2021 Supply Chain Shock – Second Wave Update

supply chain update

Powertec supply chain update – What we are observing:

Demand:

  • Delay in production and fulfilment of orders nationally has been a common theme amongst our wide and varied client base.
  • Demand remains robust.
  • Unprecedented pricing and shipping delays are now major issues that may curb global demand.
  • Rates are tipped to reach USD$20K for a 40’ container from Asia to Northern Europe, a 10 fold increase from 2019. AU bound Rates are heading for the $8k-10K range experienced last year.

Seafreight:

  • South China, Yantian port: Although officially open for business after its COVID outbreak it is anticipated now that the backlog will not be cleared until end of July. Shipping lines are experiencing 2-week delays just to berth at the port with some lines omitting the port due to congestion. In short, It’s a mess. Just to give you some perspective, Yantian is the 3rd largest container port in the world, it is estimated that the equivalent of. 350,000 Twenty-foot containers have been delayed.
  • Shanghai Port – The road transport of All Dangerous Goods (DG) has been banned until 23:00 2nd July.
  • USA: Expect booking delays due to congestion. If you are wondering where all the empty containers are? The port of Los Angeles (LA) has just set a record for the most containers through any port in the Western world, being 1.01 Million containers for the month of May, just LA!!! No wonder the factories of the world in Asia seem to have a problem finding containers.
  • Major delays via transhipment ports of Singapore and Malaysia, delays of approx. 2-4 weeks is not uncommon and is impacting imports from Europe, India, Bangladesh and Thailand that are shipped via transhipment services.
  • Shipping schedules are constantly being updated by all shipping lines with the sole purpose of avoiding congestion. If our container is stuck in for Yantian for instance bound for AU then it becomes a real problem and will add to delays.
  • New Zealand is currently experiencing delays of 4weeks for bookings due to a surge in demand coupled with Port congestion and equipment shortages in NZ. Demand is solid and expected to continue throughout the rest of the year.

Airfreight:

  • Due to the deterioration of service and increased pricing within the Seafreight market we have observed an increase in demand for Airfreight. Rates are increasing and space is tight but currently, workable solutions can still be found given the reduced capacity of flights globally.

Advice Remains Unchanged

Expect rates and capacity to deteriorate over the coming months, getting orders in early and maintaining pressure on our suppliers to ensure production is on schedule remains in control. If possible allow for the extra time it will take to ship due to capacity constraints and shortage of containers, otherwise, early dialogue with your customers regarding delays should serve you well. Do not make any unrealistic promises regarding into store dates as this could have the potential of being as bad as it was last time.

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