Shipping and Logistic Update- August 2021

To all Fair-Rite customers,

As we are sure you are aware, the global transportation of materials and related supply chains has been severely impacted in the last 12-18 months. The China-to-USA lane for international shipments has been especially challenging, with rapidly increasing costs, limited container availability and vessel capacities.

Via one of our transport partners, we have recently been made aware of issues at Ningbo-Zhousan, where operations at one of the port’s terminals have been suspended with 28 container ships currently waiting for a berth. The Ningbo Meidong Container Terminal, also referred to as Meishan terminal, has suspended operations after a worker for an undisclosed carrier tested positive on Tuesday, according to Reuters.

The risk to Fair-Rite and its customers is that as congestion builds at Ningbo, China’s second-largest container port, it will spread to other ports, especially Shanghai. This happened when Yantian International Container Terminals (YICT) partially shut down for four weeks starting in late-May, congesting neighboring marine terminals in Southern China.

Chinese efforts to combat COVID-19 infections appear to have also spread to air cargo, with SEKO Logistics reporting freighter flights to and from Europe and the US have been suspended until the end of August.

“With this sudden suspension, we expect a delay in planned sailings that might affect your cargo planning,” a spokesman for Hapag-Lloyd told customers in an advisory issued Wednesday. The terminal has suspended all container services, meaning vehicles and personnel are no longer permitted entry, disrupting an “already overstrained” supply chain. Several carriers have stated that their warehouses in the port’s free trade zone have been forced to close with the suspension of terminal operations.

Container terminals in eastern China — already working at full stretch with no slowdown in demand from the US and Europe — were further disrupted by typhoon In-fa, which swept through the region two weeks ago, suspending port operations and leading to vessel and container bottlenecks in a container shipping market has been operating at 100 percent utilization levels throughout much of the year.

Josh Brazil, Vice President of marketing at ocean freight visibility provider Project44, shares those concerns, explaining “The fact that ships remain delayed and now we are seeing COVID-19 variant outbreaks in major Chinese manufacturing hubs indicates there may be far-reaching down-stream consequences going into Black Friday and holiday shopping seasons.”

The above situation is in addition to existing challenges on all international transportation routes, including those to our customers in Europe. Vessel and Air Freight utilization remains at capacity. Costs continue to be at record highs and we are seeing significant delays in lead-times in ports of entry, railheads and trucking routes.

Fair-Rite’s Logistics Team and operations in both the US and China are watching the situation closely and we continue to investigate all avenues to move product as cost-effectively, quickly and securely to our US sites and our customers. However, as detailed above, there are significant impacts in the region that may cause increased delays and/or cost increases in the next few months.

We will continue to provide updates as we receive them and appreciate your support and patience during this challenging time.

For any further questions, please feel free to reach out to your Inside Sales contact here at Fair-Rite!

Regards,

Fair-Rite Logistics Team

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