Planning for the unexpected

Major shipping incidents, such as the recent Baltimore bridge disaster and the Red Sea crisis, are highly detrimental to global supply chains.

Attacks by Houthi rebels on vessels in the Red Sea forced ships to take the longer route around South Africa’s Cape of Good Hope, resulting in severe cargo delays and driving up sea freight rates significantly. In the wake of a ship’s collision with Baltimore’s Francis Scott Key Bridge in March, supply chains on the US East Coast are not expected to stabilise until at least next year.

The South African Association of Freight Forwarders Cargo Movement Update of 24 May notes that the global shipping industry continues grappling with geopolitical tensions, climate change and pandemic aftermaths. The report says conflicts in Ukraine and Gaza, alongside US-China economic disputes, threaten maritime trade routes, while climate impacts exacerbate port congestion. Notable disruptions, such as the Ever-Given Suez Canal blockage and the collapse of the Baltimore bridge underline the fragility and vulnerability of critical choke points, significantly affecting global trade flows.

Current issues include persistent port congestion, which affects 5.3% of the global fleet. This is primarily due to geopolitical crises like the Red Sea conflict, which has increased transit times on Asia-Mediterranean routes by 39%, SAAFF adds.

According to Mark Janse Van Rensburg, Trade Lane Manager for Airfreight at BIL, ongoing economic uncertainty and multiple airline strikes have also caused significant delays in Europe.

Furthermore, he points out that delays in ocean freight are leading to higher air freight rates and lower capacity in China and India.

BIL colleague and the company’s Trade Lane Manager for Ocean, Nicoleen Nielson, says the Red Sea conflict is causing extended lead times for cargo moving from Europe to China, sometimes up to 30 days. “These longer transit times are impacting South Africa in the form of equipment and vessel shortages,” she says.

“Equipment is also failing at South African ports. Compounding the problem is that MSC, the largest carrier out of the Far East to South Africa, has decided to allocate its bigger vessels to trade between the Far East and Europe. This has cut about 4,000 TEU of volume from the Far East to South Africa. Suddenly, people are trying to find space on smaller vessels for equipment.”

The question is how local players like BIL respond when such situations arise. Janse Van Rensburg says it is essential to monitor developments and keep in regular contact with overseas partners, but alternative ports should also be used to avoid delays.

In one instance, BIL needed to urgently move a shipment of 26 tons from China. At the time the Asian nation was struggling in terms of capacity and air freight rates were soaring. Yet BIL found a way to ship the cargo from Phuket, Thailand at an air freight rate 30% less than would have been the case out of China.

“This not only ensured timely delivery but also showcased our ability to navigate challenges and optimise supply chain solutions, adding significant value to our organisation,” Nielson says.

BIL regularly sends out news flashes to update clients on supply chain developments. Meetings are also held with clients and shipping lines to establish space availability. “We always advise our clients to extend their lead times and let us know four weeks ahead. We factor in time delays and work backwards to meet deadlines,” Nielson adds.

“We enhance our client’s value by advising them to diversify suppliers and routes, minimising dependency on a single source or trade lane. We also recommend maintaining buffer stocks of critical materials, developing and implementing contingency plans for various disruptions and staying informed about global developments.”