January Connected

17th January, 2024

Welcome to 2024, hope everyone has had an enjoyable break and looking forward to the year ahead.
 
Our team has been very busy over the Christmas and New Year period, with planes and ships not taking a holiday it has been many hands-on decks for the SCC crew, thanks to all of them for continuing to do a wonderful job for our great customers.
 
The news on the global supply chain is a little untidy, whilst we have been updating regularly via our marketing bulletins and social media on the DP World Port strikes there are several other global issues impacting the supply chain, each in their own way must be considered as we progress into 2024.
 
Up until the Covid pandemic, freight forwarders and the global supply chain did not make for interesting news and did not make it to the news cycle. Covid took care of that, and we dealt with it very well, to be honest we were very pleased to have the supply chain out of the news once global shipping started moving as we had come to expect.
 
Unfortunately, the global supply chain is front and centre on news reels again, including the DP World strikes, Red Sea attacks and Panama Canal drought, we will get into each of these and a bit more here. First up though it is critical for your 2024 planning that these matters are not ignored and consideration on your planning of orders must be robust to allow for these issues. Trade during Covid killed off Just In Time (JIT) inventory management, you can bank in 2024 that JIT will not be a workable model again. Check with your supply teams if increases to buffer stock is required, lead times extended and do we have the cash flow and necessary warehouse space as well. If you were not already aware we have a very experienced management team at SCC, and all are readily available to meet, discuss and help you plan for the year ahead.

DP World Strikes

The strikes have been occurring AU wide since October 2023, both parties have been stubborn on discussions and no progress has been possible. There are discussions scheduled again but given previous results an outcome from these two parties meeting alone is a very long bow to draw. The AU Federal Government has been missing during this extended period and only this week off the back of regular news articles on the impact of the strikes to Australian economy have they shown any interest. Tony Burke has finally agreed to meet with DP World management, this is the first intervention from the Government, industry commentary is clear, a resolution must be forthcoming immediately. The Fair Work Commission can compel both parties to come to a resolution by arbitration. It is reported that these strikes have been costing the economy AUD84M per week, the costs are spread across the supply chain and much of which is not recoverable, yes some is ultimately passed onto the consumer, but all is not possible. Hidden costs, like delays of 2 weeks, add to the cost to importers of carrying stock, late delivery to customers and consequently late payment for your orders. This is just one example of the cost impact. Like all, we remain very hopeful that these two parties show some respect to the rest of the supply chain, resolve the issues and stop being barriers to trade.

Shipping Delays

The strikes are having a big impact on the transit times of many sailings, with many vessels being re-routed whilst in transit, some vessel delays are currently 7-10 days. The resulting delays cause vessels to return late back to origin ports. This has an impact on the next round of schedules. The cycle continues until both parties come to a resolution.

Red Sea Attacks

The attacks by the Houthi’s in the Red Sea on container ships has continued, they are not showing any signs of ceasing. In the last few days, the USA Government with support of allies has bombed strategic locations with the intent that the Houthi’s may baulk at further attacks. The USA bombings appear to have given more resolve to the Houthi’s, and they have re-affirmed their position to continue the attacks. What does this mean for the supply chain and your orders? Cargo that had travelled through the Red Sea and Suez Canal is now being diverted around the Cape of Good Hope.

EXPECT:

• Longer lead times from Europe and the UK, up to two weeks.
• Container availability to be unstable.
• Rates on affected trade lanes to be higher.
• With orders from affected suppliers, you will need to get them placed earlier.
• For your next round of orders, plan on this conflict not being resolved.

Panama Canal (PC) Drought
The Panama Canal is one of the worlds critical passages for International trade, with 32 vessels passing through it daily. The PC is currently suffering the effects of its worse drought in history. Panama’s rainy season runs from late April to November, up until October last year rainfall was down 41%. For the PC to operate effectively consistent rainy seasons are necessary. The drought is severe, causing shipping lines to start making plans to re-route vessels. With the dry season now in play we must all expect delays to the sailings that are required to pass through the PC. 

Chinese New Year Planning

The year of the Dragon commences February 10th, 2024. The peak season for shipping will continue through to this date, whilst taking a break over the festive season. Please ensure to have your Chinese orders in place, as usual manufacturers will be stretched through to the commencement of CNY. Shipping schedules as previously noted are already affected by delayed sailings. Please ensure that all orders ex China are made available to the SCC team early January, this will allow us to track your cargo ready date and make an early booking for your important cargo. 

Chinese New Year public holiday is from 10th-17th February.

CNY Rate increases

We have seen a few rates increases recently, shipping lines have indicated further increases in effect from 14/01, likely to be around USD300.00 per 20’ and USD600.00 per 40’. Once CNY wraps up, the market will reassess based on post CNY volumes. We will keep you advised further.

So sorry the news so far has been a little miserable, let’s finish with a few good ones.

USA Air Rates Down

To lighten this news, our USA air freight rates are down again. We are proud of our USA air consolidation service and with our USA partners we offer a service that performs outstandingly every week. 

SCC Warehouse Team – Love Your Work

Shout out to the SCC warehouse team, Josh, Suzi, Tash and Paul you guys did not miss a beat over the Christmas/New Year sales periods. Thanks for ensuring all customer orders were picked, packed, distributed, tracked and delivered AU wide overnight. I think you have a little breather before the next round of sales.

The SCC warehouse facility is purpose built for online retailers, please contact us at sales@sccargo.com.au if you would like to know further information.