If you had to list the top five industries hardest hit by the pandemic, Freight Forwarding would have to be included. A double whammy of Brexit and the pandemic has left the global industry with the most complex and challenging situations they have faced since 1945. When Olly Magnus set up the freight forwarding division in 2019, he had no idea of the challenges that his team would be facing in their first couple of years.
- Documentation has been a Brexit headache.
- A lack of drivers, exasperated by a backlog of delayed driving tests, putting road freight at risk.
- A dramatic increase in online shopping resulting in more goods being shipped from the Far East.
- Scarcity of containers causing a backlog in maritime freight.
Despite that, Matt Hope and his team in the global Freight Forwarding department for Magnus Group Ltd based at Felixstowe, are still smiling! “As an overseas forwarder, we have continually focused on supporting our clients, and explaining to them what is happening throughout the pandemic and Brexit changes,” explains Matt. “By being prepared, and communicating at every stage, we have gained a reputation of being the professional experts in freight forwarding and have our clients’ trust”.
January to March was all about Brexit for UK freight, logistics and warehousing teams but, in the background, the challenge from the Far East, and specifically China, was building. “China’s second wave of the pandemic coincided with their national holiday for their new year period,” explains Matt, “which meant their productivity plummeted with a mix of restricted working hours and shifts due to covid, sickness levels and annual leave.”
This extended drop in production has delayed recovery for the international logistics industry.
The lack of containers has increased shipping prices: China to Northern Europe had seen prices quadrupled from Q1 to Q4 2020.
“The delay getting goods from the Far East to the UK is impacting on the availability of components and goods, and the profitability level of such goods,” explains Matt.
The global trade routes are interlinked in such a way that every country and trade route has been affected by covid, and especially China and the Far East.
“Whilst pricing has gone through the roof, Magnus is interested in building and developing long term relationships with our clients. We refuse to profiteer from this,” says Matt. “We are operating an open-book policy, and charging a mutually agreed management fee so our clients can see exactly how much the shipping has cost and how much we have charged. There is no hiding that costs have increased but we are supporting our clients to help protect their business as much as possible”.
How has the container shortage happened?
Put simply, the supply of containers dropped, and the demand for containers increased: a perfect storm for a worldwide logistic crisis.
China is the main provider of containers. Production dropped dramatically during the pandemic due to closures, restrictions and sick levels.
Internet shopping increased. People sat at home with no in-person retail open and spent on home improvements and home office furniture via online shopping: most of which is not locally manufactured or produced.
Add to that the demand of the huge quantities of medical PPE and supplies which were shipped via containers
The container shortage, and increase in demand, has been made worse by issues at receiving ports also struggling with covid-restrictions and staffing levels. Many ports in the Western market have experienced manpower issues with covid outbreaks both on the ships and in the port.
“The vaccination programme will no doubt help but we need every country to get to the same level of vaccinations as the UK before we see the real benefit of back to normal productivity levels and working practices,” reflects Matt. “Meanwhile UK businesses who rely on imports from the Far East need to allow for the delays and extra time in shipping.”
“The shipping industry is responding and increasing fleet size, and container production is now increasing again. The industry is reporting that container production in 2021 will be 52% higher than 2020 which is what we need,” explains Matt.
It is expected to be another 12 to 18 months before things settle, with seasonal fluctuations such as Christmas impacting the recovery.
What can UK companies do now?
There is no quick fix to this. It will take time for fleets to be increased, and containers to be produced. As covid levels decrease, and vaccinations increase, delays and blockages at the ports will gradually ease releasing more containers.
Using a freight forwarding service will help ease the pain for UK companies relying on shipments from the Far East. “At Magnus, we have the contacts and communication links needed to help support our clients. Whilst we can’t make containers materialise out of thin air, or guarantee a fast arrival time from the Far East, we can make sure that the client knows what is happening, pays the best possible price and know where their goods are,” says Matt. “We have links not only with every UK port but with every European and worldwide port, allowing us to provide a seamless door to door service.”
Magnus’s open-book policy means that their clients can be confident they are getting the best possible price, and feel confident in the transparency of the charges.
Magnus Group is based just outside Ipswich, Suffolk, ideally placed to serve the Port of Felixstowe with direct road links to the Midlands, the North and London. If you would like to know more about our global freight forwarding, warehousing, transport teams call us on +44 (0) 1473836600 or email on email@example.com.
Tags: brexit, Felixstowe, freeport, Freight Forwarding, freight forwarding Felixstowe, freight forwarding Suffolk, global forwarding, logistics, Team Magnus
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