UK now in game of supply chain Russian roulette

A senior figure at the Chartered Institute of Logistics and Transport has warned the UK faces a game of Russian Roulette as Brexit and the impact of the COVID Pandemic cause havoc at UK and European ports.

Writing in the institute’s website Alan Braithwaite, Chairman, of its Freight & Logistics Policy Group warned recent months has seen a huge upheaval in the UK’s transport and logistics infrastructure.

“Stories are gathering pace of UK ports being in trouble with landside capacity being completely full of containers and vessels simply refusing to call,” he warned.

He highlighted that the traditional Christmas peak had been delayed in 2020 due to the disruption to goods production by the pandemic.

“Normally the international shipping peak for Christmas is October, allowing time for the goods to be cleared and get to the shops,” explained Mr Braithwaite. “Delays in placing orders and resuming production in China and the East following the pandemic together with a backlog of orders when the pandemic struck has pushed the peak back. This late peak has encountered a surplus of containers containing PPE being held at the ports because the health logistics system warehouses are full; indeed, it is not just PPE but other ‘stuff’ for Christmas and Brexit stockpiling.

“It is reported by the UK Warehousing Association that all warehouses are full. As a result, managers in the supply chain have delayed clearing their containers from the port facilities; to do so would have involved a double handling and extra cost with a big risk that they would lose track of what is where.”

It has led to a reduction in the rate at which vessels can be unloaded and loaded.

“This extending of the docking period for the vessel damages the economics of the shipping line and blocks the berth for the next ship to arrive,” he warned.  “The shipping lines were already calling less frequently because of their bigger ships but that is now more sporadic as they cut out stops on their journeys and offload containers at a more convenient port; so, the ports are caught between the rocks of poor container clearance and uncertain activity peaks.”

Containers that have been ‘landed’ in other European ports may then be loaded onto trucks to be moved into the UK or held to be loaded on a short sea shipping vessel to, perhaps a minor British Port.

It has resulted in the normal 40 day interval from shipment to arrival being extended by 20 to 30 days.

“The loss of capacity in UK ports and the diversion of containers to road movements across the straits of Dover and the English Channel has brought unexpected consequences,” warned Mr Braithwaite. “Before the pandemic, the Straits crossing carried c.5,000 vehicles each day, each way. Before Christmas, due to these unplanned diversions together with pre-Brexit stockpiling, it was carrying 7,000! This 40% uplift is nothing short of exceptional, stressing the capacity on that route as well.

“But this is not just about The Channel. There is not a single container ship that remains unchartered around the world due to the delays and lack of capacity; charter rates have trebled, and container shipping rates are as much as 4 times those before the pandemic. This is not exploitation but the law of supply and demand at work as well as carriers’ realism on operating economics. Nobody will be making money, but those who can, will be protecting themselves from the worst economic effects.”

On Brexit Mr Braithwaite said the new trade deal will bring the requirement for customs documents, clearance on entry and for some potential shipment delays; COVID-19 testing will add to this, “given the experience of the ports where capacity was ‘gummed up’, the potential for a parallel experience should be obvious,” he added.

Around 90% of cross Channel movements by truck are on foreign registered vehicles. As delays grow there is a possibility that EU hauliers will not think the work is worth the candle and simply withdraw their capacity.

“The unintended consequence may be a loss of capacity which cannot be filled by British hauliers as the licences to operate on the EU mainland for British vehicles have been restricted,” he warned. “Now capacity can always be replaced if the price is high enough – but that means higher costs for consumers both through deep-sea ports and the short Straits. As the network adjusts to all these conflicting pressures, it will mean, shortages on the shelf and reduced shelf life and margins for retailers.”
Mr Braithwaite described the current situation as “a moment of dramatic national risk”.

“Figures for movements and the rapid introduction of new shipping services, point to growth in unaccompanied trailer and container movements,” he explained. “The Irish trade is actively avoiding travelling across the UK with the ports of Cherbourg and Dunkirk benefitting. If that trend continues the UK will not have sufficient trucking capacity.”

He concluded: “Unlike the roulette table where the odds are known but the outcome uncertain based on your individual gamble, here we have both unknown odds and outcomes. Given the unexpected outcomes in our ports because of PPE, Christmas and stockpiling shipments, this is not just table roulette but the Russian variety.”

“It is reported by the UK Warehousing Association that all warehouses are full. As a result, managers in the supply chain have delayed clearing their containers from the port facilities; to do so would have involved a double handling and extra cost with a big risk that they would lose track of what is where.”

Alan Braithwaite, Chartered Institute of Logistics and Transport

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