Atlantic Ocean freight has become a tough business. Companies that ship cargo from Europe to the US are waiting longer and paying a good deal to secure space on trans-Atlantic vessels. The situation probably won’t ease up until the second half of the year. Several factors are working together to make trouble in the trans-Atlantic trade. Like many problems these days, most of those issues trace back to the COVID-19 pandemic.
The lure of the Pacific
In the spring of 2020, when factories in the Far East reopened after COVID-induced shutdowns, that triggered a huge surge of orders from the rest of the world. The surge is still going strong, sending rates for trans-Pacific service through the roof. A recent story in the New York Times, for instance, cited a US importer that’s been paying five times its usual rates for ocean transportation from China.
To meet the demand and maximize earnings, shipping lines have directed more capacity to trans-Pacific routes, leaving less for Atlantic Ocean freight. The trouble is, demand in the US for products from Europe is strong as well, and there just aren’t enough vessels to transport all that westbound cargo.
Pileups at the ports
Increased demand has also triggered a bad case of port congestion. Logjams at the Ports of Los Angeles and Long Beach get a lot of publicity, but the problem has assumed global proportions. Ships sit at anchor, waiting for a chance to berth. Loaded containers pile up on the docks, waiting to be loaded onto vessels, or for truckers to retrieve them. As long as they sit, they’re unavailable for other shippers to load. Other containers pile up empty, waiting for truckers to take them where they’re needed.
Compounding the problem is the toll that COVID has taken among dock workers and truck drivers. With part of the workforce sick or in quarantine at any given moment, operations all along the supply chain fall behind. Congestion doesn’t only slow down cargo movements in the present; it also reduces capacity for future shipments. If a vessel calls on 12 ports, and it’s half a day late getting in and out of each one, it loses six days—possibly making the carrier cut a whole sailing from that route. Weather has also played a role, with big winter storms in the US and icing in the Baltic sometimes halting port operations.
With less capacity and fewer sailings, shippers have a hard time finding space on trans-Atlantic vessels, especially for cargo sailing westbound. For instance, as of early March, companies shipping from Poland to the US couldn’t get vessel space until the first or second week of April.
Rates on the upswing
Just as prices have soared for transportation from the Far East, a combination of high demand, tight capacity and port congestion has put pressure on rates for Atlantic Ocean freight. As of April, shippers will be paying about 25 percent more than they did at the same time last year. That hike isn’t as extreme as the ones in the Pacific, but they’re still a shock to a shipper’s budget.
Ocean freight rates are high on the Atlantic because of the law of supply and demand, and also because steamship lines have added extra fees, such as the “container retention surcharge” and the “equipment imbalance surcharge.” Rising oil prices have also pushed up fuel surcharges.
What’s next for Atlantic Ocean freight?
Right now, global shipping is still suffering a domino effect, as one set of capacity crunches and delays triggers more. After all, if a company looking for capacity in mid-March can’t get space on a ship until mid-April, then companies that need to ship in mid-April will be forced to find sailings in May.
Eventually – one hopes – the steamship lines will rethink their vessel allocations, providing more service on the Atlantic. And as more people get vaccinated for COVID, hopefully ports will start operating at full capacity. With luck, trans-Atlantic service will return to something like normal in the second half of the year – maybe around July or August.
Advice for the meantime
With vessels solidly booked four weeks out or more, as a shipper, you need to plan ahead as far as possible. But that’s not as easy as it sounds. You can’t just ask for a sailing two or three months in advance. Most carriers refuse to take bookings that far out.
If you need a departure two months from now, it doesn’t hurt to ask. If the line says it’s too soon to secure that date, keep checking back. It’s a lot like trying to get a COVID vaccine. Appointments are scarce, but new ones keep opening all the time.
Also, don’t ask an ocean carrier for door-to-door transportation. These days, some shipping lines are declining bookings to the door altogether. Others may book your shipment to the door, but then a few weeks later they’ll come back and say you’re out of luck. Or your container might sit at the destination port for a week or two because the line can’t find a trucker.
If you book freight with a steamship line, you’re better off arranging separately for ground transportation, finding a trucker yourself, or asking a freight forwarder to serve as your trucking broker. Alternatively, you could use a freight forwarder to manage the entire door-to-door move.
Where to find help
A freight forwarder can provide other advantages, too. A forwarder that offers Non-Vessel-Operating Common Carrier services (NVOCC) knows which lines have space available on which services, and it puts that knowledge to work for you. Maybe you’re too busy to keep checking over and over for an open slot or a better rate. Maybe you’d gladly pay extra to get your container on a vessel a week sooner, if you knew where to turn. An NVOCC can locate opportunities you’d never find on your own.
No question, this is a hard, expensive time to ship on the Atlantic. But an experienced partner can make the job easier, and set you up for even greater success as conditions improve with time. To start planning your next trans-Atlantic shipment, contact I.C.E. Transport.