Maersk Europe Market Update (July 2023)

Key Ports Update

After stormy weather caused slight delays at the beginning of the month in Rotterdam and Bremerhaven, operations at key hub facilities across Europe are now stabilising. In the west Mediterranean, terminals are accommodating West African cargo due to local port congestions and terminals operating at full capacity.

Elsewhere across Europe, ports are running without major delays and our teams continue to monitor the situation across all terminals. In France, various strike actions and political protests have not had a significant impact on port and cargo operations. If the situation changes, our teams are ready to deploy contingencies to continue providing a smooth service to customers.

Ocean Update

Schedule reliability has been a major concern in the world of ocean freight since the middle of 2020, but we have seen reliability improve across the entire industry from mid-2022 onwards. May of this year saw Industry Global Schedule Reliability stand at 66.8%, which continued the month-on-month increase by 2.7%. This is only 4.9% lower than the closest pre-pandemic score, while at the same time representing a 30.3% increase year-on-year.

The average delay for late vessel arrivals may have increased by 0.04 days month-on-month and reached 4.39 days in May 2023, but the delay time is lower than during any month of the pandemic years. According to latest Global Liner Performance report, Maersk remains the most reliable carrier – outperforming the industry average with 73.5% reliability.

Lower schedule reliability has a major impact on businesses’ supply chains, and their subsequent ability to plan due to the irregularity of cargo flow. This then has a significant knock-on effect on the end-to-end delivery integrity and ultimately end-consumer satisfaction. Inconsistent cargo flows can also result in additional costs or revenue impacts due to the late arrival of goods, as well as challenges within warehousing and other logistics operations.

Our teams have been constantly reviewing our network to ensure we are able to provide a sustainable and more reliable product for our customers. The recent changes we have introduced to our network (such as slowing down, adding buffer time, and increasing transit time), are now showing the intended benefits of increased reliability and predictability.

Air Freight Update

Air Freight is still experiencing a worldwide decline in demand (TAC Index), with one notable exception being a significant increase in E-Commerce volumes, particularly in South China. As a result, TAC Index reports that Hong Kong recently implemented a rate increase of 2.1% for shipments to Europe, while rates from Frankfurt (Germany) to North America saw a slight decrease.

According to industry experts, price discounts and the renewed sharp increase in the number of passenger flights during the peak season are responsible for an ongoing fluctuation in rates. The development of fuel prices also remains volatile. According to IATA, the current average price for jet fuel is $2.32 per gallon.

Air traffic control managers in mainland Europe are currently discussing a strike that could result in additional disruptions to vacation flights during the summer season. The Union Syndicale Bruxelles (USB), one of the unions at Eurocontrol's operations centre, has officially issued a warning about possible strikes within the next six months. Although specific dates for these strikes have not been announced yet, airlines are expressing their concerns regarding the potential consequences. Maersk will continue to monitor the situation closely and inform customers of any implications as soon as possible.

Inland Update

In Germany, collective labour agreement negotiations between rail union EVG and Deutsche Bahn (DB) have been put on hold (RailFreight). Both sides have agreed to an arbitration period from 17th - 31st July 2023, during which strike action will not take place.

At the conclusion of the arbitration period, EVG will decide which next steps of industrial action will be taken. Maersk will be keeping a close eye on developments and adjusting schedules and routes accordingly if further action takes place.

On the river Rhine, water levels have continued to decrease over the past months and as a consequence, a low water surcharge has been in effect since June. Current water levels mean barge operations are running with limited impact, but as water levels are projected to drop further, impact to barge operations can increase in the coming weeks.

E-Commerce Update

Reverse logistics is proving more and more important to businesses looking to optimise their e-commerce supply chains and gain a competitive advantage, and it’s easy to see why when you consider that returns policies are in the top three purchasing factors for European consumers shopping online (Statista).

However, returns have been increasing across Europe in recent times and giving retailers plenty to think about – particularly in the clothing industry. In the UK, for example, ‘clothing’ was identified as the most returned online purchase by category, at 32%.

Returns in such large quantities has heralded the need for some to re-evaluate their policies; and according to Business Insider, 41% of companies charged for returns in 2022 – up from 33% in 2021.

Now in 2023, retailers are urged to look closely at their reverse logistics policies in order to optimise costs and make operations more efficient, especially in the wake of Brexit.

If you're delivering online orders from warehouses in Europe to UK end consumers, returns of said orders can potentially become more complicated.

Customs Update

In the EU, the new version of the Rules of Origin Self-Assessment tool (ROSA) is now available on Access2Markets for most EU free trade agreements. The new ROSA version helps customers assess the origin of products and determine if they qualify for preferential tariff treatment in EU trade agreements. The tool provides clear explanations and examples and links to relevant legal texts. Additionally, ROSA includes instructions on the documentation needed as proof of origin to obtain tariff preferences, aiming to simplify the process for companies.

On 9th July, a trade agreement between the EU and New Zealand was signed, eliminating tariffs on EU exports and reducing compliance requirements and import procedures. With the trade agreement, full bilateral cumulation is allowed, as well as 10% tolerance in value for most products except textiles and clothing. Sustainability commitments are also included in the terms, with countries committing to the Paris Climate Agreement and core labour rights, which will be enforceable through trade sanctions. The agreement can take effect once adopted by the EU and ratified through mutual notifications, which is expected to result in bilateral trade growth of up to 30% in the next 10 years.

In the UK, the Department for Environment, Food and Rural Affairs (DEFRA) released guidance and a policy paper on the Windsor Framework for Northern Ireland, Ireland and Great Britain. The Retail Movement Scheme (ReMoS) means customers will no longer need to complete multiple export health certificates or put an EU address on individual products.

With the update, businesses moving agri-food retail goods to Northern Ireland for sale and consumption can join ReMoS for simplified processes. Under ReMoS, a single document (the General Certificate), replaces individual Export Health Certificates (EHCs) for goods on a truck, eliminating the need for vet approval.

Likewise, the ban on certain products, such as chilled meat preparations and goods from the rest of the world, has been lifted. The scheme allows for the movement of more products to Northern Ireland than the original terms of the Northern Ireland Protocol. Pre-registration for ReMoS is available from 31st July to 24th August 2023, expediting scheme membership, while online registration opens on 1st September 2023, allowing traders and businesses to register and benefit from simplified movements.

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