It never rains but it pours, as the saying goes… and it just keeps pouring in global logistics. While still battling the COVID-19 pandemic, FIDI Affiliates in Asia Pacific, Australia and New Zealand are now dealing with other crises, including lack of service from shipping lines and staff shortages. Despite all of this, many of them are optimistic about the future, as Andrew Bennett finds out
While COVID-19 has been a catalyst for far-sighted moving companies to get their businesses into better shape, FIDI Affiliates are still grappling with many other serious issues affecting their ability to serve their international customers as they would like.
In several countries, the picture is fluid in terms of government-imposed lockdowns, restrictions on movement and price rises – and the overall levels of uncertainty make planning ahead hard.
Countries closing themselves off
In the Asia-Pacific region, COVID-19 has had an ‘unprecedented impact’ on the moving business in many ways, according to Gordon Bell, Chairman of Asian Tigers Group. ‘It has increased outbound traffic, as many expatriates have elected to move back to their home country, or there has been a catch-up from people who were supposed to have left in 2020, but didn’t,’ he says.
‘Inbounds have fallen to low levels because executives are reluctant to move in the midst of a pandemic and countries have closed themselves off, not allowing in working newcomers or tourists.’
Asian Tigers says many corporate relocations have been frozen until the pandemic stabilises, with destination visas put on hold until countries come out of lockdown.
‘COVID has upended the container shipping industry, bringing sky-high costs along with a critical shortage of available container space. Moving shipments out of Asia has become a costly affair, although, sometimes, the cost is not the key factor, but space,’ adds Bell.
Nor have moving markets necessarily been behaving in predictable ways.
‘Initially, in 2020, Singapore was a safe haven from COVID – hence many expatriates chose to remain in the country,’ says Andrew Chng, Country Manager at Vanpac Group Asia. ‘However, in 2021, with the opening up of other countries and regions, many expatriates in Singapore decided to move away because of the stricter measures here. So, overall, there was a huge outflow in 2021.’
John Preston, Managing Director at Intermovers Malaysia, says unpredictable transit times as a result of port congestion, and the restricted operation of movers because of COVID procedures, is a ‘major challenge’ for outbound shipping.
However, he sees the international moving market recovering –although the speed at which this will happen will mainly be driven by the cost of sea freight and ‘all international borders opening up with reduced quarantine restrictions’.
At Classic Moving (Asia), General Manager Brian Milligan believes Singapore remains a popular expat destination, and staff are encouraged to see that ‘import business remains at a good level’.
‘Comparing Singapore with other markets, we have been fortunate to have very little business interruption because of COVID-19. With the challenges of freight charges and equipment availability aside, we have fully recovered by keeping abreast of changes in our ever evolving industry,’ adds Milligan.
Shipping line headaches
As if COVID-19 wasn’t enough to deal with, shoddy customer service from, and the unreliability of, global shipping lines has become a major bugbear for FIDI movers.
Stephen Bonollo, General Manager, International, for Grace in Australia and New Zealand, may speak for many in the moving industry when he talks about ‘extreme frustration’ at constantly changing rules imposed by shipping lines, and ‘the introduction of surcharges that they make up’.
The rates shipping lines charge for detaining containers at congested ports is another source of anger. ‘They will charge you no matter what,’ says Bonollo. He cites an example of rates being greatly increased by the day and then more than tripled for a 20-foot container for five days initial demurrage, then an additional five days. ‘It’s just crazy. Their services are appalling, the communications are appalling,’ Bonollo added.
Shipping companies are in a dominant position because of the sheer demand for their services globally. According to a Drewry report cited by Grace, the shipping lines industry is expected to make US$100bn profit for the year 2021. This compares with an estimated US$12bn profit in the previous 10 years.
‘Through COVID-19, they’ve actually learned how to become more efficient, make money and create their own bubble,’ says Bonollo – and while industry experts predict shipping rates will eventually drop, this may not be until next year.
‘They won’t go to where they were, but they will come down,’ adds Bonollo. ‘(The shipping lines) are just cashing in wherever they possibly can. It frustrates you, as you have given them 25 years of your custom.’
Equally frustrated by the knock-on effect on his international business is David Conroy, MD of Conroy Removals in New Zealand, which also operates a FIDI-accredited branch in Australia.
He describes the shipping situation as ‘one of the biggest nightmares’ for operations at the moment. Although freight bookings between Australia and New Zealand – one of Conroy’s busiest routes – are available, there are challenges in moving consignments to Europe and the US, and certain ports are congested.
‘New Zealand is not a major shipper,’ says Conroy. ‘But the customer service and availability of shipping lines is not there. I have complained a great deal about the service, but it seems to fall on deaf ears. If there was a major economic downturn in the world, we might see shipping have spare capacity and rates go down.’
Conroy adds that while the lack of container-ship capacity is causing ‘massive delays, surprisingly enough a lot of customers have accepted this. One of the biggest issues is that we are being charged considerably more.’
With New Zealand tightening its borders considerably because of the COVID-19 situation, there has been a 10 per cent drop off in people leaving the country. Conversely, as a result of nationals and expats remaining in the country, demand for domestic moves has leapt by 30 per cent.
‘We are very busy on that front; people are using the COVID situation as a reason to stay in the country and downsize or upsize, and spend money on their homes rather than travel abroad.’
Big workforce shortages
Another major challenge can be attracting new talent to the moving industry, in an age when many younger people starting out on their working lives are set on careers in IT.
‘The biggest issue is the lack of people, and the lack of experience. Whoever we talk to in the country is in much the same position,’ says Conroy, who is based at his company’s Auckland offices. ‘
We have the older workforce, who have been with us for many years, and we may be expecting a lot from them.’
Loyalty is outstanding, and appreciated, at Conroy, which employs five drivers aged over 70. ‘They love the industry… we are fortunate to have these people.’
While roles for move managers and salespeople can still attract younger candidates ‘many young people don’t want to be drivers and packers in the moving industry’, says Conroy.
Previously, he relied, to a degree, on people from Europe, the UK and South Africa with working visas joining the workforce. But when the coronavirus first hit, these people ‘went slowly home’, says Conroy, who hopes many will return to New Zealand when restrictions eventually lift.
Savvy moving companies have used the COVID pandemic – when business was much quieter – to reshape their enterprises.
‘We have learned a lot about how we go about managing our business and our staff,’ says
In the early waves of the COVID-19 crisis, in 2020, staff were put onto roster programmes and worked four days a week, and initially it was about planning rotas and ways of working.
‘When the fourth lockdown came upon us in [the Australian State of] Victoria, it took us an hour and a half to implement, and engage the team and get a plan in place, because we’re so used to doing it. The first time we did it, it took us three to five days – so, we got better,’ says Bonollo.
Prospects looking up
Despite the turmoil of the past two years, and ongoing headaches, some FIDI Affiliates are looking forward with hope.
John Preston, at Intermovers Malaysia, is optimistic about 2022 and says inquiries have been building for outbound moves.
‘We believe the cost of freight will peak shortly and then start on a downward trend back to normal levels, whatever they may be,’ he says.
‘Malaysia continues to attract a lot of foreign investment and we have seen a number of new multinational corporations opening their regional hubs here. We see the country as a destination that will continue to increase in terms of the number of expats arriving.’
Bonollo says the Australian moving market is buoyant, too – so much so that he adds, ‘if you’re a moving company in Australia and haven’t been able to make a buck in the past year, there’s definitely something wrong with you’.
After a ‘pretty ordinary’ first half of 2021 for exports, these ‘definitely picked up ground in the second half. We did see the gaps in our main market between New Zealand and the UK, and the gap closed between Asia and America, which was really good to see.’
Services for the Middle East and Africa were impeded by the lack of service that the shipping lines could offer. According to Aulina Mithal Sood, Director at Star Worldwide, business performance has been better than might be expected.
She explains: ‘With all that’s been happening with our world since 2020, we have had a steady graph on the household goods moving side of things. We’ve been pleasantly surprised by the consistent business in the past two years.
‘While the decision (for people) to move may not have been affected entirely by COVID 19, the aftermath of the break down in the supply chain is leading to business becoming sluggish.’
Looking ahead to 2022, she sees ‘continued demand and staggered supply. The Non-Vessel-Operating Common Carriers will continue to take advantage of the situation. If it carries on, companies may start looking at alternatives, such as reduced allowances and using rental furniture.’
Classic Moving’s Brian Milligan says: ‘There will no doubt be continued challenges, particularly with the freight situation and port congestion at a number of key destinations being the worst of it. There are greater infrastructure challenges for these ports, so we do not expect the situation to change this year.
‘With the added issue of a lack of haulage to and from these ports as well, we have to manage our clients’ expectations constantly, and look at other methods or routes to minimise additional costs and delays.’ Colleague Carl Häggström, Managing Director at Classic Moving, adds that, despite the intensity of requirements for each move, ‘we have remained agile throughout the past 18 months to ensure we evolve and stay ahead of the game. We are more than optimistic that we’ll continue to stay ahead of the challenges.’