A perfect storm is brewing in the UK and wreaking havoc on supply chains as retailers are struggling to fill their shelves for the Christmas rush and businesses look to close out the year.
Port Congestion
Chronic congestion at the UK’s two largest container ports, Felixstowe and Southampton, is creating chaos for the nation’s supply chain.
After the disastrous implementation of a new terminal operating system at Felixstowe in June, ships were diverted to Southampton to avoid the congestion. But the congestion problems have now spread to Southampton.
Congestion Ripples to North European Ports
As Felixstowe and Southampton struggle to cope with the peak season surge, vessels are being diverted to ports such as London Gateway, Liverpool, and Rotterdam, Netherlands, which could delay the arrival of goods by several weeks. The congestion crisis is also causing a ripple effect among other north European ports.
Introduction of ULCVs Adding to the Congestion Problems
Many ultra-large container vessels (ULCV’s) will likely be diverted away from UK ports in order to ease the congestion. The impact of these mega-ships is just now becoming visible. Larger ships mean more containers per call. More containers per call means increased feeder traffic, higher yard occupancy, and more hauler movements. More containers per call also means longer wait time for other vessels looking to dock.
Truck Driver Shortage
Landside congestion at both ports has also added to the woes of the trucking industry, which has been suffering from an acute shortage of drivers. The current estimate is that the UK haulage industry is short 75,0000 drivers, and that number is expected to rise as the aging workforce retires. There is just not enough new talent entering the industry, and the sector has been unable to attract recruits.
Haulage booking availability at Felixstowe and Southampton is currently in excess of 14 days. And, with high demand and tight capacity, haulage costs are going up. MSC has told some of its customers that it will charge them an additional £20 per TEU “to cover the cost of putting on extra haulage units”.
Airlines and Handlers Announce Rate Increases
October marked the beginning for more expensive air freight in the UK as airlines and handlers announced new charges and rate increases, including Air Canada, Swissport, Dnata, and DHL Aviation.
Slow Roll-out of the UK’s New Customs Declaration System
The UK’s freight industry is becoming increasingly anxious that the August 14 roll-out of a new Customs Declaration System (CDS) is not going fast enough and could throw the entire international trade business into chaos in the event of a no deal Brexit.
On August 14, Her Majesty’s Revenue and Customs (HMRC) announced the implementation of the new Customs Declaration System (CDS) to manage the country’s import and export customs declarations. Two months after the implementation of the new CDS, only one freight software supplier has managed to submit declarations through the system, and one of those declarations was “lost”. Forwarders are increasingly concerned that the problems associated with the new CDS could exacerbate any potential trade confusion caused by a no deal Brexit, which would dramatically increase the number of import and export customs declarations.
British authorities suggest that shippers and forwarders should make customs declarations in advance to speed up processing times at the ports.
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Sources:
- The Loadstar
- The Telegraph
- The Guardian
