New indicators for port congestion and supply chain disruption
The Federal Reserve Bank of New York launched a new Global Supply Chain Pressure Index designed to provide a “bird’s eye view” of supply chain disruptions. The metric suggests that pressures have peaked, although at a historic high. The index integrates 27 variables covering global transportation costs and country-specific supply chain measures and aims to provide a comprehensive summary of potential disruptions affecting global supply chains.
Kuehne+Nagel announced a new key performance indicator, “Seaexplorer Disruption Indicator,” measuring the congested ports of Europe, Asia, and the US in terms of TEU waiting days. This Indicator shows that most of the bottlenecks occur at North American terminals.
According to a study by Container xChange and Fraunhofer CML, container dwell times in Asia are at all-time lows while reaching record levels in Europe and the US.
The long delays due to port congestion made shippers cost billions in additional interest payments as cargoes spend more time at sea waiting to be delivered.
According to data from project44, in the first 11 months of 2021, cargo worth $238bn experienced significant delays at the ports of Los Angeles and Long Beach alone.
Outlook for container freight rates and port congestion in 2022
While spot freight rates continue to rise to record highs on the head haul, backhaul trades returning to Asia are seeing declining rates. As a result, there becomes a big gap between the two rates.
Cargo delays are rising again as capacity shortages, vessel delays, and port congestion pressure shippers. With few signs of improvement visible, shippers are set for another testing year. On the other hand, 2022 is shaping to be another good year for carriers, potentially even more so than 2021.
LA/LB set annual throughput record in 2021
Breaking its previous calendar year record by 13%, the Port of Los Angeles processed about 10.7 million TEUs during 2021. Likewise, the port of Long Beach set an annual throughput record and handled 9.38 million TEU in 2021, a rise of 15.7% above the previous record of 8.11 million TEU in 2020.
Port congestions in the US and Europe affect ports in China and India
The Port of Yantian in China limits the entry of laden containers to ease the overcrowding in its storage yard. Starting from January 21, it only allows the gate-in of export-laden containers up to four days before the vessels’ estimated time of berthing, according to a port statement.
Frustration over sailing disruptions continues in the new year for Indian exporters, with MSC skipping calls at Mundra and Jawaharlal Nehru Port Trust on its INDUSA service.
South Korea imposed fine on 23 carriers over alleged price-fixing
In a statement, the Fair Trade Commission said it was imposing penalties totaling 96.2 billion won (US$80.7 million) on 12 domestic and 11 foreign lines. The companies involved include HMM, Maersk’s Sealand Asia, Cosco Shipping, Evergreen, and Wan Hai. According to investigators, the carriers allegedly raised minimum freight rate levels and other surcharges 120 times between December 2003 and December 2018 without complying with the government’s reporting and consultation requirements.
While carriers are permitted to collaborate on freight rates under South Korea’s maritime shipping act, they must discuss with shippers and report details to the Oceans and Fisheries Ministry within 30 days.
Issues on the decarbonization of the shipping industry
‘How can we attract good people to the shipping industry?’ It is a question increasingly asked alongside the more pressing ‘how can shipping reduce its carbon footprint?’
The answer to both is that these dilemmas are not mutually exclusive. They are symbiotic. They play off one another. If we get one right, we’ll solve the other.
There will be an enormous gap in the price between zero-emission fuel and conventional marine fuel over the next 20 years — something that needs to be addressed, according to a report from the Getting to Zero Coalition.
Maersk brings forward the decarbonization goal
Maersk is going beyond its previous efforts to cut emissions, accelerating its decarbonization timeline and extending net-zero targets across its land, sea, and air business.
Maersk accepts that it will have to shoulder some of the costs in moving towards net-zero as it seeks to advance its goal of net-zero carbon emissions ahead by a decade. The company said it would aim for net-zero emissions across its whole business by 2040. Its original target, set in 2018, had been for 2050.
Technology is vital for resilient and sustainable global trade
Shipping remains heavily reliant on paper, which creates inefficiency and opacity of information shared across the different players in the supply chain. Enabling the exchange of shipping data among industry stakeholders will help create a more resilient and sustainable global supply chain.
In the meantime, US importers and exporters sounded off over the lack of accurate and timely data needed to run their supply chains, giving fuel to Federal Maritime Commission (FMC) efforts to standardize container cargo data.