The recent rally for the GBP can be attributed to a number of things, most notably the continued success of the vaccination programme in the UK. At the time of writing, over 12 million people have had their first dose. Another driver for the GBP has come from the lack of change at last week’s interest rate decision and the conclusion that negative rates will not introduced any time soon. Finally, it’s been suggested this morning that the Bank of England’s GDP projections for growth, have now been increased from 10% to 14.2% (for the period Q2 21 – Q1 22).
Rising consumer demand and constrained supply of containers is causing disruption with global sea freight, with container-shipping costs rocketing by up to 300% since Nov 2020. The scarcity of containers and space on vessels is likely to continue through the first quarter of 2021 and on into late Spring. The backlog of containers and terminal congestions at many main ports is on course to remain unabated over the short term. Looking at the longer term, the Covid-19 vaccination programmes, and subsequent relaxation of government restrictions, could lead to a shift in spending from products to services which would act to reduce freight demands and hopefully bring the rates down.
UK ports been experiencing delays due to continuing poor weather. Overnight freezing temperatures have been causing equipment failures leading to reduced productivity.
Hopes for a recovery in airfreight capacity in quarter 1 have faded as passenger traffic suffered further setbacks from the Covid-19 pandemic. Instead of the hoped-for steady build-up of capacity, the passenger business shifted into reverse again, as Covid-19 infection numbers climbed in most major markets. The air cargo market has responded to these setbacks as expected with volatility, with prices continuing to rise in response to the shortage of services and availability.
The teething period of post Brexit continues to cause a disruption with freight this month. Although the UK and EU agreed not to impose tariffs on certain goods, the ‘non-tariff barriers’ have been creating obstacles for businesses with additional paperwork requirements and customs inspections and a shortage of customs agents to smooth the process. A recent report by the Road Haulage Association (RHA) suggested that there had been a 68% drop in the volume of goods exports passing through UK ports into Europe in Jan 21 compared to the same period in the previous year. Many hauliers have been rejecting UK jobs, switching off certain services and even cancelling booked collections at short notice, preferring to take empty lorries back into Europe and avoid the costly delays.
At Goudsmit UK, we have a number of freight partners that we use to transport our customers products globally. This multi-carrier approach allows us to select the carrier best suited to your requirements, providing flexibility and a tailored service. Whilst freight delays are unavoidable at this time, we work with our customers by holding UK stock and would encourage that 6-8mths of buffer stock is considered when re-ordering new production, reducing the impact of potential freight delays.