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Spicers Australia warns of “explosion” in shipping costs

Leading supplier Spicers says a “terrible imbalance” between supply and demand in the shipping industry is unlikely to improve before the second half of 2022.  “Our expectation is that lead times will continue to be between 4 – 6 times longer than “usual”, and pricing will most likely to continue to go north on a fortnightly basis.”  All of the company's wide format media will also be affected.

Containers Colombo Express 2 ship boxship containership media cred Hapag Lloyd
Not full steam ahead for international shipping containers - expect delays and stockouts

“Spicers thought it appropriate to update our customers on a serious issue that continues to impact all business in Australia and for that matter businesses globally, being the current global shipping challenges that our mill partners are facing from all shipping companies worldwide,” Dale O'Neill, GM Print and Packaging at Spicers Australia told customers in an email on Monday.

“As has been widely reported, there is a terrible imbalance between supply and demand in the shipping industry, with significant vessel shortages, and a massive shortage of 20 & 40 foot containers. Unfortunately this imbalance is proving to be getting predictably worse before it gets better, and our best guess at this stage is that the situation will not improve until at least the second half of 2022.spicers container spots fbx

“Due to this imbalance the paper industry continues to see already significant lead-times increasing further, and in some cases up to 6 months for some paper mills. On top of this, shipping costs have exploded and mills are continuing to pass these costs on to their customers. Unfortunately this must have a knock on effect to our industry.”

Spicers outlined the current global situation:

Europe

Shipping Line Cosco has suspended all booking acceptance from Europe to Australia until further notice as there are struggles with huge backlogs of cargo caused by high demand for services in the last 2 months.

Hapag Lloyd is booking out 3-4 weeks in advance before bookings even open

MSC - Fully suspended booking acceptance until further notice

Asia 

Shipping line ANL are fully booked for August. September services are not yet open for bookings.

Hapag Lloyd are fully booked until Mid-September with bookings not being accepted beyond then.

MSC have fully suspended bookings until further notice.

Maersk have no services available for bookings to Australia.

Freight prices have increased significantly in July as demand for space increases. It is expected freight prices will increase on a fortnightly basis through to the end of 2021 meaning that importers will be paying unprecedented prices for ocean freight.

North America

Continued container shortages is causing chaos for West Coast importers and exporters

Ocean carriers are consistently rolling and cancelling bookings while available bookings are 2 months out or more, port congestion on the Westcoast is now an average of 21 days and showing no signs of improvement

Shipping industry outlook

“We do not currently foresee any significant improvement in sea freight services, lead times or pricing in the short to medium term,” O'Neill says. “Our expectation is that lead times will continue to be between 4 – 6 times longer than “usual”, and pricing will most likely to continue to go north on a fortnightly basis.

“It is understood that shipping companies have orders for approximately 7 million of 20 & 40 foot containers on order to be made to help with supply shortages. 

“Hopefully the above gives you some understanding of the current situation in the shipping industry and what issues we will be facing for the coming months.”

https://www.spicers.com.au/