Four week delays, rate hikes and surcharges have led to concerns for shippers.

Shippers from Asia to North Europe are said to be facing a mounting capacity crunch, while carriers are set to add to their woes with mid-month price rises and peak season surcharges.

According to a report in The Loadstar, companies are currently experiencing three-to-four-week delays for FAVs (first available vessels) to North Europe, and even longer for the UK. According to one source: “We are paying their FAK (freight all kinds) rate, and even a premium on top, but we are really struggling to get boxes away from China. I’m hearing rumours of a big FAK hike from the middle of the month and also that some carriers will add a PSS (peak season surcharge) on top, so we are warning our customers to prepare for extra charges.”

Richard Brooks of Far Logistics Manchester posted on LinkedIn about the multiple challenges that logistics providers are currently facing: “We expect to see Peak Season Surcharges, as well as 20% capacity withdrawal in August against the same time last year. Demand is estimated to be up to 10% higher compared to the same period last year, while we are seeing shortages of hi-cubes and roll pools of up to 20%.”

Asked if this could lead to delays or shortages in Q4, Richard told Toy World: “Normally I would say so, but shipping lines are actually posting profits – more than expected, which is great as they can’t keep losing money and we don’t want another Hanjin style collapse. The lines are in a great place, the PSS is to capitalise on bookings up to Golden Week for sure. Space is a genuine issue, as they are still not fully re instating pulled routes or larger vessels.”

One UK supplier told Toy World: “ It seems that China is short of 20ft containers for shipping and they are trying to make you take 40ft high top boxes – that equates to 2300cft, which is a lot for smaller suppliers. The rates have also gone up more than we expected at this time of year, perhaps driven by the fact that there seem to be fewer boats available.”

Meanwhile, over in the US, companies are facing similar challenges. Steve Pasierb, president of the US Toy Association, recently wrote to members about the situation: “Even as many experts say capacity is returning to near normal and total volume was forecasted to be down, uncertainty and price pressure dog the shipping sector. As we enter peak season for holiday shipping and with bookings on the rebound, China’s Ministry of Transport has sent a letter to the world’s six largest container lines after rates between China and the US West Coast reached record heights. Substantial customers with contracts in place appear to be secure, while smaller and seasonal shippers are experiencing pricing pressure and longer waits of up to four weeks, with carriers able to charge premiums to prevent shipments from being rolled. Ongoing PPE consignments, upcoming consumer electronics launches and a general attitude by the sector to price up more aggressively appear to combine for a downside to customers. While less essential to the toy community, air cargo rates are also climbing, while capacity continues to be somewhat limited due to a decrease in traffic. The tech sector is anticipated by some to further accelerate air cargo rates in the coming weeks.”

Published on: 26th August 2020

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