October/November/December 2020

The world is a small place

//The world is a small place

There is a shortage of available 40’ containers in Asia, and as a result transport costs are rising sharply. There are resultant delays, and this robust export demand has the potential to slow down global economic recovery. Also, China has some of the busiest ports in the world and one of the busiest routes is between China and the USA west coast ports. There are so many questions that arise from this, and many lessons to be learned that it is a challenge to know where to start.

Why isn’t this on the front of every newspaper?
Does it mean we will go short of food?
Does this mean that it is a bad time to export?
Isn’t there a global pandemic slowing down trade?
Why is this happening now?

And of course,

What can be done?

I have no idea why the media have not picked this up, but I would not even begin to understand what drives their agenda. It is of course highlighted in the trade press. I am not concerned that we will go hungry, but maybe that was why Rishi encouraged us all to eat out, to fatten us up just in case. This is an excellent time to export from our perspective. Exporting to Asia can actually give a distinct advantage as return freight rates should be lower than normal due to the freight companies looking to get containers back to Asia as quickly as possible – even returning them empty on occasion.

Tony Goodman MBE

There is also clear evidence that economies, especially the USA, are rebounding quickly from the pandemic downturn, though it is yet to be seen whether this will be sustained. It also highlights where the main freight traffic routes are and just how much the internationalisation of trade has developed. Ricardo lives, breathes and prospers! There are many reasons for the container shortage problem occurring now.

There have been interruptions in Asian ports caused by lockdowns, and some may not yet be back to full strength. There may also be an overhang of shipments from the height of the pandemic. It will take some time for all aspects to work their way through the system and for the future position to become clear. There are always options, though they are not always given the consideration they deserve. Air freight is much more commonly used than many may think. When you have urgent or very high value to weight ratio products it can be obvious.

Rushing the latest smart phones or medicines by airfreight adds very little to the unit cost and has the advantage of speed to market. In my time I have had customers ship crisps and popcorn, basically boxes of air, by air freight, such was their rush to taste these delights. With the reductions we have seen in air passenger numbers this year, it makes sense for the airlines to give over empty weight allowances to more freight.

What about road freight I hear you ask? Well why not. Road freight from China to the UK can take between 23 and 28 days, depending on the origination point and number of drivers (with my thanks to Stacey Byrne of Kerry Logistics for this little gem). Whilst not yet a common route or indeed a green option, this can fill a need for urgent and cost effective requirements and may grow in usage if the container crunch persists.

So far we have focused on freight with Asia, but what about the rest of the world? Well there are implications, and the world is becoming ever more complex and interconnected. When considering exporting or importing, it is a good idea to involve your freight consultants at an early stage. That leaves us with Europe and our trade with the EU and beyond. As I write this article the game of Brexit bluff continues between the UK and EU. Both sides seem to have the odd blink, but then pin their eyes back open again. It is hard to see some kind of deal not happening, even if the talks break down first, which I can foresee as a possibility, and WTO becomes the adopted route. This game of poker does not have an end date attached so even if it is WTO on 1st January 2021 that is not likely to be the final position.

So, will there be massive queues at the channel border? Well there certainly will be if it snows, that always happens. The noises I hear are that the planning has been sufficient on both sides that even if it is WTO, things will move more smoothly than some feared, though still with some delays. Freight is in the hands of professionals whose livelihoods depend on ensuring minimum transfer times and efficient deliveries. That is not to say that strikes and blockades by French farmers and fishermen are not a possibility.

But why should 2021 be different to all other years.

Tony Goodman MBE is a successful exporter and has been doing so through a variety of different businesses. He is currently Marketing Advisor at Forest and Co who specialise in offering guidance on branding, exporting and sales: www.forestandco.com