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Is this the beginning of the end for shipping as we know it?

The UK, once a proud maritime nation faces being left out in the cold by the major shipping lines as they struggle to contend with equipment shortages, lack of capacity, delays in ports and even virtual port closures.  Numerous sailing scheduled to call in at UK ports over the past few months have chosen so skip GB and instead unload their cargo on the continent in places such as Rotterdam, Hamburg and Antwerp, leaving customers with long delays waiting for a secondary shipment to the UK and adding weeks to delivery times. The resulting chaos in the supply chains is there for all to see.

What started out as a temporary measure may however become the norm as shipping lines seriously question the viability of direct sailings from Asia to the UK.  One of the problems is the ratio of full containers being returned to Asia, which is around 25% for the UK, compared to nearer 50% for Europe making it more lucrative for shipping lines to concentrate on the European market.  The other problem is the hopeless congestion affecting UK ports, and whilst not unique to the UK is particularly acute here, with insufficient and poor infrastructure lacking in long term investment over many years.  The resultant delays is unacceptable to the large shipping lines who, conscious of their profit margins, are voting with their feet (or vessels to be more accurate).

In the short term things are certainly set to get worse. Yantian in Sothern China continues to run at greatly reduced capacity, with closures also being experience from time to time in neighbouring Nansha due to covid outbreaks in the population and resultant lockdowns.   At some point these ports will get back up to speed and the resultant glut of containers being shipped to Europe (including the UK) and elsewhere will lead to further congestion in what are already overcrowded malfunctioning ports.  The temptation of shipping lines to simply miss out UK ports will become irresistible.

For most businesses except the very largest there is little they can do except plan ahead, build in extra time for the inevitable delays and factor in the increased shipping costs.  This will be particularly important for the upcoming Christmas festive season if they wish to avoid empty shelves and disappointed customers.

To many observers the Covid crisis has highlighted the precarious nature of the global logistics chain and which so many of us rely. The current crisis is of little benefit to anyone except perhaps the shipping lines, but if trading patterns change even they may live to rue the evets of the last few months.  Is this a time for governments to intervene?  When a market is clearly broken (as this is) there are presidents for state interventions and some governments are taking a very close look at how the shipping industry is operating right now.  It remains to be seen whether these governments, who currently have so much else on their plates will raise their cudgels to deal with this one.