[110420.EN.SEA] Demand Drops, Cargo Backlogs Emerge Flaming Warnings of 'Mega Congestion'

FORWARDERS are predicting "mega-congestion" in the coming months as capacity is insufficient to even clear inventory build-ups, leaving insurance companies to foot the bill. But one expert asks whether humanitarian uses can be found for apparel, white goods and electronics that are stuck in Asia.

"What will happen to all that non-food cargo sitting at terminals in Asia, unable to move - much of it apparel, home and white goods, furniture and electronics. Seasons will be missed, so much of the fashions and trends for Q1/Q2 will be skipped," asked supply chain technology expert Richard Butcher on LinkedIn, reported UK's The Loadstar.

"Shippers were waiting for cargo and, with their retail and sales outlets hampered by closures?billions of dollars-worth must still be sitting unwanted across Asia's ports."

He called on the industry to find a solution for the unsold and unshipped goods.

"My question is that a lot of shippers will most likely have already put in claims to their insurance companies. That means the cargo then becomes the responsibility of insurance companies that will be facing massive losses.

"But apparel, white goods, electronics - all those things - could eventually be sold off. Can some humanitarian use of these unspoilt goods be found?"

According to another forwarder, "distribution centres in Europe are geared around imports and can hold a maximum of two to four weeks' worth of stock," he said. "After that, the impact for goods such as homewares will be huge. Where is it all going to go?"

RW Freight noted on its website that "Customs authorities in China have required all non-essential goods which have been loaded on vessels for export after March 27 to be unloaded.

"The decision is based on lockdowns in various countries, which may mean that the cargo will not be accepted by the customers.

"The export suspension is expected to last for one to two months."

With shipping lines blanking sailings, there are also concerns that, when demand rebounds, ships and containers will be in the wrong place - perhaps increasing the demand for air freight, which has now fallen off for most cargo.

Clive Data Services revealed that the air cargo dynamic load factors on transatlantic routes had remained steady, despite a heavy decline in capacity, suggesting demand is indeed falling.

Source : HKSG / Photo : Now That's Logistics.