Freight forwarders are struggling with supply chain disruptions

According to Jean-Paul van Munster, founder and owner of Trans Ocean Pacific and Famous Pacific Shipping, freight forwarders are not profiting from the current disruptions in the global supply chain. Whilst the explosive rise in sea freight rates during the coronavirus pandemic temporarily generated higher revenues, he believes the current situation is primarily causing more work, more uncertainty and more frustration among customers.

Speaking to Nieuwsblad Transport, Jean-Paul van Munster describes how disruptions around the Strait of Hormuz had a direct impact on dozens of customers’ containers en route to Dubai, Abu Dhabi and Kuwait. Containers were unloaded by shipping lines at alternative ports such as Sohar, Mumbai and Singapore. For freight forwarders, this meant days of communication, re-planning and searching for temporary solutions.

Freight forwarders are mainly facing increased workload due to disruptions

According to Van Munster, many people underestimate how much extra work disruptions cause for freight forwarders. A single container often holds goods from ten to twenty different customers. As soon as a ship is delayed or a port is avoided, customers constantly want updates on their cargo. Some containers were left idle for weeks whilst alternative routes were being explored.

In some cases, it even proved necessary to bring containers back to Rotterdam and store them temporarily in warehouses until shipment was possible again. Other customers considered alternative routes via Jeddah and transport through the desert towards the Gulf region. At the same time, a debate immediately arose over who should bear those additional costs.

For freight forwarders, this primarily means operational pressure. Not only on planning, but also on staff who have to deliver bad news on a daily basis to customers who have already been waiting weeks for their goods.

Freight forwarders see uncertainty growing among importers

Van Munster states that importers and exporters nowadays have little idea what to expect next month. According to him, in forty years he has never before experienced such an accumulation of disruptions. Whereas previous crises mainly had financial consequences, the current tensions are directly affecting the supply chain itself.

This is leading to fundamental shifts in how companies think. If sea freight rates rise sharply again, Van Munster expects many importers to take a closer look at production closer to home. Nearshoring is therefore being considered more and more seriously. Production in countries such as Poland or Italy may become more attractive if companies wish to be less dependent on long-distance transport routes and geopolitical risks.

Freight forwarders see pressure on sea freight costs rising further

This development could have major consequences for seaport freight forwarders. Their income is largely dependent on sea freight flows. When companies organise production closer to Europe, the logistics chain shifts as well. In the longer term, this could affect volumes, routes and margins within the international freight forwarding market.

At the same time, flexibility remains crucial. Disruptions in ports, geopolitical tensions and diversions mean that companies must switch between different transport modes ever more quickly. Further information on international transport solutions can be found on the page about sea freight and intermodal transport.

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