Lockdown in Vietnam and the consequences of the repeatedly interrupted power supply for Chinese factories are continuing shipping delays
October 13, 2021
by Inside Logistics Online Staff
The holiday season will not turn out as desired for many shippers importing consumer goods from the Far East.
For months now, companies have been suffering from high transport costs and a lack of freight capacity. In the fourth quarter, some companies will additionally feel the effects of the lockdown in Vietnam and the consequences of the repeatedly interrupted power supply for Chinese factories.
According to experts from software company Setlog, the situation will not change significantly until after Christmas. At the earliest, relief may come around Easter 2022. Setlog evaluated data from 2019 to 2021 from 100 companies and brands that use its software.
With the data, Setlog calculated that products from Vietnam are delayed by an average of up to 25 days before they arrive in warehouses in Germany. According to the evaluation, only 17 percent of all deliveries arrive on time. In 2019, it was 70 percent, and in 2020, around 38 percent.
The experts looked specifically at the ocean freight sector. The transport time for containers from the Far East increased by nine days on average. This year they are traveling up to 52 days.
However, it is not only deliveries from Vietnamese ports that are delayed; goods from China are also arriving significantly later than in 2019. From Shanghai two years ago, the average transport time to the warehouse was 37.1 days; in 2020, it was 41.5 days and 47.6 days in 2021.
The differences were even more obvious when analyzing the port of Yantian (27.6 days, 37.8 days and 43 days).
Companies that preferred rail as a means of transport from the Far East to Europe instead of a ship had to accept delivery delays of several days in some cases. This was due to capacity bottlenecks and delayed clearances at some customs crossings. In their evaluations, the experts at Setlog saw that rail bookings are made four to six weeks before departure of the train.
In Vietnam Apple, Adidas and Nike have been strongly affected by lockdowns. Nike, for example, produces half of its footwear and a third of its clothing along the Mekong River and has already lost 10 weeks of production.
Months of recovery
Setlog expects it will take months for supply chains to recover. “Many factory workers have fled to the countryside to survive since there was no work in the cities, the factories were closed, or they could only do weekly shifts,” said Ralf Duester, a member of Setlog’s board of directors.
He expects that more production will move out of the country, which had recently been chosen as an alternative to China by many companies.
Duester sees a glimmer of hope on the horizon for freight rates. Rates leveled off in recent weeks, and there have even been initial rate reductions – albeit at levels that, depending on the relation, shipping line and loop, are six to eight times what they were before the pandemic.
“Numbers like the $20,000 for the transport order of a 40-foot high cube container from the Far East in the summer are currently not being observed,” Duester said. Prepaid rates dropped by about $1,500 in some cases. Some shipping companies want to freeze their rates. The availability of ocean containers has also eased slightly. They are available on almost all routes, with only isolated cases of problems still occurring.
“It is still important here that bookings are made early and that suppliers, forwarders, carriers as well as importers work closely and collaboratively together. Data and information must be exchanged transparently, quickly and digitally,” Duester advised.