Global Congestion Continues

There is no clear end in sight for the surge in demand in the global shipping industry. The supply chain is strained in almost all areas of the world.  For beverage alcohol, this means out of stock situations, higher costs due to significant increases in shipping charges, and some radical actions to get products moved on a timely basis. Our current update on the key export regions for beverage alcohol follows:

Europe:  Continental Europe remains one of the hardest hit areas in terms of lack of equipment, overbooked vessels, and skyrocketing rates. The huge ports of Rotterdam and Antwerp are running low on equipment and it is difficult to find empty containers in many areas of Europe, especially at inland depots. Barge service, normally a key mode of transport in the German hinterland, is virtually at a standstill due to congestion. Italy also remains hard hit, with a massive backlog of cargo and many ocean carriers are not taking new bookings until mid to late May. Port omissions continue sporadically, with carriers skipping ports or countries to try to maintain some schedule integrity, and “rolling” of cargo at transshipment ports remains a common occurrence. The UK and Ireland are not as badly affected, but feeder vessels from ports such as Dublin or Grangemouth are often delayed or “bunched”, thus schedules are not reliable. We are continuing to effectively move all orders, but plan for longer lead times and longer transit times, and unfortunately, significantly higher prices than Q2 of 2020 when the market was at rock bottom. Demand is at an all-time high, and the prices are reflecting the demand.

Oceania:  New Zealand remains a trouble zone, with the port of Auckland being the hot spot for overall delays as it is the key import port for the country and the source of inbound equipment. Vessels are averaging 5 days at anchor waiting for berths at the port, thus creating a trickle down of delays. Some carriers are not allowing loading at Auckland, and accepting cargo only at Tauranga port. Tauranga has a huge backlog of imports and is extremely congested as well, but still running a bit more smoothly than Auckland. The port of Nelson, a key port for exports from the Marlborough/Blenheim area is also heavily congested primarily due to the trickle-down effect of vessel schedule delays at Auckland and Tauranga. Vessels are heavily booked so again, plan for delays. Australia is not as bad, and equipment is available, but schedule integrity remains a problem. Port omissions have come up, and on one key string to the USWC, there was only 1 call at Oakland during the course of 4 weeks, thus putting a strain on this lane. Vessels are all heavily booked and advance planning remains key to keeping your cargo on schedule. The continued imposition of severely high tariffs on Australian wine shipping to China has devastated this trade lane—a key market in the past for Australian wineries.

South America:  The situation in South America remains relatively stable compared to the most congested regions described above. However, issues of equipment shortages and congestion do exist. The issues are exacerbated by the limitations the Maritime Authority has placed on the port of San Antonio in terms of vessel operations, as well as carriers implementing “cut and run”, leaving the port before completion of loading to make the scheduled window at a transshipment port. All USA and European cargo is transshipped and vessels try to hit the transshipment ports in time to get the cargo onto the vessels heading onward. This has created backlogs and rolling of containers at the ports. BAF/Bunker fuel prices have also risen in this area, and have contributed to an uptick in the rates, but not nearly as dramatic as the European increases. Surcharges are in play in the lanes that are most congested, such as the Chile to US West Coast lane.

South Africa:  This country has been hard hit by COVID and various lockdowns, including prohibition of alcohol in the domestic market. The port of Cape Town has been running at low productivity for many months, with continued operational backlogs and congestion primarily due to COVID. Overall, cargo is moving and the rates remain relatively stable from this region. In the last few days, there was a major wild fire on nearby Table Mountain which temporarily blocked some roadways and created local disruption. 

US Exports:  Exporters are also feeling the impact of the global congestion. Shipping lines are preferring to return empty containers to Asia, where they can secure extremely high prices for shipping full containers back to USA and Europe at rates that top $10,000 per container. Securing empty equipment for exporters is challenging in certain areas, and we work closely with our carrier partners to hold them to their allocations and find equipment. 

US Port Congestion: Record import volumes continue to plague major USA ports with double and triple digit increases from the previous year. While the ports of NY/NJ have been seeing some improvements, truck power still remains an issue for longer haul deliveries, such as those into Pennsylvania or New England states. LA/Long Beach and Oakland remain problem areas, with berthing delays from 6-12 days and dozens of vessels waiting outside the terminals. Savannah has recently become a trouble spot with significant backlogs for moving cargo off terminals and onto the rail. We are keeping our eye on Montreal, with labor issues continuing but no strike as of yet.   

Tariff Suspension:  WSSA is continuing to work with all key industry associations to fight for a permanent end to retaliatory tariffs on beverage alcohol. The Association recently participated in a panel speaking to members of Congress, including the leaders of the Bourbon Caucus, explaining the impact of the tariffs and the effect of the short term suspension on an already strained supply chain. Next week, WSSA and other industry executives will present to the Acting Deputy Under Secretary of Agriculture, Jason Hafemeister, again explaining the need for certainty and stability for the beverage alcohol industry to survive and thrive.

Should you have any questions or need further details on any of the above points, please reach out to us at info@wssa.com.