The situations and outlook for supply chain disruption
Overcrowded terminal yards and hinterland delays are leading to lengthy delays. A surge of cargo from Shanghai could lead to further problems. Delays to voyages from Asia to Europe are increasing on the back of high yard densities at northern European terminals and hinterland bottlenecks, leading to worse port congestion. “Container ships deployed on this route currently need an average of 101 days to complete a full round voyage,” Alphaliner said. “This means that they arrive on average 20 days late in China for their next round trip, forcing carriers to blank some sailings as no ship is available.” FourKites, a data provider of supply chain visibility, shows that the volume of seaborne cargo arriving in the US from China has recovered slightly over the past couple of weeks. The 14-day average percentage of shipments delayed for loads traveling from China to the US is now at 32%, down from 39% in late April. The improvement comes as Shanghai, home to the world’s largest container port, is gradually easing its oppressive lockdown measures, having kept what it calls community infections at zero since 15 May. Drewry said, “Once the Chinese manufacturing engine starts to heat up, their port productivity is restored, and container line schedules are back in form, boxes might get stuck at destinations as those port and inland distribution systems crumble again.”
Container lines cut capacity for stabilizing rates
Carriers are increasingly blanking sailings out of Asia in response to lower demand on the three key east-west trades. The transpacific US west coast trade has seen the largest number of sailings blanked, both in absolute and relative terms, according to figures from Xeneta. Blankings on this route had helped maintain freight rates on the Asia-US west coast trade, despite a downturn in volumes, driven mainly by the lockdowns in Shanghai. On the other hand, the container ship order book currently stands at 26.7 percent of the global fleet, with much of the new capacity to be delivered in 2023 and 2024. But carriers have no intention of allowing the additional supply to undermine rates and profitability.
Port throughput masks losses in Shanghai
According to the latest throughput data, China’s controversial zero-Covid policy amid rising infections has adversely impacted the world’s largest container port. But the actual volume losses could be even steeper than indicated. Shanghai handled 3.1m teu in April, down 25% compared to the average monthly volume in the first quarter of 2021. Calculating port throughput might well have masked at least some of the contraction. Unlike a tractor, a barge will see its laden or empty boxes on board included in the port throughput as the terminal handles them. They are also counted in when loaded to or unloaded from a giant containership. While the double-counting of teu for barge and transshipment services is common for ports, a higher proportion of double-counting suggests the underlying cargo volume in Shanghai has taken a bigger hit than what appears to be on the operator’s throughput books.
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China grants cabotage container shipping to non-mainland Chinese carriers
Container shipping lines, including Maersk and Orient Overseas Container Line, have won access to China’s cabotage trade as the government aims to increase transshipment efficiency and volume. The government of Shanghai told a press conference that the Danish giant and the Cosco Shipping unit are among a few carriers allowed to haul international-trading cargo between four large Chinese ports, Yangshan, Dalian, Tianjin , and Qingdao.
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The situation of labor talks on the US West Coast
The Pacific Maritime Association says contract talks began with the US west coast labor union on 10 May “under very, very healthy conditions” after the pandemic “solidified our ability to work together.” An agreement between 22,000 dockworkers and their terminal employers, covering 29 ports, including Los Angeles and Long Beach, which handles 40% of containers imported to the US, expires on 30 June. The International Longshoremen’s Association (ILA) leadership expressed solidarity with the International Longshore & Warehouse Union (ILWU). It began contract talks with West Coast terminal employers while warning against further automation at US ports. The ILWU has requested that contract negotiations with West Coast waterfront employers be suspended until 1 June, according to multiple sources close to the talks. It wasn’t immediately clear why the ILWU would want to take a break from negotiations. However, a source with knowledge of the negotiations said little progress had been made since the talks began on 10 May. The source added that the ILWU, at this point, appears to be in no rush to secure a new contract before the expiration of the current deal on 1 July.
IMO ISWGHG’s discussion on MBMs
The IMO will weigh countries’ competing plans for a global carbon pricing scheme. From 16 May, an inter-sessional working group on greenhouse gas emissions (ISWGHG) saw countries discuss six separate plans for market-based emissions measures (MBMs), which was crucial for closing the price gap between fossil fuels and zero-carbon fuels. The results of the inter-sessional meeting will inform the rule-making body, the Marine Environment Protection Committee, which next meets on 6 June. The greenhouse gas working group agreed that a “basket of measures” is needed, including an MBM and a greenhouse gas fuel standard. Green groups renewed calls on the IMO to move faster and try to limit emissions in the short term. But observers called the meeting a “major development” after a decade of heated discussions on the topic.
Rotterdam moves to lock in the large-scale European hydrogen supply
The Port of Rotterdam unveiled an ambitious plan to supply regional transport and industrial end-users in Northwest Europe with 4.6 million tonnes of sustainable hydrogen annually by 2030 in a deal arranged with hydrogen-exporting countries and scores of energy companies. The initiative advances the development of a “hydrogen economy” for the region, focusing on fueling European industry and inland road and barge transport rather than producing an alternative power for container shipping.
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FMC seeks to standardize supply chain data flows
Next month, Federal Maritime Commissioner Carl Bentzel will report his findings from a series of meetings conducted under the auspices of the Maritime Transportation Data Initiative. The initiative, commissioned by FMC chairman Daniel Maffei, was launched last November to gather information on how data was shared across the industry and how best to improve data flow.
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Banks help GSBN develop bill of lading finance tools
The Global Shipping Business Network (GSBN), a nonprofit carrier- and port-backed technology consortium to build trade technology infrastructure, said it produced two trade finance tools that tether banks to an electronic bill of lading (eBL) data. The products enable banks to access data directly from bills of lading, whether the relationship between a shipper and its bank is based on an open account or a letter of credit. An open account entails a relationship where buyers purchase goods on a deferred payment basis. On the other hand, a letter of credit is a guarantee from an importer’s bank that an exporter of goods will receive payment.
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