Shippers, forwarders adjust to sharp decline in trans-Atlantic reliability

Shippers, forwarders adjust to sharp decline in trans-Atlantic reliability

A container ship crosses the Atlantic Ocean.

A container ship crosses the Atlantic Ocean. Photo credit: Shutterstock.

Shippers and freight forwarders moving goods between Europe and North America have in the last year found themselves forced to track cargo more closely, switch carriers, or even send goods by air to cope with a sharp decline in the reliability of carrier sailing schedules.

A report released by SeaIntel Maritime Analysis, the Copenhagen-based shipping analyst, found that the disparity between carriers’ schedules and the actual times that vessels arrived was worse on the trans-Atlantic route than any other route, except Asia to North America East Coast. The reliability on westbound trans-Atlantic routes fell by 10.5 percentage points to 67.4 percent, while reliability on eastbound trans-Atlantic routes decreased by 10.6 percentage points to 70.2 percent, according to the analysis released earlier this month. The biggest decline was on the Asia to North America East Coast route, where reliability fell by 14.1 percent to 66.3 percent, the study found.

Several freight forwarders or shippers said they had noticed a decline in service on the trans-Atlantic route and attributed it to various factors, including poor weather conditions and the growing pains of the reshuffled alliances.

Klaus Schnede, manager North American Marine at Eastman Chemical Company, attributed the problems in large part to the alliance reshuffle and series of hurricanes and winter storms that affected the Gulf and East coasts. And this year has not gotten off to a good start, he added.

Weather, trucking — major factors

“Weather and trucking are two major factors for huge delays in the first couple of months this year,” Schnede said.

Alison Leavitt, managing director of the Wine and Spirits Shippers Association, said the problem became noticeable in the second quarter of last year, which “resulted in blank sailings and re-adjustment of strings and port calls.” Reliability improved for a while but deteriorated again with the bad weather at the end of the year, which was a “big factor,” she said.

One group that represents freight forwarders, which asked not to be identified, said a related problem to the schedule unreliability was the carriers’ failure to inform shippers of any tardiness.

“The increasing slot chartering [and] shared use of vessels adds to the lines’ operational and information coordination, and thus delay in being able to provide good updated information to customers,” the group said. As a result, the freight forwarders said, “One of the big adjustments OTIs [ocean transportation intermediaries] have had to make is to put more resources in to keeping track of containers and the true arrival/departure dates.”

The reliability issues unfolded as spot rates on routes into New York from Rotterdam were generally lower in the first part of the year through September than the corresponding period in 2016, according to figures from the Drewry World Container Index tracked on JOC Shipping & Logistics Pricing Hub. But Westbound spot rates on the route have risen since the start of the year to $2,067 per FEU — up 20 percent over a year ago, and the highest rate since January 2016, Drewry figures show.

In the opposite direction, spot prices on exports from New York to Rotterdam moved back and forth above and below their year-before levels for much of 2017, the Drewry figures show. But the figures have risen steadily since the start of the year to $501 for an FEU, or about 5.5 percent above the year before figure, the Drewry figures show.

The volume of loaded cargo going between Europe and the United States grew 6 percent in 2017, with imports — which accounts for about two-thirds of the trans-Atlantic volume —increasing by 7 percent over the year before, according to PIERS, a sister product of JOC.com.

Niche carriers: most reliable

Schnede said his company responded to reliability problems by changing shipping lines, mainly to ICL. The SeaIntel analysis concluded that “niche carriers ICL and Marfret had the highest schedule reliability on the Transatlantic Westbound and Eastbound trade lanes, respectively, recording on-time scores of 97.5 percent and 98.7 percent, respectively.”

In addition, said Schnede, his company — which ships 8,000 containers to Europe and imports 1,500 boxes in the opposite direction — “added inventory in Europe which served as a bridge between customers and delayed shipments.”

“It added cost, unfortunately, to add inventory,” he said. “But it was the only solution available to deal with these massive delays at times. Occasionally we also had to airfreight to cover a customer that was running out of material.”

The SeaIntel report comes as trans-Atlantic carriers refine their route offerings. In January, Mediterranean Shipping Co. announced a revised schedule for US importers of goods from Mediterranean ports via East Coast ports that would get cargo to its destination up to four days faster.

Two months earlier, Maersk Line added Newark and Charleston to its Columbia Express route, which begins in Turbo, Colombia, and ends up in Felixstowe, after stopping at Rotterdam. That route, begun in January 2016, had a “disastrous launch” that offered the “slowest service to the US East Coast with huge delays,” after the carrier said it would be the fastest, said Leavitt.

Contact Hugh R. Morley at Hugh.Morley@ihsmarkit.com and follow him on Twitter: @HughRMorley_JOC.