and America whilst quickly following, on the 25th of January, the Year of the Rat in China looms. Importers are calculating orders to arrive for pre-Christmas break and post-Christmas stock increases whilst understanding that their Chinese suppliers disappear into a black hole for a week at the end of January.
The world of logistics and shipping is getting frantic and we would like for all of you traders to consider “forecasting”.
Working a month or two ahead is a lot easier than receiving a phone call on the day with the word “urgent” attached.
Breakdowns in factories and heart transplants are urgent – most other things have been sitting in someone’s desk tray for some time before a phone call or email is sent to the transport or shipping person getting the goods from point A to point B.
Consider a quick email to your shipping or transport person from time to time to give them a heads up around an order that is coming up. We will always be there for you when needed, but bringing us in at the beginning of the process is always easier than at the end.
Importers could be forgiven for curling up in the foetal position and rocking whilst sucking their thumb at the moment.
Freight rates ex-China particularly are on a trajectory that at this rate will pass Jupiter next week and are not likely to fall again to at least February.
Another challenge is the reduction of space on the trade with importers finding that orders are being rolled often at origin with less capacity due to blank sailings and less tonnage than last year (even less capacity in 2020 with one service representing over 3000TEU pulling out of the Asia Australia run – this means that it is likely that rates will not drop to the levels experienced in mid-2019).
The knockout blow comes (not without pre-warning mind you) with the introduction of Low Sulphur fuel surcharges in December of anywhere between US$100 and US$200 per TEU being added to the cost (this is a monthly variable figure like a fuel surcharge – lucky there are no pressures on oil at the moment…oh, hang on…).
Not an importer? Don’t think this affects you? Guess where that cost impost will go – hello consumer.
As always – I am very happy to discuss any aspect of this commentary (email@example.com).