Forwarders grapple with shortage of storage capacity for box imports into Europe
A shortage of storage capacity for ocean freight imports into Europe is proving a major headache for forwarders and the onus is on finding a mix of different solutions to avoid unnecessary costs and delay in transit for shippers, according to a senior freight forwarding industry executive.
The issue has arisen due to orders that were placed during the initial outbreak of coronavirus in China that saw the supply side virtually shut down. This led to pent-up demand in consumer markets; but fulfilment of these orders began just as the pandemic spread to these markets, leading to lockdowns and a collapse of demand.
Maersk, CMA CGM and Mediterranean Shipping Co (MSC) have each taken steps to avoid congestion in the supply chain as cargoes reach their destinations. Earlier this month, in a letter to customers, Maersk urged shippers to minimise port stays and the detention of containers as much as possible, in order to reduce the risk of congestion and maintain the flow of goods.
MSC this month introduced a Suspension of Transit (SOT) programme that allows containers to be stored at several transhipment hubs in advance of renewed customer demand. French carrier CMA CGM followed MSC’s lead and introduced a delay in transit option for shippers seeking to delay to final delivery of their goods to import destinations.
Hellmann Worldwide Logistics’ chief commercial officer, Jochen Freese, told Lloyd’s Loading List in an interview: “In an environment of reduced capacity, blank sailings and combined loops etc., forwarders have to keep their options open when it comes to storage solutions and choose which is the best on a case-by-case basis,”
“MSC’s SOT is not new but has been extended to 10 ports worldwide and you have to book it with the fixed schedule before the movement of goods, so that might not give the room for manoeuvre the shipper requires. For example, if I chose Bremenhaven as the transhipment port, I’d have to book that before the ship leaves Asia. Nevertheless, it’s a helpful tool in the current situation and is part of a mix of options that forwarders can call upon.”
He continued: “As far as Hellmann is concerned, our focus is on getting shipments into warehouses rather than have them held over at transhipment points offered by the shipping lines or at destination ports, because this makes us way more flexible and corresponds to customer preferences.
“Very often customers do not have an urgent need for all of the contents in a single container but only certain parts, components and boxes packed in it. Being able to break down containers in-house therefore gives us greater reactivity and the benefit of this will be demonstrated when things start to ramp up again, as the COVID-19 threat recedes.
“So, our preference, where possible, is to store containers in warehouses. Of course, whatever solution we find, they all come with additional costs, and there’s no way round that.”
However, Freese underlined that Hellmann wouldn’t rule out ‘delay in transit’ options. “For example, we’ve brought containers into Dubai’s seaport, positioning them in a warehouse there and can respond to customer requirements in Europe for these goods in 24/48 hours by flying them in,” he explained.
“Finding warehousing capacity is a challenge, but we still have some space available. It depends on how much is required, for how long, and what kind of goods has to be stored. Our warehouses are starting to fill up now and we are also renting additional space on a short-term basis.
“But with lockdowns in Europe being extended in certain countries, if cargo continues to arrive, the shortage of space could reach critical levels.”