Industry Insight

How the ocean freight crisis is affecting project logistics

Author: LPC editorial team

A shortage of containers and a lack of specialist workers during the Covid-19 pandemic

Covid-19 has had a firm grip on the world since the spring of 2020. The effects of the pandemic can be felt in logistics operations all around the globe. It has long since been clear that there is a need for innovative concepts and solutions to handle capacity problems on ships and in warehouses. The project logistics department of one of the leading German freight forwarders has therefore developed various concepts during the last eighteen months to ensure that manufacturers and logistics specialists can cope with the challenges of the current situation together.

It is a very normal working day in the office of one of the leading German project logistics freight forwarding companies. Niels Walch, one of the company’s project managers, is currently processing an urgent customer enquiry: to ship project loads from China to Germany. This would have been an enormous opportunity prior to Covid-19. However, it is now a real challenge at the end of 2021, in the middle of the pandemic. Capacity problems on scheduled container vessels, RoRo and break bulk ships, no guaranteed dates for shipments, repeated cancellations of trips, clearance delays at ports, no spare capacity in warehouses to store the goods for a later departure, and not least increases in prices – all these factors have become part of the new normal world.

An unprecedented situation for shipping

However, the ocean freight crisis is not just affecting individual sectors but practically every company during the Covid-19 pandemic. ‘I don’t know how manufacturers can cope with these challenges alone. The situation is one that we’ve never experienced before, even a company like ours, which has many years of experience in project logistics,’ Walch explains.  

While it was primarily container deliveries that were affected at the outset, RoRo and break bulk shipments are now being particularly impacted because of these bottlenecks, as every bit of available shipping space is being used. The situation seems to be most drastic for deliveries from China to Europe and the USA. Ultimately, the project logistics business is not only facing a shortage of shipping space for so-called OOG goods (‘out of gauge’ – i.e. oversize consignments such as heavy cargo items) and the corresponding small parts, which can be placed in containers. The handling capacity at ports is also extremely limited and this often causes clearance delays.

Capacity problems caused by an increase in demand after the slump triggered by Covid-19

Covid-19 continues to introduce a large number of challenges, even about eighteen months into the pandemic. In the spring of 2020, when the pandemic broke out, many shipping companies were forced to cut important connections for a short time, take vessels out of service and accept fewer new orders. The boom in demand following the first lockdown automatically created bottlenecks, which cannot be handled with the current shipping and container capacity.  

Quarantine measures for ships’ crews and port personnel in connection with the pandemic have also meant that more and more important specialist workers have been unavailable for clearing deliveries. This in turn has created real logjams at the ports and delays in transporting the goods from there – and this is a problem that is very familiar to Walch and his team, too.

A project involving booking a RoRo shipment for a partial consignment from Shanghai in China to Baltimore in the USA during the summer of 2021, for example, proved to be far more complicated than prior to the pandemic. The earliest suggestion for an available vessel for this consignment was in the autumn and the service provider rejected all attempts to arrange an earlier departure, stating that there was ‘no shipping space available’. When the situation in Shanghai then deteriorated even further and shipping companies started to reschedule their departures and completely remove the port from their list of stopping points because of the enormous congestion there, the autumn alternative was no longer an option. A departure would then have been possible at the earliest at the start of 2022 – and it was the same story with other service providers. ‘FCL shipments were not an alternative at this time either as the shipping rates for containers are still continuing to reach new record levels,’ Walch comments. It was therefore necessary to continue looking for a suitable solution. 

Manufacturers and freight forwarders affected to the same degree

Logistics specialists face the same problems as their customers in the crisis. Then there is the fact that it is also necessary to explain situations to customers. ‘If people aren’t aware of the market or don’t have any contact with experts, the current situation can be devastating for an individual company,’ Walch adds.

This is why freight forwarders are doing everything to explain to manufacturers the current changes in the marketplace such as unreliable timetables and capacity problems and prepare them for any eventuality. Project logistics experts and customers then draw up concepts together, which also take into account the current challenges. This may involve significantly more work as more options have to be compared with each other, but it ensures the best possible solutions in the current situation.

Tailor-made concepts in project logistics more important than ever

This is particularly important at the moment as delays in heavy cargo transport operations and extensive projects involving complex advanced planning are having an effect on the delivery processes along the complete supply chain.

„It’s crucial in project logistics to check all the available possibilities to keep costs low and adhere to the customer’s timetable. This requires creativity, particularly when it comes to investigating new possibilities.“
Niels Walch | Project Manager at Rhenus Project Logistics

This includes new transport methods with individually adapted packaging solutions, as well as finding available capacity using traditional methods.

Good transport management with experts around the globe

Comprehensive management processes are not only essential during the project run-up, but also during the complete handling of any project. They make it possible to respond quickly to circumstances that have been changing daily in the course of the Covid-19 pandemic. Many companies do not have the necessary in-house capacity or adequate expertise to draw up solutions that have been adapted to the requirements of the crisis.

However, tailor-made concepts have always been the key element for project logistics operations. Experienced specialists around the globe handle the planning and management work. ‘In our capacity as a project logistics freight forwarder, we consider all the options when we need to draw up the most efficient solution for our customers,’ Walch says. This also means accounting for possible risks such as capacity problems and delays in clearance or even additional cost factors.

This was also true of the case mentioned above involving transport services from Shanghai to Baltimore: Walch’s team decided to ship the complete load by break bulk carrier in order to be able to still meet the planned deadline in the autumn. ‘We’re using all our expertise to find the right option at a reasonable price at the right time, and be able to respond to possible interruptions and changes of plans very quickly. As a result, we can provide the best possible general conditions available at the present time and help our customers to focus on their core business, also during the Covid-19 pandemic.’

Are you interested in receiving more information?

You can discover more about extensive projects which require complex advanced planning work and in-depth knowledge here.

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