29 June 2021 • 14 min read
Why Shipping Delays are Bad for Business?
Know why shipping delays happen and how it's bad for business. What plagues the shipping industry today? And how early is enough to book a shipment. Plan well.
Plan your shipment in advance. You’ve come across this piece of advice often enough in our blogs, but it must be said again. Early planning and booking helps you make timely deliveries, keeps your import-export business running smoothly and your customers satisfied. Leaving it till too late could likely mean a delayed shipment, leading to unhappy customers, missed business opportunities and extra expense.
While shipment delays are all too common, you can avoid them to a great extent. That is the focus of this blog. Read on to find out:
- Why shipments get delayed
- How delayed shipments impact your business
- How to book and plan early
Why shipments get delayed
Some of the most common reasons for shipment delays are:
- Vessel delays: Bad weather, port congestion, strikes, container shortages and changes in service schedule can delay a ship’s departure, arrival, loading and unloading. Additionally, ships can get held up at sea due to navigational hazards (floating ice) and technical malfunctions. Delays also occur when the ship takes a detour, makes additional stops or skips a port. According to a Schedule Reliability report covering the east-west trade lanes, less than 50% of ships were on time while 10% were late by three days in 2019.
- Overbooking and rollovers: Shipping lines are known to overbook carriers in anticipation of last-minute cancellations and no-shows. When a ship is overbooked, it might stop your cargo from being loaded and roll it over to another vessel that sails on a later date.
- Carrier space shortage: If you wait till too late to book space on a ship, the slots might all be gone. Even if you do get a slot, the rate might be too high and you might be forced to delay your shipment.
- General rate increase: Another price deterrent that could push back your shipment is a general rate request (GRI) – a base price hike implemented by carriers in response to high demand.
- Peak season: Carrier space is tight and prices high during the August-November peak season, when traders ship at higher volumes to catch the Christmas and New Year holiday shopping season. (In India, the peak season falls in February-March, coinciding with the harvest season.)
- Holidays: Major holidays such as Chinese New Year, Golden Week and Eid also see demand and prices go up.
- Customs hold-ups: Violations such as incorrect cargo declaration and incomplete documentation can lead to your containers being held up for customs inspection and examination.
- Transshipments: A transshipment is when a shipment is moved from one carrier to another when in transit. Your cargo might have to be transshipped if there is no direct route between your ports of origin and destination. A missed transshipment can cause a delay of days, even weeks.
- Vessel sharing: There are instances where two or more shipping lines share vessels on a specific route to expand their service network. When you make a booking with one such company, your cargo is transported part of the way by another company. The two might not use the same routes and your shipment might end up on a ship with a longer route.
- External factors: Then there are conditions you have no control over, such as wars, terrorist attacks, piracy, natural disasters, vessel collisions, and lost or stolen cargo.
What plagues shipping today?
These days, shipment delays can also be blamed on two problems facing the container shipping business – shrinking carrier space and a drop in shipments. Why is this happening?
- Reduced sailings: The carrier space shortage can be attributed to an overall shipping slowdown brought about by Covid-19. In the first half of 2020, carriers announced record blanked sailings in response to unprecedented booking cancellations and no-shows and plunging container volumes. A blanked sailing is when a carrier skips a port or cancels the entire voyage. By mid-July, the number of ships arriving at ports each week had fallen to 8,722, an 8.5% drop year on year. This improved to 9,265 in early August, but it was still 3% short of levels during the same period in 2019. With fewer ships sailing, shippers struggled with reduced carrier space. At the same time, thousands of full containers were stranded at ports for months as a result of government-imposed lockdowns. This created a container shortage. With the outlook for global trade still risky, analysts say tactical sailing cancellations by carriers will continue for some time.
- Falling imports and exports: The drop in shipments, on the other hand, is a direct result of falling global imports and exports, again due to Covid-19. Exports fell 15% while imports contracted by 13.6% in the April-June quarter, according to this World Trade Organisation report. North America recorded the steepest fall in exports (24.5%) while imports declined the most in Europe (19.3%). The report, however, showed a declining trend in exports and imports since the fourth quarter (October-December) of 2019, before the pandemic hit the global economy with full force. With trading down, shipment volume has also dropped sharply this year. The good news, though, is that China – the world’s largest exporting nation by value and a manufacturing powerhouse – is showing signs of recovery with exports and imports picking up strongly.
Shipment delays: Bad for business
Any delay is bad for business. A shipment delay tends to affect all aspects of your trade:
- Unhappy customers: An importer is less likely to buy from an exporter who cannot keep to the promised delivery time.
- Cash flow trouble: If you don’t deliver your goods on time, you don’t get paid on time. This creates cash flow problems that affect your day-to-day operations.
- Manufacturing hold-up: If the delayed cargo is raw material you imported for an important project, you would be forced to halt production.
- Additional expense: Having your shipment stuck in a port for an extended period of time will invite demurrage, detention and port storage charges, which can prove costly.
- Loss of cargo value: An extended transit time can be disastrous for perishable cargo. By the time the shipment reaches its destination, it might be worth nothing.
Book in advance: But how early is early enough?
- We recommend two to three weeks before cargo pick-up. This increases your chances of finding space on the carrier of your choice, at a competitive rate
- Before booking, find out the transit time and then add a few extra days as a buffer. This is critical when shipping during peak seasons and holidays, when ports are more likely to be congested
Plan your shipment well
Booking early isn’t enough. Proper planning is just as important if you want your deliveries to be on time and your customers happy. A few tips:
- While booking, mention the correct number of packages and double check your cargo details
- Make sure the packaging, labeling and dimensions are proper
- Ensure your shipment is picked up and gated in on time. Try Cogoport to connect with reliable transport providers who will guarantee your cargo is on time
- Share the shipping schedule with your freight forwarder, customs agent, transport providers and other partners. Cogoport offers the services of verified forwarders and customs agents you can rely on
- Prepare and submit documents on time. Make sure they are accurate and complete to avoid delays and extra costs
- Buy insurance for your shipment on the off chance it is lost, stolen or damaged
If you didn’t book early enough, you can still take some last-minute action to ensure timely delivery:
- Book a direct route. With transshipments, your cargo is at greater risk of getting rolled over or delayed at a transshipment hub
- If you cannot avoid a transshipment, try to restrict it to just one. You can also request your carrier to flag your shipment as a priority transhipment
Just follow these simple tips to increase your chances of getting carrier space and shipping your goods on schedule. Register with Cogoport for a wide range of services designed to get your shipment to its destination on time.
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