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UK Container port haulage and rail update

An update on the ports of Felixstowe and Southampton, haulage, rail and general capacity.

Update on the Port of Felixstowe

The Port of Felixstowe are currently claiming that their productivity and volumes are rising towards previous levels before the ill-fated introduction of the new Terminal Operating System (TOS). Regrettably, our experience is that vessel discharge is still too slow, leading to carriers changing port rotation and leaving the port early before all containers are loaded/discharged. Low levels of productivity continue to cause delays in the supply chain. There has still been no official update from POF, although DSV are in daily contact with carriers and hauliers. Additionally, we expect upcoming winter weather conditions to cause closures and delays in the next few months.

Congestion at Southampton Port is easing slightly

The port previously reported high levels of empty containers impacting their productivity, but this seems to have eased. However, Southampton Port continues to handle higher than usual volumes, resulting from the peak season and diversion of services and vessels away from Felixstowe. Again, we expect the winter weather to cause closures and delays from time to time in the next few months.

UK haulage update

Significant challenges continue to disrupt the UK container haulage:

There is currently a lack of qualified drivers. This is caused by retirement, UK drivers taking higher paid tanker and trailer work, EU drivers leaving UK because of Brexit and the depreciation of Sterling against the Euro. Additionally, drivers are having increased responsibility and liability from CPC and Working Time Directives.

Road infrastructure is more congested than ever before, with major roadworks disrupting traffic near the ports on the A14, A13 and A34, as well as further inland on major motorways and trunk roads. Majority of businesses insist on AM collections and deliveries.

Escalating costs are being experienced, as fuel prices have gone up by 30% and driver’s wages have increased significantly.
When vessels divert because of congestion or technical problems, trucks and drivers may have to go to unfamiliar ports, with different procedures leading to additional congestion and delays.

The above challenges all lead to increased rates being needed to secure haulage, as well as increased flexibility required from clients to accept PM collections, deliveries and late running containers. Increased notice periods are still required and DSV continues to recommend at least 7-10 days. Late running deliveries which are not accepted, will incur rent/demurrage and potentially another delivery charge. Hauliers are increasingly refusing to pay when circumstances are beyond their control.

Rail update

Similar problems are affecting the rail network, including:

Shortages of available drivers, while the pay is better on rail, training can take up to 12 months.

Poor infrastructure with too many 60-foot wagons, not enough bridge clearance for 40’HC containers, engineering works and priority for passenger trains.
Government subsidies have been removed, meaning cost by rail is less economical. Shipping lines insist on empty containers back to the ports because of trade imbalance between UK imports & exports.

Most freight trains are contracted to bulk cargo or shipping lines buying up the entire space on the train.

Asia/Europe Capacity outlook

The blank sailings and temporary suspension of the 2M AE2 loop Asia/Europe/UK, has continued since the 1st of October China Golden Week holiday period. 2M just announced the service will resume, starting in Qingdao, during week 49 to coincide with the expected increase in volumes during December/January, as we approach Chinese New Year on 5th February 2019.

We expect freight rates to increase during this time as space will be tight and carrier’s losses throughout 2018 have been significant and cannot continue. Increased fuel costs will be passed on, either through increased all in rates or increasing emergency fuel surcharges.

In the longer term the new IMO Super Low Sulphur regulations starting 1st of January 2020 will lead to increases. These are estimated to be about USD150-200/TEU. As ships will need to use this new fuel during Q4 2019 it can be expected that these increases will occur sometime during the 2nd half of 2019.

An increase in the much larger 18-22,000 TEU vessels, which take much longer to discharge and when they are off schedule, ports cannot always allocate sufficient cranes to complete their loading and discharge, this leads to carriers diverting them away to Europe before returning at a later date.

What does all this mean and what can be done to help?

  • Costs are increasing, fuel surcharges are currently rising to 19%, rates have to increase both on ocean freight and inland trucking
  • Increased notice for collections/deliveries needed, around a minimum of 7-10 days
  • Longer lead times should be built into your supply chains, add 1-2 weeks ideally
  • More flexibility with collections/deliveries, particularly in the afternoon. Clients can help by accepting late deliveries, as in most cases it is better to pay a few hours overtime, than reject a container and then risk incurring lost journey and potential rent/demurrage costs. Ports will not pay, and hauliers are increasingly rejecting additional charges when events are often beyond their control.

    Your local DSV sales responsible person will update you specifically. Thank you for your ongoing support through this difficult period in our industry
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