Current events impacting global shipping in 2021

Brexit

The cost of moving freight from France to the U.K. surged to more than four times the usual rate after Brexit and a new strain of the coronavirus complicated supply chains.

If you export from the EU to the UK and vice-versa, Brexit means more administration tasks, heightened rates, and more delays. Businesses must make sure that they have the correct paperwork for themselves and the goods on board, and traffic has to be managed into the area.

In addition to Brexit, France has closed the border in the protection of the new strain of COVID-19 which has brought major chaos to the surrounding British ports. This chaos has led to a pile-up of thousands of trucks on both sides of the English Channel.

Container Shortages

A dire shortage of shipping containers in some countries matched by an oversupply in others has created bottlenecks all over the globe. Carriers have been struggling to get containers where they need them. Analysts see this shortage continuing at least through January.

While high demand itself is part of the problem, the escalating empty container shortage is also a result of the following factors:

• Port congestion slowing container turn times
• U.S. export levels
• Vessel slowdowns affecting scheduling
• Slower return of empty containers at destination
• Inefficient chassis usage in the USA
• Overall inadequacy of worldwide container pool

Global trade and tariffs

January 1, 2021, saw the expiration of several programs that offered protections from standard or punitive duties based on product or country of origin.

Importers across a wide spectrum of industries are facing additional duty burdens. Significant changes were made to the Generalized System of Preferences (GSP) recently, most notably that certain Thailand-origin goods are no longer GSP eligible.

The United States-Mexico-Canada Agreement (USMCA) inherently impacted the cross-border world and tariff schedules. The expectation was that the USMCA would increase annual US exports to Canada and Mexico significantly.  As exports increase, that results in more cross-border truckloads between the US and Mexico. This should also increase reliance on cross-docking shipments to leverage trucking capacity on both sides of the US/Mexico borders.

Vaccine Distribution

Vaccines have started hitting some markets already and full global rollouts are expected early this year.

The initial distributions will also coincide with the Chinese New Year when we historically see a large influx of retail merchandise ahead of the weeklong holiday in China.

With vaccines likely moving via air freight, we expect peripheral products, such as syringes, gauze, cotton to move via ocean, which could mean tightened capacity for both air and ocean shipments. The importance of freight forwarders is likely to increase as the complexity of vaccine distribution reaches never-before-seen levels. Freight forwarders’ role as the “connective tissue” of logistics will be key and will take the pressure of managing the logistics of pharmaceutical companies. Additionally, prioritizing vaccines means that some non-essential cargo will get bumped, increasing rates and affecting businesses that are not properly prepared for this unprecedented time.

Experts say that 2021 will be known as the “year of cold chain logistics” in reference to refrigerated distribution.

Covid-19

COVID-19 and border restrictions continue to impact customer’s exporting needs as they move their freight into the US and other countries. The news strain of COVID-19 has added a new layer of unpredictability and border closures. Logistics companies will have to be agile and diligent as they navigate and comply with their customer’s requirements.