High rates are not the only challenge facing sea freight. According to DSV specialists, Polish importers should start planning deliveries as soon as possible to increase stocks, so as not to be surprised before the key fourth quarter of trade.
Geopolitical storm
Maritime transport is the foundation of global supply chains. Although slow, shipping goods by container ship is the cheapest method of delivering between recipients on different continents. The critical importance of what happens on the seas and oceans was evident to everyone during the pandemic. Today, although for different reasons, the logistics sector is once again facing the effects of disrupted conditions and safety of shipping.
The biggest cause of the difficulties are the ongoing attacks on ships in the Red Sea by the Yemeni Houthi rebels since November 2023. They have caused shipowners to decide to avoid this route whenever possible. This is well illustrated by data from the Suez Canal Authority, the operator of the Canal, according to which transit on this route has fallen by around 55-60%. There is still no prospect of this state of affairs improving. The situation is also not helped by congestion in key ports around the world. According to data from mid-July, a total of 6.5% of global cargo space remains trapped in anchorages, waiting to enter the port. Major delays are visible, among others, in key European ports in Hamburg and Antwerp, Chinese ports in Shanghai and Ningbo, and in the South African port of Durban. The result is a waiting time of 3 to even 8 days, which is a significant obstacle to planning and implementing logistics operations.
At the end of May, 55.8% of freight was completed on schedule
The challenges faced by maritime transport are reflected in the data on timeliness. At the end of May, 55.8% of freight was completed on schedule. This is the highest level in 2024, but compared to May 2023, it is down by as much as 11 percentage points.
The cost of anxiety
Congestion and the need for ships to bypass the Red Sea have resulted in higher prices for container shipping. The freight cost of a forty-foot container equivalent (FEU) from Shanghai to Northern Europe, according to the Shanghai Containerized Freight Index (SCFI), has increased from around $2,300 in October 2023 to around $10,100 in mid-July 2024 (a 339.1% difference).
In July, due to the increased supply of transport space associated with the acceptance of new ships by shipowners, some signs of stabilization appeared on the market. However, as DSV experts point out, the situation remains extremely unstable and unpredictable. At the very beginning of August, the first declines since April of this year appeared, despite the persistently high demand from importers. In this situation, it is extremely difficult to determine the trend in which freight prices will change.
The pre-Christmas season started earlier
The consequences of the ongoing difficulties will have a particular impact on the pre-holiday period. Traditionally, the peak supply period begins at the turn of August and September and lasts for most of the 4th quarter. During this time, stocks are built and replenished to handle the increased, pre-holiday demand. As experts from DSV – Global Transport and Logistics point out, in response to the problems faced by maritime transport, the trade sector has started preparations much earlier this year, even at the turn of June and July.
– For some time now, we have been observing that European companies involved in trade and distribution have already begun preparing for the holidays. On the one hand, they are expanding their warehouses, increasing current deliveries, and on the other, the number of inquiries about the possibility of booking container space for the coming months has started to grow faster than usual. In our opinion, this is due to the desire of companies to minimize the risk of shortages of goods due to unforeseen disruptions in supply chains during the key trading period. – says Bogdan Homiak, LCL & Rail Manager at DSV – Global Transport and Logistics.
Due to the international nature of the sea freight market, Polish importers are competing for the same container space as their competitors from other European countries. Therefore, companies that have not yet done so should start planning their “holiday” deliveries today to avoid disruptions. This is especially true for companies that source products or components from Asian suppliers.
Liquidity of supplies and liquidity of finances
Although the pre-holiday logistics peak started exceptionally early this year, it should be assumed that it will not affect consumers' shopping habits. Increasing the level of stock may already seem like too much of a burden on the company's budget. After all, the cost of purchasing goods and transporting them is one thing, but the need to incur customs duties is another.
In this context, importers can find particular help and cost-optimization in using the services of a temporary storage facility (MSC) or a customs warehouse. Both solutions allow for the postponement of the obligation to pay customs duty for goods imported from outside the European Union, but they operate on slightly different principles.
To illustrate this with a simple example, let's assume that we are an electronics importer. We know that the holiday ordering season will start soon, which will mean a high demand for gaming consoles. In order to secure supply, we order 10 containers of consoles well in advance to ensure that even in the event of delays, they will reach Poland on time. After arrival, instead of immediately clearing the goods, which involves paying customs duty, we transport them to a temporary storage warehouse or a customs warehouse. MSC allows goods to be stored for a maximum of 30 days. After this time, the cargo must be released and customs cleared. Importantly, the entire shipment must be released from MSC in one batch. A customs warehouse is more flexible, because goods can be released from it in any size and there are no time limits. Only products leaving the warehouse at a given time are subject to customs duty. – explains Sebastian Skuza, Branch Manager at DSV
It is worth remembering that the services and operations of both the temporary storage facility (MSC) and the customs warehouse can only be carried out on the basis of a special permit issued by the Polish customs services. DSV, with the needs of importers in mind, has established, together with its partners, a warehouse that can function as both an MSC and a customs warehouse in Gdańsk, directly next to the Baltic Hub. The facility has a total area of over 25 thousand square meters.
