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Neolink Update – Port Congestion Reaches Crisis Point – 10.9.20

NEOLINK Update – Port Congestion Reaches Crisis Point

Thursday 10th of September

Dear Valued Clients,

Before we get into it….

I hope everyone is staying well and you, as well as your families are keeping safe during COVID.

Despite now being in an official recession and Melbourne still in lock-down, we have seen shipping demand increasing since March with no signs of it slowing down.

There are a couple of key factors driving this:

  • Supply chains being lockdown between Australia and China for extended periods
  • Factory production/lead times extending in China due to sourcing of raw materials
  • Consumer spending shifting from the services sector and into the goods sector
  • Factory Orders piling up during China lockdown and demand not slowing

The above has put incredible strains on supply chains here in Australia and we are now seeing this manifest in a number of different ways.

So What is happening?

  • Despite the demand from Australia, shipping lines are actually contracting or reducing services southbound (see articles below)
  • Due to the above, there has been massive congestion problems in China that is having a two fold impact. Firstly on delays broadly across China ports and secondly on driving up ocean freight prices (please see below)

  • In addition to origin shipping port congestion, Port Botany here in Sydney is now at a crisis point due to a number of factors:
  • Empty container parks are full, further jamming up already stretched supply chains
  • Bad weather and vessel scheduled alterations
  • Government approved industrial actions have dramatically reduced the capacity at port botany
  • Vessels are being significantly delayed into port
  • Export containers are not being loaded anywhere near the rate required to solve the backlog
  • Empty parks are redirecting empty imported containers where they can or are flat out refusing to take them
  • Transport companies yards are piling up empties as we speak until they can make room
  • The above is a shipping line showing no care for Australian importers, but also facing extreme challenges themselves having vessels sit for days out of sea not being able to be unloaded
  • The Port Authority of NSW and Shipping Australia we are being told are working with the government to address all of these challenges, but little is being done in the short term

What does this mean for you?

  • Delays – Everyday our staff are driving past vessels at the port that remain untouched for multiple days or are stranded out at sea off the coast here in Botany waiting to be unloaded
  • Ocean Freight rates are increasing and don’t look like they are slowing down

What NEOLINK are doing for our clients?

  • Negotiating and working with the shipping lines at both origin, as well as here in Australia to ensure we get the best prices for our customers
  • NEOLINK are working with our origin offices, your suppliers and the shipping lines on every order to proactively book, as well as monitor space closely before departure
  • Please ensure you get us your purchase orders, or loop us in with your factory as early as possible to ensure we can be as proactive as we can
  • We are also talking to the shipping lines about container detention relief when we cannot dehire containers due to empty parks being full

As always our Customer Operations Team are working hard and proactively to engage you on your supply chains to ensure we are managing the situation the best we can.

I also ask that you rethink the lead times on your goods and allow for the rate increases/delays in your own supply chains internally, which I know have customer implications. In some instances we are being used by some of our clients to speak to their customers about the delays in addition to forwarding on our notices.

The situation is manageable, but challenging for every importer or exporter providing we can all work together between our teams and plan/engage across the supply chain as early as possible.

Please feel free to reach out to your Account Manager if you have any questions on any of the above.

Best regards,

NEOLINK Management


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