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Logistics facing perfect storm in summer of discontent – updated

[ August 31, 2022   //   ]

Head of consumer research at ParcelHero, David Jinks is warning that the logistics industry is facing a “perfect storm” with dock, rail and postal workers and even Amazon operatives staging industrial action over the summer.

He said: “It’s estimated that the port strike alone will disrupt trade worth up to £700m and impact on supplies to supermarkets and exports from now until Christmas.”

He added: “The e-commerce giant Amazon is also being hit by a wave of wildcat strikes by warehouse workers across the UK.

“The combined result of this Summer of Discontent is likely to impact on £1bn-worth of trade at a conservative estimate. Deliveries will also be delayed and production lines could be brought to a halt.”

Executive director at international supply chain and logistics consultancy SCALA, Phil Reuben, commented: “When the decision to strike was made, ships that were due to arrive at Felixstowe over the past few days had already departed from China, meaning that a number of importers will not have had enough warning to take action, and may not have been able to re-route freight.

“Following on from the various challenges faced in the ocean shipping arena over the last couple of years, the ongoing Covid situation in China and the risks associated with potential China action against Taiwan, this strike should further encourage companies to give serious and urgent consideration to nearshoring, or even onshoring, to reduce potential losses.”

Three days following the strike,  London Gateway and Southampton were seeing uptakes in container volumes, said shipping visibility specialist Project44.

Delays to consumer goods arriving in time for Christmas were looking all the more unlikely, it added.

Vice-president supply chain insights, Josh Brazil, warned: “As observed at other global port strikes this year, containers that are stuck at Felixstowe have no chance of getting out any time soon. Containers are already waiting over 50% longer than last week, and it’s only day five of the strike. Even if the strike is over within a week, which now looks unlikely, it will take containers several weeks to clear out, causing massive delays in the supply chain.” 

As the strike had been announced almost six weeks in advance, many shippers had advance options to divert their shipments to nearby ports in the UK, such as London Gateway and Southampton. Project44’s latest data points to an over 200% rise in total vessel TEU capacity at the port of Southampton on August 23, two days after the strike began.

Felixstowe has been plagued by vessel congestion since the onset of COVID-19, with dwell times averaging over eight days at the beginning of 2022. Matters had just started to improve, with dwell time close to five days in July but improvements could well be undone by the eight-day strike.

Project44 says that if the strike goes on,  massive delays will be seen across the UK, with spillover effects into the EU as containers get diverted to other ports such as Rotterdam or Le Havre. What’s more, many UK and EU ports are already experiencing maximum capacity volumes, so their ability to handle even more may be limited.

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