Supply chain disruption risk in 2022
The fundamental structural market vulnerabilities that had led to so much disruption this year remain in place, according to Drewry head of supply chain advisers Philip Damas. On top of this, however, shippers faced four other key risks in the year ahead. Key among these is the chance of another dispute between the International Longshore and Warehouse Union and US west coast port employers when the two parties renegotiate their labor agreement.
Despite efforts to clear out the landside of the US’ busiest import gateway, the ports of Los Angeles and Long Beach face a significant challenge on the waterside with unloading, trucking, and railing out cargo. More than 100 container ships were scheduled to arrive through mid-December but are queueing in some cases more than 150 miles off the coast.
The current backlog of ships at the Los Angeles–Long Beach port complex won’t be unloaded until well into 2022 as more containers head toward Southern California.
Mr. Christian Roeloffs, chief executive of the Container xChange online container trading platform, said he foresees the pandemic and its new variants will continue disrupting port operations and labor capacity into 2022. However, he noted that the “return to normal” seems to be coming earlier than anticipated and may arrive as early as the second half of next year. “A temporary supply crunch causes the current spike in rates. But with disruptions such as labor union conflicts at US ports easing up, we will also see the capacity challenge improving,” he said.
Supply chain disruption affecting export cargoes
It is said that the ports of Los Angeles and Long Beach had seen a reduction in dwell times of containers following the threat of fines and the offer of incentives. However, research counterpointed a build-up of export containers at the San Pedro Bay ports and major ports globally.
According to the latest data from technology services provider Project44, export containers at Los Angeles took 11.85 days (average) to be loaded on a ship between October and November 2021, while Long Beach took 10.98 days (average).
“With export containers taking about twice as long to move through US west coast ports as import containers, the problem appears to be getting containers from docks onto ships,” it said.
Containerized imports through leading US ports are on course to end the year with the most significant growth and fastest volume on record, but the country’s export volumes have languished to reach their lowest number in three years.
California ports delay container dwell fee again
Los Angeles and Long Beach ports have again extended the deadline for introducing a container dwell fee for boxes not removed from the ports’ terminals promptly. The original deadline for the fee to apply was November 15. That differed to November 22, then December 6, 13, 20, and now will not apply until December 27.
Although both ports said the number of long-dwelling containers had decreased by more than 40 percent since late October when the ports announced penalty fees, progress has been uneven.
Ocean shipping reform brings a new type of disruption
The drive by the federal government to address short-term supply chain pressures — most notably through fast-moving legislation that would reshape US container shipping regulation — would foster significant long-term changes.
There was a lack of substantial debate in the House before passing significant ocean shipping reform legislation even after the ranking member of the maritime subcommittee warned that he had reservations while he supported the bill.
A Coalition of nearly 100 US agriculture exporters has strongly endorsed the bipartisan Ocean Shipping Reform Act.
The situation of European ports
Felixstowe, the UK’s largest container port, has had most vessel calls canceled of any European port, as carriers seek to avoid those terminals affected by congestion.
Figures from Alphaliner comparing actual ship calls with pro forma schedules from July to December show that shipping lines omitted almost one-third of Felixstowe’s calls.
“Our survey clearly shows that the temporary schedule changes and ad hoc adjustments hit Felixstowe worst,” Alphaliner said. “The top-three ports, Rotterdam, Antwerp, and Hamburg, also saw a reduction of between 20.2% to 30.3% of planned calls. However, smaller ports have fared much better.”
The true extent of port congestion on the schedules of Asia–North Europe container carriers has been tallied by Alphaliner, with one in four calls on the main loops omitted through the second half of the year.
UK ports saw throughput volumes drop 9% last year, with a further 5% decline on the cards when the numbers for 2021 are in, according to a report compiled for the UK Major Ports Group trade association. However, the analysis shows the operator’s upside that the losses will likely recoup by 2023.
The situation of Chinese ports
Rising coronavirus cases have forced the port of Ningbo, the world’s third-largest container shipping harbor, to tighten restrictions. As a result, container truck drivers are subjected to inspections of digital health documents before entering the port. The changes took effect from December 12.
Chinese ports plan to raise prices for handling containers, spurred by elevated ocean freight rates. While the potential mark-ups bode well for terminal operators seeking better returns, there are concerns about whether this will lead to intervention by the Chinese government. It is committed to cutting the financial burden placed on shippers, already dealing with high shipping costs. The port of Ningbo-Zhoushan, the world’s third-largest container port, already said it would increase its handling fees for import and export boxes by about 10%, starting from the beginning of next year. The move has given rise to speculation that more of its domestic peers will follow suit.
Methanol future proof fuel for the green revolution
Although a sizeable dual-fuel two-stroke engine running on methanol could cost more, and operating expenses are marginally higher, methanol is simpler to handle and store and is safer for the environment.
The technological and regulatory challenges of burning methanol as a bunker fuel have been almost resolved. Therefore, Maersk’s backing means it’s time for the industry to go green with methanol. That’s the view widely expressed at the “Rise of Methanol as a Future Proof Marine Fuel” seminar held in London and online on November 25.
Maersk unveiled the design of its dual-fuel methanol containerships, saying it more than compensates for the loss of teu capacity needed to fit the methanol tanks.
Japanese shipowners lead climate change rankings
Japanese shipping companies dominate a table put together to measure action on climate change. Rankings compiled by a non-governmental organization, the Carbon Disclosure Project, show Kawasaki Kisen Kaisha, known as K-Line, and Nippon Yusen Kaisha, known as NYK Line, in the top two places. Both had “A” ratings, while at least nine companies, including AP Moller-Maersk and tanker owner Euronav, scored a “B” for undertaking further steps to reduce emissions effectively.
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