Supply Chain Council of European Union | Scceu.org
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Logistics costs ease heading into the New Year, but bottlenecks remain – Steel, Aluminum, Copper, Stainless, Rare Earth, Metal Prices, Forecasting

Importers of metals and metal components may be seeing a glimmer of light at the end of what has been a very long tunnel of logistics chaos, sky-high freight rates and shipping delays.

Freight rates have eased from peaks per 40ft container in the summer for some shippers of up to $15,000 to $9,000 last month. Rates have fallen further to around $7,000 today, as reported by the the Financial Times.

The number of vessels sitting off the ports of Los Angeles/Long Beach waiting to discharge have declined from 261 in September to 246 in October and 216 last month, the Financial Times reports.

Not a massive decline, but at least the trend appears in the right direction.

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Shipping rates down, but for how long?

Shipping

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Still, before we break out the Christmas champagne early, not all the news is quite so positive.

Rates have declined. However, this is in part a reflection of the fact that the peak Christmas traffic has now passed. Current shipments will not arrive until into the New Year. As such, the impetus to ship come what may is over.

Yet, the readiness-to-ship-date in top exporter China remains elevated. It sits at or around 100 days, according to the Financial Times, on the China to Europe and China to U.S. routes, suggesting either port congestion or container availability — or both — remain highly constrained.

Bottlenecks remain

Businesses in Europe and the U.S. are reporting the same problems of port congestion. A lack of hauliers and haulage capacity to move cargoes to and from the ports is exacerbating the situation.

While rates may be easing, potentially opening up supply options that had become closed due to uneconomic freight rates, significant bottlenecks remain. Those factors may yet rear their head in the event of a recovery in volumes or COVID-related outbreaks shutting down ports (as happened last summer at Ningbo in China).

So, the beginning of the end, or the end of the beginning? Probably more the latter.

2022 will see continued road haulage delays, sea freight disruption and elevated rates albeit lower than last year. The only bright spot for U.S. importers is the strength of the USD dollar so far this year. That strength is likely to continue well into next year, which should help ease goods and logistics costs from the peaks they hit in 2021.

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