2020 was a hard year for any of us. Most businesses saw the coronavirus affect their bottom line negatively, and a few have positively benefited from the last several months. The year has been anything but easy.
But surprisingly, 2020 has been difficult for shippers for different reasons than you may expect. US imports have been at an all-time high now more than ever. Product imports are increasing, which is tying up shipping equipment and congesting ports. While the influx of goods has done good things for the economy, there’s no doubt that it’s made international shipping to and from the US difficult.
On top of this, the equipment tie-ups and port congestion we’re seeing isn’t just related to Chinese New Year – we can expect it to head straight into 2021.
So with all this news, here is a brief overview of 2020 and it’s impact on shippers, along with a look at what the near future may hold for us all:
2020 Shipping Recap
Let’s take a brief look at some of the effects that 2020 has brought on the international shipping industry:
January: IMO Restrictions
In January, 2020, new restrictions were put in place regarding sulfur emission from international shipping vessels. This restriction put a 0.50% limit on a previous 3.50% limit of sulfur content in international ocean vessel fuel.
This means there will be a 77% average drop in sulfur emissions from international ocean vessels every year, and experts presume this will result in a reduction of ocean acidification and acid rain, will reduce lung cancer, strokes, and asthma, and will benefit the growth of crops.
February: China Factories Close
As we all know, COVID hit China the hardest first, and the most significant impact was its effect on the workforce and factories. Early in February and throughout the next couple of months, factories began closing due to COVID outbreaks, which resulted in a major discrepancy between supply and demand.
This obviously restricted many companies around the world from the receiving the products they needed on time, creating a backlog of orders awaiting fulfillment.
April: Blank Sailings & Global Lockdowns
The first few months of the year held a lot of uncertainty. However, as COVID progressed, countries got more concerned about the medical and economic impacts of the virus, and countries were forced into lockdowns.
Unfortunately, for shippers this had massive implications. Several ocean vessels turned out to be blank sailings as scheduled shipments were cancelled and ships in transit were turned away or re-routed.
July: Early Peak Season
The middle of the summer is the start of the busy season for companies who are shipping internationally. In July, the peak season began to hit as it always does, only this time with the backdrop of COVID and its implications on the international shipping industry as is.
October: Equipment & Infrastructure Crisis
As peak season continued – combined with the delayed domino effect of early lockdowns and factory closures – an equipment and infrastructure crisis ensued. Demand far exceeded supply as companies around the world sought to make up for their losses and delayed orders from earlier in the year.
There is now container and equipment shortages, cargo blocks, and booking stops that aren’t showing any signs of stopping soon. On top of it all, the actual virus itself is directly affecting business as truckers and draymen catch it and cancel bookings last minute. While everyone is doing what they can to combat the impacts of COVID, there’s no doubt that it has taken its toll (and continues to do so) on the international shipping industry.
Preparing Your International Shipping for 2021
So, I think we can all agree that 2020 has had a significant impact on global trade, supply chains, and most international shipping companies’ bottom line. In other words, “It’s been a year…”
But to be completely honest, this year has proved to be a perfect pallet cleanse (see what we did there?) for businesses as they re-evaluate their vendors, business decisions, costs, and strategies for dealing with international shipments and sales in the New Year.
This year offers a blank slate; a new canvas for reworking the way we all approach our international shipping practices. And if you’re ready to embrace that and properly prepare yourself for the New Year, here are a few things you can do:
Utilize Your Freight Forwarder Fully
I think we’re all doing everything we can to save a dollar here and there, cut costs where unnecessary, and improve our processes to increase efficiency. Right now, more than ever – this is the time to either be utilizing your freight forwarder fully, or finding a different freight forwarder if they aren’t working out for you.
With the predicament that steamship lines are in right now with the equipment shortage, they’re not going to be making special exceptions for space for every company who has a larger-than-normal shipping volume. The small anecdotal discounts are pretty much irrelevant at this point.
What you need is a freight forwarder who can offer you the benefits of established carrier relationships and large shipment volumes. You also need a carrier at this point who practices active listening as a part of their process – someone who can genuinely listen to the issues you’ve experienced with past vendors and devise a customized solution for your business only.
Make Smaller Shipments
If you have the option of deconsolidating FCL shipments into more LCL shipments, now is the time. With shipment bookings being turned down due to container and equipment shortages, the chances are significantly higher of you getting any space on LCL bookings than FCL bookings.
Talk with your freight forwarder about potential solutions for breaking apart your shipments to fit into multiple LCL shipments. It could save you some massive headaches, customer relationships, and your bottom line.
Use 20’ Containers
If your current shipping process involves the use of 40’ or 45’ regular and high-cube containers, you might want to start considering switching to 20’ containers. With the above implications on the shipping industry, you want to use a shipping solution that is most widely accepted, and currently, 20’ containers are the way to go.
Asia has some restriction on containers that aren’t 20’, which can cause cancellations or difficulty in booking shipments if you’re opting for 40’ or 45’ containers.
Wrapping it Up
We’ve all been dealt a certain, rather unfavorable set of cards this year – personally and in business. We understand it’s hard, but this year has provided the opportunity to reflect on what all has happened and how we can bounce back in 2021.
If you’re ready to gear up for the New Year and take a fresh approach to your logistics process, start utilizing your freight forwarders fully. Use a good freight forwarder who has established relationships with carriers to reduce costs, secure space on shipping vessels, and streamline your process. Break down
FCL containers into several LCL shipments to get space on vessels that are quickly overbooking. And finally, make sure you’re using 20’ containers at the start of 2021. With the effects that COVID has had on the international shipping industry, you need to opt for containers that are more universally accepted, and 20’ seems to be the way to go for now!
If you are interested in starting a conversation to discuss how the year has gone for you and what you are looking for in a freight forwarding partner to bounce back after this year, please don’t hesitate to reach out to one of our team members! We would love to chat with you about solutions and help answer any questions you may have.