Abstract
The freight forwarding industry is an important player in the maritime transport industry that facilitates shipping processes by providing various value-added services such as securing bookings, transporting cargo, and preparing shipping documents. However, due to COVID-19 outbreak, the freight forwarding industry faced many challenges like port congestion, container shortages, and blank sailings. Therefore, this study examines COVID-19 effect on the freight forwarding industry and the challenges that the freight forwarders faced especially in Egypt, which is a logistics hub due to its strategic location. The case provides researchers and practitioners with an overview of the challenges that affected both maritime transport and freight forwarding industries in Egypt and investigates the challenges that Agility Egypt encountered due to COVID-19 restrictive safety measures. Also, it presents the solutions undertaken to deal with those challenges. Data were collected through interviews with various operation managers, executives, and specialists in Agility Egypt for shipping and freight.
TopIntroduction
According to the United Nations Conference on Trade and Development (UNCTAD), the maritime transport industry is considered the heart of global trade (UNCTAD, 2017) since it handles about 90% of total international trade volume (Phuong Vu et al., 2020) transported at competitive prices (UNCTAD, 2017). It plays a significant role in delivering all resources efficiently and effectively especially critical ones such as medical and food supplies to cover rising global market demands through the support of the freight forwarding industry (Asariotis et al., 2020). Maritime industry parties need the assistance of the freight forwarding industry to arrange shipments and transport huge freight volumes globally (Caliskan & Ozturkoglu, 2016). The freight forwarding industry is an important player in the maritime transport industry in terms of shipping cargo despite any obstacles (Stojanović & Velickovic, 2019).
According to Shang & Lu (2012) in Christopher & Fredrick (2019), the freight forwarding industry is a customer-intensive service sector that connects buyers and sellers as well as creates economic value through the effective delivery of goods. It assists in delivering safe, cost-effective, and environmentally friendly activities, as stated by the International Federation of Freight Forwarders Association (FIATA) through flexible coordination of value-added logistics services (Stojanović & Velickovic, 2019). Freight forwarders provide resources, technologies, and entrance to global markets, which significantly affect countries' economic activity (Kherbash & Mocan, 2015). They provide high-quality services and flexible, customised solutions to meet customers' demands to be able to survive fierce market competition (Caliskan & Ozturkoglu, 2016).
As acknowledged by the FIATA, forwarders act on behalf of their customers to provide main logistics activities such as handling, distribution, consolidation, de-consolidation, and customs clearance (FIATA, 2021). Also, they assist in securing vessel bookings, issuing bills of lading, freight invoices, arrival and delay notices of shipments, and other shipping documents as well as supporting logistics activities such as inventory management, packaging, packing, and warehousing (Caliskan & Ozturkoglu, 2016). Other activities added by Subhashini & Preetha (2018) are labelling goods and updating customers with shipping regulations.
Key Terms in this Chapter
Cut and Run: When a vessel decides to cut and run, it abruptly transports its cargo to a different port than intended, requiring subsequent travels to be arranged from the new site, which can result in weeks of delays in expected delivery timeframes. Ships may only dump a portion of their cargo before 'cutting and running' to their next destination to avoid losing berthing slots elsewhere.
Vessel Roll Over: If reported congestion levels are excessively high, ships may avoid a scheduled port entirely.
Storage: Storage is a fee paid to the port authority by a shipping line if their container stays in the port or terminal after the allowable laytime to clear them. Simply explained, storage is a fee charged for each container that is not transported from the storage space/terminal when it is ready to be loaded onto a truck or a vessel.
Demurrage: Demurrage is a cost levied by a carrier on a consignee if rented containers are not cleared at the port or terminal and returned to the carrier's designated location. Typically, the consignee is provided with laytime (free time). The consignee must clear and return the container within this period. Otherwise, he will be charged a fee for exceeding his time at the port. Demurrage is the charge that the merchant pays for the use of the container within the terminal after the free time has expired.
Securing Bookings: Declaring the exact date of the vessel's departure and the projected date of the vessel's arrival, as well as declaring the availability of spaces and an unbroken seaworthy container for shipment.
Detention: After a ship has been emptied, a consignee has a certain amount of time to unload his products from a container and then return the container to the shipping firm. If the free time allotted expires and the container is not returned, the consignee will be charged a detention cost. A detention fee is a cost paid by a shipper for holding on to a container after leaving the port/terminal to load or unload the container for an extended period. Detention is the fee paid by the merchant for using the container outside of the port or depot after the free time has expired.
Port Omitting: Port omitting is a change in the shipping line's routing of the vessel in which the vessel bypasses a specific port calling and thus the secured booking is delayed to the following vessel.
Blank Sailings: Blank sailing, also known as void sailing, is when a shipping line or carrier chooses to skip a certain port or an entire trip on a planned sailing route.
Port Congestions: The containers are piled high in the port's yard, waiting to be collected and transported to their destination.