Recovery from supply chain disruption requires effective and coordinated actions by port stakeholders.
The White House’s intervention to resolve port bottlenecks in Southern California faces steep challenges that will require coordinated action from terminals, truckers, and distribution centers effectively acting as an integrated system.
Terminal operators in Los Angeles–Long Beach said 24/7 gate hours were not feasible until retailers and truckers made better use of the each weekday that was already available to them. In addition, executives at the ports of Los Angeles and Long Beach stressed that moving to round-the-clock gates would take time. Nevertheless, “24/7 is the aspirational vision for the entire supply chain. This will not happen overnight,” said Noel Hacegaba, deputy executive director and COO at the Port of Long Beach.
He also said the ports were using their influence as facilitators to bring supply chain partners together to support initiatives that would push the inland supply chain toward 24/7 operations. For example, Long Beach is developing near E-dock yards, such as Pier S, where imported containers are trucked for temporary storage, thereby freeing up space at the terminals. In addition, the port is looking for additional near-dock sites for temporary container storage. The port is also working with US Customs and Border Protection to designate more inspection sites where so-called Vacis portals scan containers for drugs.
Empty container issue worsens supply chain disruption.
With far more consumer goods exported from Asia to North America and Europe than in the reverse direction, empty containers must be returned to loading ports where they are urgently needed to ship subsequent consignments to the big consumer markets.
In the US, furious farmers in the mid-west cannot get their hands on containers needed to move agricultural products to the ports and overseas markets. They cannot understand why containers are sent from the US to Asia empty rather than loaded with grain, rice, or other foodstuffs.
Truckers in the Port of New York and New Jersey were blocked more than usual when they returned empty containers to its marine terminals last month. Motor carriers say such an efficiency drag increases costs and driver turnover.
Extra ships arrived in New York and New Jersey to sweep up the empties and relieve the congestion.
On the other hand, Maersk requisitioned ships from within its fleet to pick up empty containers in ports across northern Europe to clear the backlog and ease quayside and storage yard congestion. One vessel was redeployed for this purpose, with empties being taken to one of APM Terminals’ Mediterranean facilities either at Tanger Med in Morocco or Port Said.
Widespread port congestion
More than 600 containerships are waiting outside ports worldwide, unable to go directly to a berth on arrival because of congestion on the quayside or in storage yards.
Initially mainly affecting the US, where consumer spending rebounded spectacularly, ship queues have spread to all corners of the world, with just about every reasonable-sized container port affected to some extent.
Kuehne+Nagel’s Seaexplorer shows that most ports handling containerships in the deepsea trades suffer from some disruption, but many of the biggest are severely gridlocked. They include Los Angeles, Long Beach, New York/New Jersey , and even Prince Rupert in Canada.
In Europe, ships calling at Rotterdam, Antwerp, Hamburg , and Felixstowe are all being held up, often for several days, because of issues ranging from severe congestion in both port container yards and off-dock locations to stack density and the shortage of truck drivers.
In Asia, severe congestion is apparent in some of the world’s top ports, including Singapore. Due to yard density, low productivity forces ships to wait around two to three days for a berth in the port. Others experiencing disruption include Hong Kong, Pusan, and Chittagong, which are all heavy congested, according to Seaexplorer. However, at Shanghai, the world’s largest container port, operations are now back to normal, with congestion less severe than it was with waiting time for a berth at out at between half a day and two days.
Other regions, including Central and South America, Africa, and Australia/New Zealand, all have some levels of port disruption. Auckland, for example, is suffering from considerable congestion, while an added problem for Sydney is a threat of industrial action at Patrick Terminals.
Outlook for container rates
Elevated spot rates, particularly on transpacific trade, started to slide markedly in late September, with China’s power crunch overshadowing factory productions.
However, it is hard to tell how much the actual supply reduction caused the correction and how much is exaggerated by the bearish sentiment derived from its perception.
The traditional seasonality of container shipping suggests that cargo volume and freight rates will generally decrease after October’s Chinese Golden Week holiday. The Golden Week holiday in China has provided a rare moment of relief in freight rates for shippers on the transpacific, but it is too soon to tell if there will be any significant easing of rates for the longer term. Vessel capacities remain in tight supply, according to forwarding sources. Also, this time with the drop in costs comes more shipment, they said. That is because many shippers previously taking a wait-and-see approach amid rocketing spot rates have now begun to make bookings for their cargo again.
Meanwhile, the US demand remains firm. The National Retail Federation has revised its forecast on the US’s container imports to 6.5m teu in the fourth quarter of the year, up 1.3% year on year. It also predicted volume would rise 5.3% and 1.6%, respectively, to 2.2m teu and 1.9m teu in January and February next year.
Singapore uses a yard at Tuas port to cope with congestion in the global supply chain.
Singapore is ramping up its port capacity by using its not-yet-operational Tuas port to store containers and operate around the clock to help tackle the disruption of global supply chains.
The 2,000 teu in yard capacity, which opened at Tuas port last month, is added to another 65,000 teu in storage space rolled out at Keppel terminal late last year, senior minister of state for transport in Singapore Chee Hong Tat said on 20 Oct.
The first two berths at the port are supposed to open by the end of this year.
When fully completed in the 2040s, Tuas will be the world’s largest fully automated terminal capable of handling 65m teu annually, almost double the 36.9m teu that Singapore handled in 2020.
Read more: Lioyd’s List
Refer sector loses its allure.
Reefer cargoes have always been a small but lucrative revenue stream for container lines, with higher freight rates and steadier demand patterns.
But the chaos in the sector that has slowed down the flow of all cargo now means that reefer rates trail behind dry cargo, and customers have to fight to secure slots.
Hapag-Lloyd senior director for niche products, Ms. Sarah Schlueter, said that while there had only been a few pockets of disruption six to nine months ago, mainly centered around terminals in China, the problems were now happening everywhere.
“Because of the tremendous rate increases that we have seen in other parts of the business, it has been putting pressure on the reefer business,” said Ms. Schlueter. “In the past, reefer cargo always had priority within the shipping lines because it was always the better-paying cargo. “Today, in many trades, we are now competing with dry cargo, and everyone is competing for that one slot.”
Read more: Lioyd’s List
The IAPH argued that the fund for shipping decarbonization should go to ports in developing countries.
The IAPH said the most significant share of the $1.2trn-$1.6trn to decarbonize shipping should be invested in land-based infrastructure and production facilities for low-carbon fuels.
“We all know that decarbonizing shipping is much more than decarbonizing ships,” said IAPH Managing Director Policy & Strategy, Mr. Patrick Verhoeven. “It’s about the whole supply chain. So a lot of the investments will have to be made on land and in ports.”
In a submission to the IMO’s Marine Environment Protection Committee, the IAPH said that allocating a significant share of market-based measures revenue to port-related investments could be a way to win support from developing economies for such a measure.
Read more: Lioyd’s List
FuelEU rules open to abuse, say EU shipowners
The European Community Shipowners’ Associations (ECSA) stepped up their campaign against the European Union’s maritime proposals to promote the broader use of renewable fuels. The ECSA argued that the proposals relied too heavily on non-EU fuel suppliers to provide correct documentation, creating enforcement loopholes.
The ECSA said the proposal was flawed because it accepted paper documents calculating the carbon savings of biofuel blends purchased outside the EU and supplied to ships that went on to call at EU ports.
Standards on marine fuels carbon content applied to ships purchasing bunkers not only in the EU but also outside Europe, according to FuelEU. The import and purchase of biofuel blends within the EU are already regulated.
“This may create substantial loopholes and ultimately an enforcement minefield,” the ECSA paper said, and outsources responsibility for checking to shipping companies and emission monitoring verifiers.
Shipowners had no means or competence to check biofuel blend compositions, and non-EU fuel suppliers “will be tempted to provide only-on-paper cleaner fuels as they are not subject to inspections, as they are not bound by EU law.”
Read more: Lioyd’s List