Lack of capacity outside peak season; how is this possible?
7 May 2020
Traditionally, the summer months experience a peak in the numbers of shipments from Asia. Now more than ever we know that we must be creative and efficient where this concerns the available space. The arrival of the corona virus has unsettled the entire world. The precipitous decline of cargo capacity and the uncertain economic situation have of course consequences for the availability of space. We would like to keep you up to speed with the very latest developments.
How is the coronavirus affecting supply and demand?
Coronavirus arrived at the beginning of 2020. It almost immediately impacted the production and volume of goods being sent from China to the Netherlands. This pandemic has become a worldwide problem and a number of source countries have entered lockdown. For example, we informed you in March about the resolute closure of India and Pakistan. Thankfully, some countries have now cautiously started to reopen, albeit with still far from their normal pre-corona levels of productivity.
The decline in cargo volume, due to the closure of countries and European clients cancelling orders, of course has had an enormous effect on the supply and demand of cargo space.
Blank sailings and slow sailing ships
Obviously shipping companies also experience the direct consequences of this turbulence in supply and demand. The impact on their cargo volumes is vast, as they endeavour to deal with the blows and setbacks. By resolutely cancelling sailings from their schedules (known as blank sailings) and by having ships sail slower they hope as far as possible to mitigate and limit the expected material damage.
Unfortunately, decisions about this are often taken rapidly and unexpectedly, making it difficult for forwarding agents and shippers to anticipate such moves. With regard to this we would also like to draw your attention to an interesting article published last month by Nieuwsblad Transport.
Consequences for shippers
Because so many sailings are being cancelled in the present situation (for example, there is currently an unprecedented 35% of blank sailings) little balance exists between supply and demand.
For as long as this crisis continues, we don’t expect the shortages in capacity to ease off. Unfortunately shippers will therefore have to take (unexpected) delays and higher tariffs for the available cargo space into account.
We would also advise you to make allowances for blank sailings when drawing up your planning. Timely booking and allowing for more time for sea freight can reduce the potential for unpleasant surprises. If you have any queries, please do not hesitate to call your Ritra Cargo contact person.
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