2021 Logistics Update

Oct 25 / Casey Duggan
We've all experienced delays in shipping recently - whether it's our MedTech products taking longer to get to customers or our late-night online purchases taking weeks to arrive. One of the outcomes of the global Covid-19 pandemic has been instability and a lack of reliability in the global supply chain environment.

Shipping routes, vessels and containers have become highly sought-after commodities and the availability of containers and vessel space has been significantly reduced. There are also significant delays in ports around the world, with unexpected routing changes of cargo adding to delays.Expensive Air Cargo volumes have increased to make up the short-fall in Shipping freight with IATA (International Air Traffic Association) data showing a 4.4% increase for March 2021 over March 2019 pre-pandemic levels.

The significant fall in passenger air travel has driven creativity with aviation organisations continuing to profit from cargo sectors of their businesses as well as, in the case of Emirates, driving a conversion of their passenger planes to focus on freight; initially by loading cargo onto passenger seats and in the overhead bins, and then by removing the economy seats from some planes in order to convert them into mini-freighters.

The impact of the disruptions to global logistics is that freight costs are increasing at a staggering rate. For the first time, the cost of shipping a container on the world's busiest shipping routes from China to Europe surpassed $US10,000 ($13,513), a rise of more than 500 per cent since June last year (*abc.net.au). The increased rates on air cargo, especially on mini-freighters has also been noticeable but is required to balance out the high running costs and low margins on these creative alternatives.

The Australian market has seen significant uncertainty with increased shipping times on goods across all sectors. This is primarily due to vessel schedule disruption with a lack of containers in Asia and a focus on the most lucrative shipping lanes. Contributing to the delays is the increased volumes seen by local courier companies and increased consumption of retail products spurred on by an increase in online shopping!

With global vaccination rates on the increase and many countries loosening travel restrictions, it may seem the height of the pandemic crisis is over but, unfortunately, shippers are unlikely to get any relief from elevated pricing and delays until demand and available capacity level out. For the MedTech industry it's about managing your customers' expectations and closely liaising with your Operations team to fully understand where your company is "at" regarding supply.